Without dramatic reductions in fossil fuel use, we will see untold destruction – IMF Chief tells member countries

Oct 17, 2021 News

Kaieteur News – With the science clear to all and sundry that climate change is worsening, Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, recently sounded the alarm bells for member states such as Guyana on the need for urgent action to be taken.

IMF Managing Director, Kristalina Georgieva

During her address at a High-Level Dialogue on Energy under the auspices of the United Nations General Assembly, the Managing Director said, “Without dramatic reductions in the use of fossil fuels, we will see untold destruction to our environment and continuing damage to people’s health and livelihoods. And the 1.5°C goal of the Paris Agreement will fall quickly out of reach.”
Equally clear, said Georgieva, is the need to get fossil fuel prices right. In this regard, she said the right prices must fully reflect both supply costs and environmental costs – especially carbon emissions and local air pollution.
Towards this end, she disclosed that IMF staff has proposed an international carbon price floor among large emitters, set according to development levels. The Managing Director is of the firm conviction that it would help to get the right price on fuel and accelerate global climate action. “And now is the time to do it,” the IMF official intimated.
Georgieva was keen to note that putting a robust price on carbon will no doubt provide a critical signal for redirecting private investment and innovation to clean technologies, and incentivise energy efficiency.
She said, “Our research is clear—without it we simply cannot reach the goals of the Paris Agreement. And this price signal needs to get predictably stronger—by 2030, we need an average global price of US$75 per tonne of Carbon Dioxide, way up from today’s US$3 per tonne.”
The IMF Head said a minimum first step on carbon pricing is a regular stock taking of measures by the G20 countries such as China and the USA to assess progress toward mitigation commitments while adding that a higher level of ambition to have is an International Carbon Price Floor Agreement among major emitters.
With a pragmatic design, the IMF Head said this type of arrangement would allow different minimum prices based on different development levels and different national policy approaches. “And the carbon price floor does not have to be a tax. Some countries may prefer other measures that achieve the same outcome, such as emission trading or combinations of feebates/regulations at the sectoral level,” expressed Georgieva.
While the foregoing would be very effective, the IMF official was keen to note that carbon pricing alone is not enough. The IMF head said radically decarbonising economies will require a substantial scaling-up of investment over the next two decades. She stressed that the shift to renewables, new electricity networks, energy efficiency and low carbon mobility offer a huge investment opportunity.
Georgieva said too that international public finance can help reduce both costs and perceived risks. In this regard, she said governments can help provide the infrastructure to support the deployment of low-carbon technologies in response to carbon pricing while adding that financial sector policies can steer private investment toward sustainable projects.
Closing her position on this matter, the IMF Managing Director referenced the words of the great Italian painter and theorist, Leonardo da Vinci. Georgieva said, “I have been impressed with the urgency of doing but knowing is not enough; we must apply…We must do.”
On this note, the IMF Chief stressed that climate change is a global challenge where all leaders know what must be done but are required to act now. She said action is what is expected when heads of government converge at the 2021 United Nations Climate Change Conference between October 31, and November 12, 2021, under the presidency of the United Kingdom to address this frightening global phenomenon.