## IMF Survey : Policymakers Face Historic Opportunity to Fight Climate Change

_IMF News, October 10, 2015_

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## Bibliographic details
- Authors: Maureen Burke October
- Published: October 10, 2015

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### Overview
- Seminar at the IMF-World Bank Annual Meetings in Lima, Peru convened climate experts and international organization representatives to discuss policy responses to climate change.
- Central message: low fossil fuel prices create a policy window to introduce carbon pricing and eliminate energy subsidies, generating revenue and discouraging energy consumption.

### Key findings
- Energy price context:
  - "A 50 percent drop in fossil fuel energy prices in a little over a year" creates an opportunity to implement climate measures.
- Carbon pricing and subsidy reform outcomes:
  - British Columbia introduced a revenue-neutral carbon tax in 2008, starting at "$10 a ton and gradually raising it."
  - Result reported for British Columbia: "reduced its consumption of all fuel types by 16 percent" while "across Canada it rose by 3 percent."
- Access and equity:
  - "In India, for example, about 40 percent of the population doesn’t have access to electricity."
  - "The top twenty emitting countries are responsible for roughly 90 percent of global emissions."
- International pledges:
  - Advanced economies have pledged to channel "$100 billion a year to the developing world for this purpose starting in 2020."

### Evidence and country examples
- British Columbia carbon tax:
  - Implemented 2008, revenue-neutral, began at "$10 a ton," raised gradually.
  - Associated outcomes: "reduced its consumption of all fuel types by 16 percent" and the province's economy "grew faster than the rest of Canada."
- India perspective:
  - Energy access framed as life-or-death; climate measures perceived differently where "about 40 percent of the population doesn’t have access to electricity."
  - Political economy challenge: perception that developing countries "had nothing to do with the problem."

### Equity, financing, and international cooperation
- Equity concern emphasized: historical responsibility and moral obligation—"a subset of countries that have caused this historically and that therefore have the moral responsibility to help developing countries."
- Financing challenge:
  - Need for a coherent global system for climate financing; existing pledge: "$100 billion a year ... starting in 2020."
  - Panelists stressed revenue from carbon pricing and subsidy reform should be used to:
    - "drive infrastructure change,"
    - "advance technology change,"
    - "share the sorts of breakthroughs needed to bring energy security to people in the developing world."
- Free rider problem and policy heterogeneity:
  - Risk of "a ludicrous mosaic of fundamentally different policies" and countries worrying "that their neighbor isn’t doing enough."

### Policy recommendations and strategic priorities
- Seize low-price window:
  - Introduce a carbon tax or emissions trading scheme while energy prices are low to make price increases more palatable.
  - Eliminate energy subsidies during the low-price period.
- Design and communication:
  - Set a carbon price equal to the cost of the "externality" (damage from climate change) to internalize climate costs.
  - Raise public awareness continuously to build political support for carbon pricing.
- Use revenue wisely:
  - Recycle revenues to reduce more harmful taxes, finance mitigation/adaptation, and promote sustainable development objectives.
- Country-specific approaches:
  - Tailor emissions reduction pathways to each country’s circumstances while pursuing "common objectives that are achieved in a modestly fair way."

### Timing and urgency
- Time sensitivity:
  - Consensus that "time is of the essence"; the global community "didn’t have the luxury of holding out for the perfect global system."
  - Recommendation: pursue pragmatic international agreement on shared objectives ahead of the Paris Summit (COP21).

*Source: IMF Survey : Policymakers Face Historic Opportunity to Fight Climate Change (October 10, 2015).*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [In The News](https://www.imf.org/en/news/search)
- [Watch Part 1 of seminar](http://www.imf.org/external/am/2015/mmedia/view.aspx?vid=4542988823001)
- [Watch Part 2 of seminar](http://www.imf.org/external/am/2015/mmedia/view.aspx?vid=4541004294001)
- [Read the research](http://www.imf.org/external/pubs/ft/survey/so/2015/new070215a.htm)
- [Read the blog](http://blog-imfdirect.imf.org/2015/05/18/global-energy-subsidies-are-big-about-us5-trillion-big/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew101015a_