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Political Science > Environmental Policy

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Cover IMF Staff Country Reports
Vanuatu: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper discusses sea-level rise impacts and adaptation in Vanuatu. Sea-level will continue to increase during this century directly caused by global warming and melting of terrestrial ice. While Vanuatu cannot control global sea-level, it can manage how it affects the country by adapting. Staff analysis estimates the cost of sea-level rise under alternative adaptation strategies: (1) no-adaptation; (2) protection; and (3) planned retreat. Such analysis can help the government to identify trade-offs between efficiency and equity, and choose according to the preferences of the population, consistent with public finance objectives. Preliminary results show that complete protection of coastal areas in Vanuatu is costly while planned retreat from the coastline is the least-cost adaptation response. However, given the mountainous nature of the islands, only small areas of the main population centers of Port Vila and Luganville are at risk of being permanently inundated even with very high sea level rise.
Keywords:
summary statistics; sea-level rise; surface temperature; adaptation in Vanuatu; Vanuatu with CIAM; Climate change; Environmental policy; Natural disasters; Global
Cover Departmental Papers
The Energy Security Gains from Strengthening Europe’s Climate Action
Geoffroy Dolphin, Romain A Duval, Hugo Rojas-Romagosa, and Galen Sher
Following the 2022 energy crisis, this paper investigates whether Europe’s ongoing efforts to cut greenhouse gas emissions can also enhance its energy security. The global computational general equilibrium model analysis finds that individual policy tools, including carbon pricing, energy efficiency standards, and accelerated permitting procedures for renewables, tend to improve energy security. Compared to carbon pricing, sector-specific regulations deliver larger energy security gains and spread those more evenly across countries, benefitting also some fossil-fuel-intensive economies in Central and Eastern Europe. This finding strengthens the case for a broad climate policy package, which can both achieve Europe’s emissions-reduction goals and deliver sizeable energy security co-benefits. An illustrative package, which would cut emissions in the EU, UK, and EFTA by 55 percent with respect to 1990 levels by 2030, is estimated to improve the two energy security metrics used in this paper by close to 8 percent already by 2030. Beyond the policies analyzed in the model, the paper also discusses the technology, market design, and supply chain reforms that Europe needs for an energy-secure green transition.
Keywords:
Climate change; energy security; Europe; carbon tax; economic growth; emissions trading; greenhouse gas emissions; energy prices; diversification; technological change; climate policy package; Europe's Climate action; climate policy instrument; IMF Library; Imports; Climate policy; Non-renewable resources; Central and Eastern Europe; Global
Cover Departmental Papers
Unlocking Climate Finance in Asia-Pacific: Transitioning to a Sustainable Future
Cheng Hoon Lim, Ritu Basu, Yan Carriere-Swallow, Kenichiro Kashiwase, Mahmut Kutlukaya, Mike Li, Ehraz Refayet, Dulani Seneviratne, Mouhamadou Sy, and Ruihua Yang
The transition to a sustainable future in the Asia-Pacific region has global economic significance. Despite driving global growth in recent years, the region's heavy coal reliance led to significant greenhouse gas emissions. Meeting climate mitigation and adaptation needs in emerging and developing Asia requires investment of at least $1.1 trillion annually. Actual investment falls short by about $800 billion. Asia-Pacific’s environmental performance has also hampered its ability to tap into private flows from the fast-growing ESG asset class, keeping the cost of issuing sustainable debt instruments relatively high compared to other regions. This paper provides an overview of the climate finance ecosystem in countries in the Asia-Pacific region and presents strategies to mobilize climate finance for the region’s transition to a sustainable future. The paper identifies challenges, including gaps in the climate information architecture, policy conflicts, global complexities, and emphasizes the need for coordinated action involving governments, central banks, financial supervisors, the IMF, and other multilateral institutions. In particular, • Governments need to establish a well-defined climate strategy with strong institutional oversight and coordination to strengthen the framework on data, taxonomies, and disclosures. Fossil fuel subsidies should be phased out and carbon pricing schemes expanded to create fiscal space for sustainable investments. Strengthening macroeconomic management is essential to attract private capital. • Financial supervisors and central banks should coordinate across jurisdictions to promote global, interoperable disclosure standards, enhance climate risk analysis and reporting, and incorporate climate-related financial risks into prudential frameworks. Developing climate labels for sustainable investment funds and shifting the focus of ESG scores to better capture sustainability and climate impact would foster trust in the evaluations. The IMF can drive climate action by integrating discussions in surveillance activities and strengthening data and statistics—including through capacity building and peer learning—to develop common standards around climate risk measurement and analysis. The Resilience and Sustainability Trust could contribute to reducing financing gaps through its catalytic and reform supporting functions, while multilateral development banks could scale up grant financing and concessional lending, and where appropriate adopt risk-mitigating mechanisms to expand lending capacity. Cooperation among multilateral institutions is essential to align efforts and resources to achieve a balanced allocation between mitigation and adaptation lending.
