STATEMENT: Fiscal Policy for the Climate at Heart of Flagship IMF Publication
WASHINGTON (October 10, 2019) — The International Monetary Fund released today the September 2019 issue of the Fiscal Monitor.“How to Mitigate Climate Change,” that presents arguments for fiscal policy, especially carbon pricing, that could save lives through reduction of destructive climate imapcts such as sea level rise, coastal flooding, extreme weather and other disruptions.
Statement from Leonardo Martinez-Diaz, Director, Sustainable Finance Center at World Resources Institute:
“We congratulate the IMF for putting climate change mitigation at the heart of one of its flagship publications — the Fiscal Monitor. In the Monitor’s October 2019 issue, the IMF rightly argues that fiscal policies can be key tools for mitigating climate change, and that pricing carbon ‘is the most powerful and efficient way to do so.’
The IMF finds significant benefits from pricing carbon, including potentially 725,000 fewer premature deaths from air pollution in 2030 for G20 countries, as well as stronger profits and more jobs for businesses that deploy new technologies. Yet, the global average carbon price today is $2 a ton, a very long way from where we need to be to keep warming under 2°C. Kudos to the IMF for identifying some of the political economy and distributional challenges that have limited carbon pricing, and for proposing steps that policy-makers can adopt to manage these impacts and to pave the road to a just transition.
The newly-formed Coalition of Finance Ministers for Climate Action should take stock of the Monitor’s very relevant findings, and the IMF should expand resources available to support governments on how to design and implement carbon pricing as part of a broader package of instruments, including the potential to increase the use and harmonization of price floors across countries.”