By Jeff Kearns
The IMF is pushing harder to address climate risk to the global economy by assisting with research efforts and offering policy advice. Georgieva’s comments echo the fund’s call in October that climate change demands government action, and that countries must immediately adopt carbon pricing to keep global warming under 2 degrees Celsius.
Georgieva noted that Chile, Colombia, and South Africa recently implemented carbon taxes, and China is about to launch an emissions trading system.
“These initiatives will encourage households and firms to use less energy and shift to cleaner fuels,” she said in an address at the Vatican City Wednesday.
Many governments are reluctant when it comes to environmental taxes, fearing backlash from voters, such as French President Emmanuel Macron experienced with the Yellow Vests.
However, a study by OECD economists published this week suggested that while carbon taxes can be disruptive, the net effect on employment isn’t necessarily negative.
Georgieva said while greater investment in coastal protection and more resilient infrastructure and agriculture is welcome, much more is needed to directly cut emissions.
“The good news is that green bonds, impact investing, and many other forms of sustainable finance are growing fast,” she said. “But this is not nearly enough. The private sector can do more, and I believe it will in the days ahead. Why? Because the price of inaction is too high.”