## Deputy Managing Director Zhang Speech: Climate Change: From Awareness to Action

_IMF News, June 9, 2020_

## Source details

**Canonical URL:** [Deputy Managing Director Zhang Speech: Climate Change: From Awareness to Action](https://www.imf.org/en/news/articles/2020/06/08/sp060920-climate-change-from-awareness-to-action-delphi-economic-forum-v)

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## Bibliographic details
- Published: June 9, 2020

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### Context and framing
- Speech delivered for Delphi Economic Forum V: “The Day After” on June 9, 2020.
- Immediate context: the COVID-19 pandemic is the current crisis, but climate change is identified as a slower-moving, equally critical crisis that is linked to policy choices made during the pandemic response.
- Paris COP21 referenced as the five-year prior commitment point for global action to curb temperature rise.
- Europe highlighted as being at the forefront of climate action.

### EU commitments and challenges
- Key EU ambition: to be carbon neutral by 2050.
- European Green Deal and related policy initiatives and investment are presented as central to the EU response.
- EU recovery architecture: the new Economic Recovery Fund and a revised EU budget under discussion aim to support a green recovery after the pandemic.
- Noted challenges:
  - The carbon price under the Emissions Trading System is currently around €25 a ton.
  - To achieve carbon neutrality by 2050, much higher effective carbon prices and more ambitious emissions reductions are needed.
  - Distributional impacts of ambitious climate policies must be assessed and addressed to ensure a “just and inclusive transition.”
  - Transition requires massive investment in renewables, smart grids, and electric vehicles and will require mobilizing private finance.
- Opportunity: the transition to a carbon-neutral economy brings new growth opportunities.

### Greece: vulnerabilities, opportunities, and policy questions
- Greece has ample solar and wind capacity that can be tapped.
- Potential co-benefits of green policies in Greece:
  - New jobs through smarter urban development and social policies.
  - Better housing and improved air quality reducing illnesses and deaths related to pollution.
  - Savings on health spending and increased tourism.
- Current status:
  - Greece is among the few countries that have already achieved their 2030 greenhouse gas emission targets.
  - This achievement mainly reflects reductions in energy demand from the recession.
  - Greece’s energy structure remains more carbon-intensive than that of many other European countries.
- National plan:
  - The new Greek national energy and climate plan envisions a substantial boost in green investment and full closure of lignite plants over the medium term.
- Two sets of policy questions posed:
  - What will happen to the lignite-producing areas of Western Macedonia as plants close and workers are adversely affected? What policies are needed to help in the transition toward greener economic activity?
  - What are the implications for climate change, and climate policies, of Greece’s role as a shipping and tourism hub? These two industries account for about a quarter of Greece’s GDP.
- Suggested approaches:
  - Targeted support to affected groups and sectoral diversification to mitigate transitional costs.
  - A supportive investment climate as a key element to successful transition.

### IMF work, tools, and recent assistance
- IMF is scaling up work on both mitigation and adaptation.
- Analytical and policy work includes:
  - Carbon pricing analysis: helping countries understand needed carbon prices, trade-offs with other instruments, and how to design comprehensive, growth-friendly, politically acceptable policies.
  - Pricing climate risks and providing incentives for climate-resilient investment.
  - Integrating climate risks and adaptation spending into economic and fiscal plans.
  - Assessing countries’ climate strategies together with the World Bank, starting with small countries most vulnerable to climate change.
  - Stress testing of financial systems to assess resilience to natural disasters and climate-motivated policy changes.
  - Working more closely with central banks on climate-change risks affecting financial and price stability.
- Example of central bank engagement: the Central Bank of Greece has been very active in this area.
- Emergency and pandemic-related financing as of June 4:
  - Nearly $24 billion in emergency financing to 67 countries.
  - Debt relief of $229 million to 27 of the IMF’s poorest members.
- The IMF’s readiness:
  - Emergency lending facilities designed to provide speedy assistance when natural disasters strike or in pandemics.
  - The IMF is gearing up efforts to help membership recover toward a better, greener future.

### Core policy messages and recommendations
- Keep climate change in mind as countries move from rescue to recovery; ensure a “green recovery” for Greece, Europe, and the planet.
- Act on multiple fronts:
  - Reduce emissions and offset what cannot be reduced.
  - Address social and economic consequences of the transition (ensure fairness and inclusivity).
  - Seize economic opportunities from a greener economy through investment and private finance mobilization.
- No institution or individual can stand on the sidelines; coordinated action is required across fiscal, financial, and structural policies.

*Source: Deputy Managing Director Zhang Speech: Climate Change: From Awareness to Action (Delphi Economic Forum V), June 9, 2020.*

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## References

- [Tao Zhang](https://www.imf.org/en/About/senior-officials/Bios/tao-zhang)
- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2020/06/08/sp060920-climate-change-from-awareness-to-action-delphi-economic-forum-v_