The International Monetary Fund (IMF) chief, Kristalina Georgieva, has issued a stark warning ahead of the COP28 climate talks, stating that the current approach to managing global warming is “not viable”. In an exclusive interview with Reuters, Georgieva called for an end to “business as usual”, emphasizing the need for drastic reductions in carbon emissions.
A Call for drastic carbon emission reductions: Georgieva highlighted that carbon emissions need to fall between 25% and 50% by 2030. However, current pledges would only lead to a “meagre” 11% cut.
The most important thing in COP28 is to be clear that the way we are going is not viable and define a level of ambition that is likely to keep a chance for the world to live with temperatures not exceeding 1.5 to 2 degrees Celsius.
Overhauling the World’s Financial System: The IMF chief stressed the importance of overhauling the world’s multilateral financial system to ensure more funds are available to countries already experiencing the impacts of extreme weather events. She praised the World Bank’s efforts, which could boost lending by $100 bn over a decade, as “very promising”.
Georgieva also discussed the potential of Special Drawing Rights (SDRs), foreign exchange reserves that are rarely used, to bolster climate finance in developing markets. She revealed that 29 members had agreed to this approach, providing $55 bn for on-lending through the IMF’s Poverty Reduction and Growth Trust, and $41 bn through its Resilience and Sustainability Trust.
Furthermore, Georgieva mentioned that the African Development Bank and the Inter-American Development Bank had proposed using SDRs on-lent to them as hybrid capital. This could then be leveraged to expand their lending capacity.
We have presented this to our board of directors. What we are doing now is to look into the legal and operational modalities. And while it is not yet done, it has some promise.
Need for better carbon pricing: On the topic of carbon pricing, Georgieva stated that more than 70 jurisdictions are now adopting such schemes. She emphasized the need for rapid decarbonisation and revealed that the IMF had recently increased its forecast for the average price needed to achieve this to $85 a ton by 2030, up from a previous forecast of $75 a ton.
As the COP28 climate talks are set to begin in Dubai, the world will be watching closely to see if these ambitious goals can be met.
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