Climate Change

The IMF and Climate Change

Climate change presents a major threat to long-term growth and prosperity, and has a direct impact on the economic wellbeing of all countries. The IMF has an important role to play in helping its members institute fiscal and macroeconomic policies to help address these climate-related challenges. We are mainstreaming climate-related risks and opportunities into our macroeconomic and financial policy advice. Climate considerations are now embedded in our bilateral and multilateral surveillance, capacity development, and lending. We also increasingly collaborate with other organizations on climate issues.

Through our analytical work we have examined policy issues such as an international carbon price floor, the transition to a green economy, border carbon adjustments, scaling up private climate finance in emerging market and developing economies, strengthening climate information architecture, fiscal policies to support adaptation, and green public investment and public financial management.

Highlights

COP29 Event – Unlocking Financing for the Green Transition in Emerging and Developing Economies

Delivering on global climate goals requires a shift to renewable energy and other green technologies. The main challenge for developing economies is securing funding for this transition. With limited fiscal space and low financial development, foreign direct investment (FDI) and official lending are crucial. This high-level panel discussed market reforms and financial sector policies to attract official financing, the impact of climate policies on FDI in low-carbon technologies, and the conditions needed to attract it.

Blogs on Climate Change

Why Women Risk Losing Out in Shift to Green Jobs
October 7, 2024

Closing the gender gap in science, technology, engineering, and math would accelerate the green transition while making it more inclusive

How Europe Can Make Carbon Pricing Policies Less Regressive
September 26, 2024

Easing the burden on lower-income households is not only socially fair, but also economically efficient

Economics Authors Confront Toughest Questions on Data, History, and Theory
August 21, 2024

New books offer fresh perspectives on climate, China, and John Maynard Keynes

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Integrating Economic and Climate Data Will Strengthen Climate Policy
July 9, 2024

Data Gaps Initiative helps policymakers better understand the environmental impact of economic activities and the effectiveness of climate policies

As IMF Turns 80, Mounting Global Challenges Mean World Must Work Together
June 4, 2024

Our biggest challenges—from global warming to demographic and technological transformations—cannot be resolved by countries acting alone.

EUR Energy Security Blog
Europe Can Reap Sizable Energy Security Rewards by Scaling Up Climate Action
May 28, 2024

Meeting the continent’s emission reduction targets could enhance energy security metrics by 8 percent by 2030—and that would be just the start

What's new

Republic of Kazakhstan: Selected Issues
January 31, 2025

2024 Selected Issues

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Peru: Technical Assistance Report-Report of the Diagnostic Mission on Macro-relevant Climate Change Statistics (July 10–14, 2023)
January 31, 2025

Peru has made significant commitments to climate change through the Law N°30754. The law stipulates the development of a national plan to fight climate change and emphasizes upon the production of data and statistics to monitor and guide the implementation of the Nationally Determined Contributions. Peru’s National Statistical Office (INEI) regularly compiles and releases publications related to environment statistics and accounts based on the System of Environmental-Economic Accounting (SEEA) in collaboration with the concerned official agencies. However, there is a need for production of timely, coherent statistics to effectively monitor NDCs and guide the implementation of climate change mitigation and adaptation strategies. In this context, a mission took place from July 10–14, 2023, funded by the Swiss State Secretariat for Economic Affairs (SECO) and hosted by INEI, Peru. During this mission, discussions with authorities focused on key priorities, identifying feasible developments such as SEEA energy and emissions flow accounts, and establishment of domestic carbon footprints.

Read More
Niger: 2024 Article IV Consultation, Sixth Review Under the Extended Credit Facility Arrangement, Requests for a Waiver of Nonobservance of Performance Criterion, Modification of Performance Criteria, Second Review Under the Resilience and Sustainability Facility Arrangement, and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Niger
January 28, 2025

Niger remains trapped in high levels of fragility and conflict, which are exacerbated by climate shocks. This year, flooding combined with heavy rain affected more than 1.5 million people. The socio-political environment remains challenging. Political instability and sanctions following the military takeover in July 2023 have severely and persistently affected economic and social conditions. There is still no timetable for the political transition after the military takeover and insecurity remains acute, particularly outside the capital Niamey. The authorities are finalizing a new development strategy, the Resilience Program for the Safeguarding of the Homeland (PRSP).

