The rise in geopolitical tensions linked to the Russian invasion of Ukraine and the deterioration in the China-U.S. relationship have put global cooperation on climate goals at risk, the IMF warned on October 5, noting that a timely fight against global warming needs immediate, credible, transparent and ambitious action.
The International Monetary Fund (IMF) in a report released ahead of the annual meeting of the IMF and the World Bank here next week said: “It is not too late to avert the most catastrophic climate damages."
"But ensuring that temperature increases remain well below 2°C at a reasonable cost will require immediate, credible, transparent, and ambitious action,” it said.
Because Greenhouse Gases (GHGs) know no borders, the effort to accomplish this goal needs to be global, it asserted.
The rise in geopolitical tensions related to the Russian invasion of Ukraine and the recent deterioration in the China-U.S. relationship have put global cooperation on climate goals at risk, the IMF said.
Russia’s invasion of Ukraine in February 2022 has triggered a new “gold rush” for fossil fuels amid skyrocketing commodity prices.
China in August suspended climate talks with the U.S., as it announced a raft of measures in retaliation for U.S. House Speaker Nancy Pelosi's visit to Taiwan.
China and the United States are the world’s biggest climate polluters, together producing nearly 40% of all fossil-fuel emissions.
The IMF said if different international standards arose, carbon border adjustment taxes could help prevent excess leakage and accelerate the convergence of tax and regulations to the highest global standard.
International coordination in GHG taxation could also allow faster decarbonisation, as low-hanging fruit could be plucked in many countries that have not yet started decarbonisation.
“Productive areas of cooperation might include bridging data gaps, improving reporting standards, and increasing access to climate finance in emerging markets and developing economies,” the IMF said.
Simultaneously in a blog, two senior IMF officials wrote that the transition to a greener future has a price but the longer countries wait to make the shift, the larger the costs.
Benjamin Carton and Jean-Marc Natal from the IMF’s Research Department argued that the world must cut greenhouse gas emissions by at least a quarter before the end of this decade to achieve carbon neutrality by 2050.
Progress needed toward such a major shift will inevitably impose short-term economic costs, though these are dwarfed by the innumerable long-term benefits of slowing climate change, they said.
According to the two officials, for Europe, the United States, and China, the costs will likely be lower, ranging between 0.05 percentage point and 0.20 percentage point on average over eight years.
Not surprisingly, the costs will be highest for fossil-fuel exporters and energy-intensive emerging market economies, which on balance drive the results for the rest of the world.
“That means countries must cooperate more on finance and technology needed to reduce costs — and share more of the required know-how — especially when it comes to low-income countries," they said.
"In all cases, however, policymakers should consider potential long-term output losses from unchecked climate change, which could be orders of magnitude larger according to some estimates,” they added.
