(MENAFN- Trend News Agency) WASHINGTON, U.S., April 27. Major emitters needa complementary agreement on carbon pricing, a source at IMF toldTrend on thesidelines of the Spring Meetings held from April 15 to April 20 inWashington D.C.
“Wherever climate policy intersects with macroeconomic policy,the IMF is here to help. We help our members address thosechallenges of climate change for which fiscal, financial, andmacroeconomic policies are an important component of theappropriate policy response, including how best to capture theopportunities of low-carbon, resilient growth,” said thesource.
The Fund is supporting macro-resilience, delivering policy adviceand capacity development support to help identify and implementstrong climate policies, and providing long-term lending to addresslong term challenges in the most vulnerable countries.
“Through our new lending instrument, the Resilience andSustainability Trust (RST), the IMF provides long-term financing tolow and vulnerable middle-income countries to address climatechallenges. In RSF (Resilience and Sustainability Facility)recipient countries, the Fund is also convening multilateraldevelopment banks, international financial institutions, bilateraldonors, and private investors to help these countries exploreoptions for crowding in private climate finance,” noted thesource.
For its wider membership, IMF adds a climate lens to its economicsurveillance, capacity development and data: a transmission line toshare policy analysis and advice wherever needed. Macroeconomic andfinancial sector policies are a critical component of the greentransition -- including the opportunities of low-carbon, resilientgrowth, and jobs.
“This underscores the importance of international cooperation. Suchcooperation is needed at two levels – first among IFIs(International Financial Institution), regulatory bodies andstandard setters to devise policies, regulations, disclosures, andtaxonomies that are interoperable, and second among MDBs(Multilateral development banks), donors and private sector to setrisk sharing mechanisms that would facilitate scaling up of climatefinance. If we fail to stabilize our climate, all countries willsuffer, so each country must contribute all it can. The more wedelay, the higher the costs and the worse the outcome for the nextgenerations,” said the source.
IMF believes that carbon pricing should be an integral part of awell-designed policy mix, complemented with public investmentsupport and sectoral policies, such as feebates, regulations ortradable performance standards.
“Fiscal incentives are also needed for broader emissions sourcesincluding methane, forestry, and agriculture.
Momentum for carbon pricing is increasing globally, though thereare large cross-country differences in coverage rates and prices pricing is operating in nearly 50 countries. We see someprogress in carbon pricing generally. Globally, there's coveragethat currently stands at about 25% of emissions, up from about 10%about a decade ago. But we would like to see that significantlyaccelerated and that would require a complementary agreementbetween the major emitters,” the source explained.
In this regard, IMF has recommended for a couple of years nowthat countries agree on an international carbon price floor, thatwould be complementary to the Paris Agreement, specifically, aninternational carbon price floor (ICPF) among major emitters.
“Even if a smaller group of just six major emitters wereincluded (Canada, China, European Union, India, United Kingdom,United States) that would close much of the implementation gap. Forcountries where pricing is unlikely, alternative policies thatachieve equivalent emissions cuts could be accommodated. This wouldalso send a very powerful signal to other countries to also adoptsimilar instruments.
Predicting when an international policy coordination mechanismlike a price floor arrangement might emerge, who will participatein it, and what form it will take is speculative,” the sourceconcluded.
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