Read More
Democratic Republic of Congo: Requests for an Arrangement Under the Extended Credit Facility and an Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Congo
January 27, 2025

The authorities have requested a new ECF-supported program, to deepen reforms undertaken under the previous program (completed in July 2024). They have also requested a program under the Resilience and Sustainability Facility (RSF).

Read More
The Economic Costs of Temperature Uncertainty
January 24, 2025

Beyond its environmental damage, climate change is predicted to produce significant economic costs. Combining novel high-frequency geospatial temperature data from satellites with measures of economic activity for the universe of US listed firms, this article examines a potentially important channel through which global warming can lead to economic costs: temperature uncertainty. The results show that temperature uncertainty—by increasing power outages, reducing labor productivity, and increasing the degree of exposure of firms to environmental and non-political risks, as well as economic uncertainty at the firm-level—persistently reduce firms’ investment and sales. This effect varies across firms, with those characterized by tighter financial constraints being disproportionally more affected.

Read More
Carbon Pricing at Export Markets: Trade-Related Implications in Trinidad and Tobago
January 24, 2025

This paper examines the potential impact of border carbon adjustments on Trinidad and Tobago’s exports. Despite its marginal contribution to global greenhouse gas emissions, the country’s high carbon intensity exposes the economy to global low-carbon transition risks. The paper aims to raise awareness and encourage discussions on critical actions needed to maintain export competitiveness, enhance diversification, support balance of payments stability, and finance a green transition. The analysis recommends building on existing policies to integrate transition risks into development strategies, promote carbon intensity reduction, accumulate relevant data, and explore innovative emissions reduction approaches, including carbon pricing.

Read More

Republic of Kazakhstan: Selected Issues
January 31, 2025

2024 Selected Issues

Read More
Peru: Technical Assistance Report-Report of the Diagnostic Mission on Macro-relevant Climate Change Statistics (July 10–14, 2023)
January 31, 2025

Peru has made significant commitments to climate change through the Law N°30754. The law stipulates the development of a national plan to fight climate change and emphasizes upon the production of data and statistics to monitor and guide the implementation of the Nationally Determined Contributions. Peru’s National Statistical Office (INEI) regularly compiles and releases publications related to environment statistics and accounts based on the System of Environmental-Economic Accounting (SEEA) in collaboration with the concerned official agencies. However, there is a need for production of timely, coherent statistics to effectively monitor NDCs and guide the implementation of climate change mitigation and adaptation strategies. In this context, a mission took place from July 10–14, 2023, funded by the Swiss State Secretariat for Economic Affairs (SECO) and hosted by INEI, Peru. During this mission, discussions with authorities focused on key priorities, identifying feasible developments such as SEEA energy and emissions flow accounts, and establishment of domestic carbon footprints.

Read More
Niger: 2024 Article IV Consultation, Sixth Review Under the Extended Credit Facility Arrangement, Requests for a Waiver of Nonobservance of Performance Criterion, Modification of Performance Criteria, Second Review Under the Resilience and Sustainability Facility Arrangement, and Financing Assurances Review-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Niger
January 28, 2025

Niger remains trapped in high levels of fragility and conflict, which are exacerbated by climate shocks. This year, flooding combined with heavy rain affected more than 1.5 million people. The socio-political environment remains challenging. Political instability and sanctions following the military takeover in July 2023 have severely and persistently affected economic and social conditions. There is still no timetable for the political transition after the military takeover and insecurity remains acute, particularly outside the capital Niamey. The authorities are finalizing a new development strategy, the Resilience Program for the Safeguarding of the Homeland (PRSP).

Read More
Democratic Republic of Congo: Requests for an Arrangement Under the Extended Credit Facility and an Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Congo
January 27, 2025

The authorities have requested a new ECF-supported program, to deepen reforms undertaken under the previous program (completed in July 2024). They have also requested a program under the Resilience and Sustainability Facility (RSF).

Read More
The Economic Costs of Temperature Uncertainty
January 24, 2025

Beyond its environmental damage, climate change is predicted to produce significant economic costs. Combining novel high-frequency geospatial temperature data from satellites with measures of economic activity for the universe of US listed firms, this article examines a potentially important channel through which global warming can lead to economic costs: temperature uncertainty. The results show that temperature uncertainty—by increasing power outages, reducing labor productivity, and increasing the degree of exposure of firms to environmental and non-political risks, as well as economic uncertainty at the firm-level—persistently reduce firms’ investment and sales. This effect varies across firms, with those characterized by tighter financial constraints being disproportionally more affected.

