IMF: $2 trillion needed for climate investments by 2030

The International Monetary Fund (IMF) noted that in emerging markets and developing economies, the private sector will need to play a key role in financing investments to mitigate the effects of climate change, given limited fiscal space in difficult market conditions. .

The IMF published the analytical section of its Global Financial Stability Report titled “Financial Policies to Unlock Private Climate Finance in Emerging Markets and Developing Economies.”

The report noted that to achieve net-zero emissions by 2050, global climate investments will need to reach approximately $5 trillion annually by 2030, and that the investment needed to mitigate the effects of climate change in emerging markets and developing economies is projected to development will increase. will increase to 2 trillion dollars in the same period.

THE INCREASE IN PUBLIC INVESTMENT IS EXPECTED TO BE LIMITED

The report states that in emerging markets and developing economies, given limited fiscal space in difficult market conditions, the private sector will have to play a key role in financing investments to mitigate the effects of climate change, as expected .

The report states that it is estimated that the private sector will need to provide approximately 80 percent of climate investments in emerging markets and developing economies by 2030.

The report emphasized that a broad policy mix is ​​needed to create an attractive environment for private capital in emerging markets and developing economies, and noted that carbon pricing can be extremely effective in diverting capital flows toward low investments. carbon, but policymakers should complement it with additional policies.

CARBON PRICE POLICY

On the other hand, the IMF published the first part of its Fiscal Monitoring Report entitled “Climate Turning Point: Fiscal Policies in a Warming World.”

The report emphasizes that relying primarily on spending-based measures to achieve net-zero emissions targets will become increasingly costly, and warns that this will increase the ratio of public debt to gross domestic product (GDP) to 45-50 percent. cent for a high level country. issuing country and can cause the debt to enter an unsustainable path.

The report noted that limited climate action would expose the world to the negative consequences of global warming.

The report emphasized that a carbon price could be implemented, which is cost-effective in reducing emissions and will also generate revenue to alleviate the debt burden, and stated that the carbon price should be an integral part of the policy mix. (AA)