This week, the International Monetary Fund released the World Economic Outlook October 2020: A Long and Difficult Ascent. The document has the recovery from the Covid-19 pandemic as a central focus, but also addresses the need for multilateral action on climate change mitigation.
The Report’s Chapter 3 ‘Mitigating Climate Change‘ is clear in its assessment of emissions reduction efforts to date – which it describes as “grossly insufficient” – and the potential consequences of further inaction: “…global temperatures could increase by an additional 2–5°C by the end of this century, reaching levels not seen in millions of years, imposing growing physical and economic damage, and increasing the risk of catastrophic outcomes across the planet.”
And the Report is refreshingly emphatic about what needs to be done. “Sizable and rapid reductions in carbon emissions are needed for this goal to be met; specifically, net carbon emissions need to decline to zero by mid-century… To implement such deep reductions in emissions at the global level, each country/region needs to reduce its own emissions by 80 percent, and there is little room for differentiation of mitigation efforts across countries.”
The IMF’s proposal is for a “broadly adopted, growth-friendly mitigation package [that] could raise global activity through investment in green infrastructure over the near term, with modest output costs over the medium term as economies transition away from fossil fuels toward cleaner technologies”. The Report acknowledges the issue of the “costs over the medium term”, but argues that these would be offset by a “significant boost [to] incomes in the second half of the century by avoiding damages and catastrophic risks from climate change”.
In essence, the blueprint is for a mix of carbon pricing, green investment incentives and subsidies, and consumer compensation packages. The approach is supported by the IMF’s economic modelling which indicates that, by adopting the blueprint’s approach, “getting to net zero emissions by 2050 is still within reach, though the window to keep temperature increases to safe levels is closing rapidly.”
Links to a sample of media coverage follow, and more analysis from h&t to come.
IMFBlog | ‘Finding the right policy mix to safeguard our climate’
7 October 2020
Time: | ‘Activists can’t agree on how to fight climate change. The IMF says just do something.’
10 October 2020
The Guardian: IMF warns emissions policies ‘grossly insufficient’ and urges green recovery’
13 October 2020
Bloomberg: ‘The IMF has a blueprint for helping the climate without hurting economic growth’
16 October 2020