IMF, Vulnerable Countries Call for Green Recovery, Climate Finance
One of the world’s most influential multilateral finance agencies jumped onboard the green recovery late last month, when the head of the International Monetary Fund (IMF) urged governments to invest the US$1 trillion in emergency loans the agency plans to issue in projects that also combat the climate crisis, while scrapping fossil fuel subsidies and taxing carbon.
“We are about to deploy enormous, gigantic fiscal stimulus and we can do it in a way that we tackle both crises at the same time,” IMF Chair and Managing Director Kristalina Georgieva told the annual Petersberg Climate Dialogue in prepared remarks last Wednesday. “If our world is to come out of this [coronavirus] crisis more resilient, we must do everything in our power to make it a green recovery.”
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After more than 100 countries applied to the IMF for emergency relief from the economic impact of the COVID-19 pandemic, Climate Home News says the agency is advising that “money to rebuild after the public health crisis should be directed into green investments and not subsidize fossil fuels”.
Former Bank of Canada and Bank of England governor Mark Carney, now the UN special envoy on climate finance, echoed Georgieva’s call for governments to “use this opportunity to implement a new financial framework that is centred around the transition” to a clean economy. “To build back better, we need to learn from our current predicament,” he said. “We cannot wish away systemic risk.”
Climate Home cites Nigeria as a country that received $3.4 billion from the IMF to mitigate the economic impact of the oil price crash, and “ditched an expensive petrol subsidy” at the same time. The UK-based climate publication says it has queried the IMF on whether its recovery fund will come with binding green conditions.
The days before and after the IMF statement saw a succession of international authorities call for increased financial support to developing countries facing the overlapping threats of the pandemic and climate change. In her own address to the Petersberg Dialogue, German Chancellor Angela Merkel urged wealthy countries to boost their commitments on climate finance, not scale them back.
“Merkel admitted the dual needs for COVID-19 recovery funds and climate finance would lead to ‘a very difficult debate’ over how governments distribute their money,” Climate Home writes. “She urged ministers not to focus solely on their national situation, ‘but to fulfill our international commitments so that we have a global success in climate protection’.”
Speaking for a country that doubled its international climate finance commitment for this year to €4 billion, Merkel added that international cooperation is “crucial” in responding to global challenges and urged every country to “turn our backs on fossil fuels,” Climate Home says.
In a statement to Climate Home, a spokesperson for the African Group negotiating block expressed concern that the pandemic would draw rich countries’ focus away from their 2009 promise to mobilize US$100 billion per year by 2020 to help vulnerable countries deal with climate impacts. While those countries will “inevitably have other national priorities related to economic recovery,” the statement said the African Group would urge them “to agree on a way forward to close the climate finance gap by the end of this year.”
In a pre-recorded video, Rwandan Environment Minister Jeanne d’Arc Mujawamariya said the pandemic has “further exposed the unacceptable levels of inequality in our societies, and we must work even harder to level the playing field.” That means the recovery “must start by investing in people, especially the most vulnerable.”
Jamaican Finance Minister Nigel Clarke warned that his country now faces “triple jeopardy” in the form of the pandemic, climate impacts, and high levels of debt. “At the time of the greatest economic crisis since the Great Depression, we are going to face the 2020 hurricane season without the deeper disaster risk financial protection we sought, at the very time when we actually need it,” he said. “To have a pandemic risk and a natural disaster risk is an unfortunate position to be in.”
In a post for Newsroom, Fenton Lutunatabua of 350.org and Willy Missack of the Vanuatu Climate Action Network said Pacific Island nations are already right up against that threat.
“The ongoing cycle of devastation and trauma inflicted upon Vanuatu, Fiji, and the rest of the Pacific Islands will not ease anytime soon as the climate crisis intensifies and the threat of COVID-19 escalates,” they wrote two weeks ago. And that reality “raises new questions and challenges: What does ‘shelter in place’ mean during a climate catastrophe when homes are destroyed and communication lines are gutted? What does assistance really look like in a time of social distancing, when impacted communities are so geographically isolated, with limited possibilities of aid reaching them on time?”
Against that reality, Lutunatabua and Missack said, “it is critical to continue to drive home the message that the climate crisis is caused by countries that rely heavily on fossil fuels. Fossil fuel companies are responsible for emitting more than one-third of all greenhouse gas emissions, linked to half the rise in global temperature and close to a third of the sea level rise between 1880 and 2010.”
Which is why “the international climate agenda cannot wait until after this pandemic to address the urgency of climate change,” and the promise of $100 billion per year through 2025 can’t be put on hold, they added. At $71 billion, rich countries’ combined commitment to date “is outranked by the profits raked in from the fossil fuel industries in the same countries,” underscoring that “rebuilding their own economies sustainably must be accompanied with delivering on climate finance to others.”