{
  "title": "Not Yet on Track: Climate Threat Demands More Ambitious Global Action",
  "publication": "IMF Blog, November 1, 2021",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2021/11/01/blog-climate-threat-demands-more-ambitious-global-action",
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  "summary": "New IMF analysis shows gaps in ambition and policy needed to achieve emissions curbs that contain global warming.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- New IMF Staff Climate Note shows unchanged global policies will leave 2030 carbon emissions far higher than needed to “keep 1.5 alive.”\n- Cuts needed by 2030:\n  - 55 percent below baseline levels to meet the 1.5 degrees Celsius goal.\n  - 30 percent below baseline levels to meet the 2 degrees Celsius objective.\n- Climate change poses a grave threat to macroeconomic and financial stability and threatens ecosystems, lives, and livelihoods."
    },
    {
      "heading": "The global mitigation ambition gap",
      "content": "- Commitments and coverage:\n  - 135 countries representing more than three-quarters of global greenhouse gas emissions have committed to net zero by mid-century.\n- Near-term pledge shortfall:\n  - Even if current commitments for 2030 were met, this would only amount to between one- and two-thirds of the reductions needed for temperature goals.\n- Pledged 2030 cuts by country group:\n  - Advanced economies: 43 percent cut below 2030 levels.\n  - Higher-income emerging market economies: 12 percent cut.\n  - Lower-income emerging market economies: 6 percent cut.\n- Illustrative distributional scenarios for reaching the 2 degrees target (all figures are percent reductions below 2030 baseline levels):\n  - Scenario A: Advanced 45, High-income emerging markets 30, Low-income emerging markets 20.\n  - Scenario B: Advanced 55, High-income emerging markets 25, Low-income emerging markets 15.\n  - Scenario C: Advanced 65, High-income emerging markets 20, Low-income emerging markets 10.\n- Illustrative distributions to stay on track for 1.5 degrees (percent reductions below 2030 baseline levels):\n  - Scenario D: Advanced 70, High-income emerging markets 55, Low-income emerging markets 35.\n  - Scenario E: Advanced 80, High-income emerging markets 50, Low-income emerging markets 30.\n- Abatement costs:\n  - To put global emissions within range of a 2 degrees target would cost 0.2 to 1.2 percent of GDP, with the biggest burden on richer countries.\n- Co-benefits and finance needs:\n  - Domestic environmental benefits include reductions in deaths from local air pollution.\n  - Advanced economies must fulfill their commitment to provide $100 billion per year in finance to low-income countries from 2020 onward; the most recent figures show that we remain short of that target.\n  - To scale up private financing, certainty over public mitigation objectives and price signals are critical, alongside better-quality and standardized information to reduce perceived investment risks."
    },
    {
      "heading": "The global mitigation policy gap",
      "content": "- Need for policies even with ambitious pledges:\n  - Carbon pricing should play a central role, especially for large emitters, by providing a price signal to redirect private investment to low carbon technologies and energy efficiency.\n- Required carbon price:\n  - A global carbon price exceeding $75 per ton would be needed by 2030 to keep warming below 2 degrees.\n- International coordination:\n  - Coordination is critical to overcome competitiveness concerns and policy uncertainty that hinder unilateral action.\n  - IMF staff proposal: an international carbon price floor among a small group of large emitters with differentiated pricing by development level, financial and technological assistance for low-income participants, and allowance for national implementation through non-pricing measures that achieve equivalent outcomes.\n  - A price floor arrangement would be collaborative and help avoid contentious border carbon adjustments if some countries move ahead with robust pricing while others do not."
    },
    {
      "heading": "Domestic policies and distributional design",
      "content": "- Evidence on macroeconomic impacts:\n  - Recent empirical studies suggest carbon pricing reforms have not reduced GDP or employment and could support long-run growth objectives.\n- Revenue potential and uses:\n  - Revenues from carbon pricing are typically around 1 percent of GDP or more.\n  - Possible uses include reducing labor taxes, increasing public investments, strengthening social safety nets, raising personal income tax thresholds, or funding public investments in health or education.\n- Just transition and communications:\n  - Policymakers should ensure a just transition with robust assistance for vulnerable households, workers, and regions.\n  - Reforms should be introduced progressively and well-communicated so firms and households can adjust.\n- Broader mitigation measures:\n  - Policies should cover broader emissions sources, such as methane, and enhance forest carbon storage.\n  - Green public investment is essential to accelerate adoption of clean technology infrastructure (e.g., smart grids and charging stations for electric vehicles).\n  - Private and public investments in clean energy have especially powerful growth effects; low-carbon industries tend to be more labor-intensive than fossil fuels, which can help boost employment."
    },
    {
      "heading": "Urgency and risks of inaction",
      "content": "- Without an urgent narrowing of ambition, policy, and financing gaps:\n  - A dangerous cliff-edge for emissions reductions beyond 2030 will be set up.\n  - Transition costs could greatly increase, potentially putting temperature goals permanently beyond reach.\n- Imperative:\n  - An orderly, cooperative, and timely transition can and must happen now.\n\nKristalina Georgieva, November 1, 2021 — IMF blog post\n\n---\n\n\n References\n\n- IMF Staff Climate Note\n- IMF staff proposal\n\nSource: https://www.imf.org/en/blogs/articles/2021/11/01/blog-climate-threat-demands-more-ambitious-global-action"
    }
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    "[Markdown version](/en/blogs/articles/2021/11/01/blog-climate-threat-demands-more-ambitious-global-action/index.md)",
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    "Authors: Kristalina Georgieva",
    "Published: November 1, 2021",
    "New IMF Staff Climate Note shows unchanged global policies will leave 2030 carbon emissions far higher than needed to “keep 1.5 alive.”",
    "Cuts needed by 2030:",
    "Climate change poses a grave threat to macroeconomic and financial stability and threatens ecosystems, lives, and livelihoods.",
    "Commitments and coverage:",
    "Near-term pledge shortfall:",
    "Pledged 2030 cuts by country group:",
    "Illustrative distributional scenarios for reaching the 2 degrees target (all figures are percent reductions below 2030 baseline levels):",
    "Illustrative distributions to stay on track for 1.5 degrees (percent reductions below 2030 baseline levels):",
    "Abatement costs:",
    "Co-benefits and finance needs:",
    "Need for policies even with ambitious pledges:",
    "Required carbon price:",
    "International coordination:",
    "Evidence on macroeconomic impacts:",
    "Revenue potential and uses:",
    "Just transition and communications:",
    "Broader mitigation measures:",
    "Without an urgent narrowing of ambition, policy, and financing gaps:",
    "Imperative:",
    "[IMF Staff Climate Note](https://www.imf.org/en/Publications/staff-climate-notes/Issues/2021/10/29/Not-Yet-on-Track-to-Net-Zero-The-Urgent-Need-for-Greater-Ambition-and-Policy-Action-to-494808)",
    "[IMF staff proposal](https://www.imf.org/en/Publications/staff-climate-notes/Issues/2021/06/15/Proposal-for-an-International-Carbon-Price-Floor-Among-Large-Emitters-460468)"
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