IMF leader says pandemic stimulus must focus on battling climate crisis

Massive fiscal stimulus measures adopted by governments around the world to combat the coronavirus pandemic must be tailored to tackle climate change at the same time, International Monetary Fund Managing Director Kristalina Georgieva said on Wednesday.

Speaking at a virtual summit known as the Petersberg Climate Dialogue, Georgieva joined German Chancellor Angela Merkel and U.N. Secretary Antonio Guterres in calling for focused efforts to promote a "green recovery" from the pandemic crisis.

"Taking measures now to fight the climate crisis is not just a 'nice-to-have'. It is a 'must-have' if we are to leave a better world for our children,' the IMF leader told the summit.

"What we do now will not only reshape our economies and societies; it will also reshape humanity's future on this planet," she said. "A 'green recovery' is our bridge to a more resilient future."

Georgieva said governments had already adopted extraordinary measures to fight the pandemic, which has now infected over 3.11 million people and killed 216,667, but further efforts would be needed to respond to the worst economic downturn since the Great Depression of the 1930s.

To ensure that fiscal stimulus addressed climate change risks, she said governments should make financial lifelines for carbon-intensive companies contingent on commitments to reduce carbon emissions. This was done during the global financial crisis, when some automakers committed to higher fuel efficiency standards.

Georgieva urged governments to focus fiscal spending to promote green technologies, clean transport, sustainable agriculture and climate resilience.

"With oil prices at record-low levels, now is the time to phase out harmful subsidies," Georgieva said, citing the IMF's estimate that a low-carbon transition would require $2.3 trillion in investment every year for a decade.

She also urged governments to promote green finance by focusing on green bonds and other forms of sustainable finance, and mandating financial firms to better disclose climate risks in their lending and investment portfolios.

Raising the price of carbon would help generate revenues to increase public revenues in the future, she said.

"A substantially higher carbon price is needed to encourage climate-smart investment and to accelerate the shift to cleaner fuels and more energy efficiency," Georgieva said.

The IMF estimates that the global carbon price should rise to $75 per ton from $2 per ton currently to keep global warming under 2 degrees Celsius.