Read More
Carbon Pricing at Export Markets: Trade-Related Implications in Trinidad and Tobago
January 24, 2025

This paper examines the potential impact of border carbon adjustments on Trinidad and Tobago’s exports. Despite its marginal contribution to global greenhouse gas emissions, the country’s high carbon intensity exposes the economy to global low-carbon transition risks. The paper aims to raise awareness and encourage discussions on critical actions needed to maintain export competitiveness, enhance diversification, support balance of payments stability, and finance a green transition. The analysis recommends building on existing policies to integrate transition risks into development strategies, promote carbon intensity reduction, accumulate relevant data, and explore innovative emissions reduction approaches, including carbon pricing.

Read More

What is the IMF doing to help tackle climate change?

  

Surveillance

Article IV consultations will cover macro-critical issues triggered by climate change and/or the need to contain it. These include countries’ contributions to the global mitigation effort, especially by large emitters; domestic policy challenges that arise in the context of achieving countries’ nationally determined contributions under the Paris Agreement; macroeconomic policies to adapt to and build resilience to climate change; and challenges presented by a global transition to low-carbon energy.

Financial Stability Assessment Program (FSAP)

FSAPs are paying increasing attention to climate risk analysis for the financial system. Recent FSAPs have looked at the implications of transition risk in Norway, South Africa, Chile, Colombia and the UK, and physical risk in the Philippines. Where relevant, climate risk considerations are also being embedded in FSAP reviews of financial supervision and regulation.

  

Capacity Development

The IMF already supports member countries through capacity development in countries vulnerable to climate change and natural disasters.

  

Policy Advice

Adaptation

Guidance on building financial and institutional resilience to natural disasters and extreme weather events, and infrastructure investments to cope with rising sea levels and other warming-related phenomena.

Mitigation

Advice on measures to contain and reduce emissions through policies—such as increasing carbon taxes, reducing fuel subsidies and improving regulation—and providing tools to help countries achieve their Nationally Determined Contributions.

Transition to a low-carbon economy

Advice on measures to contain and reduce emissions through policies—such as increasing carbon taxes, reducing fuel subsidies and improving regulation—and providing tools to help countries achieve their Nationally Determined Contributions.

Data

The IMF's Climate Change Indicators Dashboard provides a platform for disseminating climate change data for macroeconomic and financial stability analysis. The dashboard helps users assess the linkage between economic and financial activities and government policies on the one hand, and climate change (and environment more broadly) on the other—either on a country-level or cross-country basis—by analyzing a standardized set of comparable data.

  

Lending

The IMF’s Resilience and Sustainability Trust (RST) helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability. It complements the IMF’s existing lending toolkit by providing longer-term, affordable financing to address longer-term challenges, including climate change and pandemic preparedness.

Videos

COP29: Bridging the Adaptation Financing Gap: Challenges and Potential Solutions
November 15, 2024

Panelists discuss how to enhance partnerships and cooperation to scale up adaptation financing for EMDEs and explore the role various stakeholders play in n attracting private capital for adaptation investments.

COP29: The Pioneering Role of IMF’s Resilience and Sustainability Trust (RST) in Climate Action
November 15, 2024

anelists discuss how specific countries benefited from the Resilience and Sustainability Trust (RST) and the lessons learned in the process.

COP29 Event – This Critical Decade: A Wake-up Call for Global Climate Action
November 12, 2024

This session assesses the question: Is the world on track to net zero? Building on updated IMF research, it will explore how to equitably close the global gap in climate ambition to achieve the Paris Agreement goals.

COP29 Event – Unlocking Financing for the Green Transition in Emerging and Developing Economies
November 12, 2024

Delivering on global climate goals requires a shift to renewable energy and other green technologies. The main challenge for developing economies is securing funding for this transition. With limited fiscal space and low financial development, foreign direct investment (FDI) and official lending are crucial.

COP29: The World is Sitting on a Razor's Edge
November 11, 2024

The world is sitting on a razor's edge, and the deciding factor between future prosperity and potential runaway climate disaster is a single number-- 1.5.

Unlocking Financing for the Green Transition in Emerging and Developing Economies
November 11, 2024

To hit net zero by 2050, emerging and developing countries will need substantial amounts of additional renewable energy investment--because domestic financial resources are limited, foreign direct investment, or FDI, is key.