Keywords:
Climate finance; green bonds; data; information architecture; policy; IMF Climate; IMF Library; unlocking climate finance; Climate datum; Asia-Pacific country; Climate change; Greenhouse gas emissions; Climate policy; Asia and Pacific; Global; Pacific Islands
Cover Departmental Papers
Asia’s Perspectives on Climate Change: Policies, Perceptions, and Gaps
Ms. Era Dabla-Norris, Mr. Thomas Helbling, Kenichiro Kashiwase, Giacomo Magistretti, and Mouhamadou Sy
Asia and the Pacific’s green transition will have far-reaching implications for the global economy. Over the past decades, the region has become the engine of global economic growth. With relatively heavy reliance on coal and high energy intensity, the region has recently become the largest contributor to growth in global GHG emissions, accounting for nearly 40 percent of the total emissions in 2020. Achieving net zero by 2050 requires an energy transition at an unprecedented scale and speed, even as the region must ensure energy security and affordability. The region must also address its vulnerability to climate change as it comprises many countries highly exposed to climate hazards increasing in severity and frequency with global warming. If managed well, the green transformation in Asia and the Pacific will create opportunities for economies not only in the region, but also around the world for inclusive and sustainable growth. The global economy is still far from achieving net zero by 2050, and the Asia and the Pacific region must play its part to deliver on mitigation and adaptation goals. Understanding Asia’s perspectives on the constraints and issues with climate ambitions, climate policy actions, and constraints is central for devising climate strategies to meet climate goals. To this end, this chapter draws on novel surveys of country authorities and public in the region to distill climate ambitions and challenges faced and identify sources of major gaps in achieving mitigation and adaptation goals. Measures to help close the gaps are drawn from policy discussions with country authorities in bilateral surveillance and related studies.
Keywords:
Asia; Climate Change; Mitigation; Adaptation; Nationally Determined Contributions (NDCs); Industrial Policy; Energy Transition; Renewables; Green Technology; Climate Finance; Critical Minerals; IMF country authority climate survey; IMF country staff report; mitigation policy; Policy instrument; IMF Library; Greenhouse gas emissions; Climate policy; Asia and Pacific; Global; Middle East
Cover Policy Papers
Resilience and Sustainability Facility—Operational Guidance Note
International Monetary Fund. Strategy, Policy, & Review Department, International Monetary Fund. Finance Dept., and International Monetary Fund. Legal Dept.
This note provides general guidance on the operationalization of the Resilience and Sustainability Facility (RSF) for arrangement requests and reviews. The RSF complements the existing IMF lending toolkit by providing longer-term, affordable financing to members to help them address longer-term structural challenges from climate change and pandemic preparedness. The note has benefited from experience gained during early operationalization of the RSF.
