Climate Cooperation
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- Climate Cooperation
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Bibliographic details
- Authors: EDDIE BUCKLEY
- Published: September 2, 2021
Overview and historical context
- The IMF took its first major step into the climate change debate in 2008, when a chapter in the World Economic Outlook (WEO) identified climate change as “a potentially catastrophic global externality and one of the world’s greatest collective action problems.”
- The October 2020 WEO showed how green investment, combined with a steadily rising carbon price, could boost global growth in the next 15 years of the recovery by about 0.7 percent of global GDP on average, and create millions of new jobs.
- The first IMF Staff Climate Note highlighted the need for faster and more coordinated action on carbon pricing.
Policy research and analysis
- Analyses cover a broad range of climate-related topics, with a focus on mitigation and adaptation policy tools.
- The IMF supports the role of carbon pricing as a central policy and continues to place such measures “in the spotlight” in discussions with IMF members.
Country economic surveillance
- IMF staff meet with each of our 190 members every year or two under Article IV surveillance to discuss economic developments and policy support for inclusive growth and development.
- Since 2015, the IMF’s coverage of climate change during surveillance has steadily increased.
- In the past year, climate issues featured in about 30 of our country assessments, including for Canada, Germany, Korea, the United Kingdom, and the United States.
- The IMF will cover mitigation policies in the 20 largest greenhouse gas emitters—that together account for more than 80 percent of all such emissions.
- In countries especially vulnerable to climate change, assessments will focus on adaptation policies to build resilience to climate-related disasters.
Financial sector analysis and FSAP enhancements
- In 2021, the IMF Executive Board approved proposals for more in-depth climate-related risk assessment and expanded mandatory surveillance from 29 countries to 47.
- The IMF’s Financial Sector Assessment Program (FSAP) will now cover physical climate change risks and potential transition risks as the world moves to a low-carbon economy and the value of high-carbon assets declines.
- Climate risk stress testing in FSAPs can identify financial system pressure points from physical climate shocks and the transition to a low-carbon economy.
- Recent FSAPs in Norway and the Philippines included climate risk stress testing.
- Previous FSAP and insurance stress testing assessments covered droughts, floods, and storms for small island countries such as Jamaica, and natural catastrophe risks for advanced economies such as Belgium.
- Assessments of regulatory and supervisory frameworks can ensure appropriate prudential supervision of all climate risks across a country’s entire financial system.
Data, disclosure, and taxonomies
- Three building blocks will strengthen the climate information architecture:
- (1) high-quality, reliable, and comparable data;
- (2) a harmonized and consistent set of climate disclosure standards;
- (3) a broadly approved global taxonomy.
- Together, these can unlock trillions of dollars in green finance and help turn the tables on global warming.
- In 2021 the IMF launched an experimental climate data dashboard to contribute to statistical cooperation on climate-change-related data and overcome challenges to integrating climate change into the macroeconomic statistics framework.
Capacity development and technical assistance
- The IMF’s capacity development activities increasingly cover climate-related topics and provide members tools and expertise for effective fiscal planning and monetary frameworks.
- On fiscal issues, member support includes mitigation and adaptation policies and measures to build resilience.
- Technical assistance missions have helped develop carbon pricing programs and related tax policies.
- Small island states have received help with post-hurricane public financial management reviews and fiscal risk management for natural disasters.
- The IMF will likely scale up all aspects of climate-related capacity development.
- A new diagnostic tool, the Climate Macroeconomic Assessment Program, built in conjunction with the World Bank, will assess:
- the macro-fiscal risks of climate shocks and stresses;
- the preparedness of climate vulnerable countries;
- the implications of climate mitigation policies, such as carbon pricing.
- Capacity development is often delivered in collaboration with the World Bank, the International Energy Agency, the Organisation for Economic Co-operation and Development, and through organizations such as the Group of Seven and Group of Twenty.
Eddie Buckley, special assistant to the director in the IMF Communications Department.
Content in this bundle
- التعاون المناخي
- Cooperación climática ● Finanzas y Desarrollo ● Septiembre de 2021
- Coopération pour le climat
- The Risks and Opportunities of Climate Change – IMF F&D
- Сотрудничество в области изменения климата
- 气候合作 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期
- Proposal for an International Carbon Price Floor among Large Emitters
- CHAPTER 3 MITIGATING CLIMATE CHANGE—GROWTH- AND DISTRIBUTION-FRIENDLY STRATEGIES