Keywords:
Climate change; Long-term challenges; pandemic preparedness; Prospective risks to Balance of Payment stability; Conditionality; Collaboration with other international organizations; RSF arrangement; RSF financing presentation; RSF design; RSF engagement timeline; RSF framework; Climate policy; Climate finance; Debt sustainability; Global
Cover Policy Papers
Review of the Climate Macroeconomic Assessment Program Pilots
International Monetary Fund. Fiscal Affairs Dept. and International Monetary Fund. Strategy, Policy, & Review Department
This paper reviews the two Climate Macroeconomic Assessment Program (CMAP) pilots and proposes a way forward. It builds on the experience of the previous six Climate Change Policy Assessment (CCPA) pilots, and the recent rollout of the World Bank’s Country Climate and Development Report (CCDR). It also accounts for early experience with countries requesting support under the Fund’s Resilience and Sustainability Trust (RST). Based on the lessons from pilots and recent developments, staff proposes to streamline the CMAP to focus on the Fund’s comparative advantages in the areas of mitigation, PFM and macro-fiscal impact of climate change policies, provide a streamlined CMAP in exceptional circumstances, and expand more targeted CD in particular in support of RSF countries. This focused and tailored approach would benefit members as it is more agile, allows the Fund to serve more members within the same resource envelope and enhance synergies with other Fund products and the World Bank’s CCDR.
Keywords:
climate diagnostic assessment; resilience to climate change; climate risks; national climate strategies; mitigation; adaptation; PFM; disaster risk financing; macro-fiscal impact of climate change; CMAP; CCPA; CMAP pilot; climate policy ASSESSMENT tool; CMAP template; pilot country authorities; program pilot; Climate change; Climate policy; Climate finance; Global
Cover Policy Papers
The Managing Director’s Update on the FY 2023 Work Program of the Executive Board
International Monetary Fund. Policy Development and Review Dept.
The membership is facing significant challenges, including high inflation, rising food and energy insecurity, elevated debt levels, tightening financial conditions, volatile capital flows and exchange rates, and intensifying geopolitical fragmentation. To this end, the Executive Board Work Program focuses on policy responses and bilateral and multilateral advice to stabilize the global economy and build resilience, critical financial assistance to those countries most affected by these shocks, and capacity development support to help implement policy advice. More than ever, the Fund has a key role to play in promoting international cooperation and collaborative solutions to shared challenges, including those related to climate, digitalization, and inclusion.
Keywords:
surveillance policy agenda; fund policy; surveillance agenda; executive board executive board meeting; resilience agenda; IMF lending toolkit; Digitalization; Development strategy; Climate policy; Global
Cover Policy Papers
Statement by the Managing Director on the Independent Evaluation Office Report on IMF Engagement with Small Developing States: Executive Board Meeting May 6, 2022
International Monetary Fund
The report and its recommendations should also be careful to not impinge upon areas that are still unfolding, such as the RST, crisis response, and CD provision, to avoid unnecessary duplication of efforts and ensure that a coherent and evenhanded framework is in place. I offer qualified and/or partial support to the recommendations, as discussed below, to serve better our SDS members.
Keywords:
SDS challenge; SDS MC turnover; SDS issue; SDS heterogeneity; SDS use; SDS engagement; Climate change; Natural disasters; Climate policy; Financial Sector Assessment Program; Global
Cover Departmental Papers
Economic and Environmental Benefits from International Cooperation on Climate Policies
Jean Chateau, Ms. Florence Jaumotte, and Gregor Schwerhoff
This paper discusses and analyzes various international mechanisms to scale up global action on climate mitigation and address the policy gap in this area. Despite the new commitments made at COP 26, there is still an ambition and a policy gap at the global level to keep temperature increases below the 2°C agreed in Paris. Avoiding the worst outcomes of climate change requires an urgent scaling up of climate policies. Recent policy proposals include the idea of common minimum carbon prices, which underlie the IMF’s international carbon price proposal (Parry, Black, and Roaf 2021) and the climate club proposal of the German government. While global carbon prices are not a new idea, the new elements are the use of carbon price floors—which allow countries to do more if they wish—and the differentiation of carbon price floors by level of development. In the absence of international coordination, countries with ambitious climate policies are considering introducing a border carbon adjustment mechanism to prevent domestic producers from being at a competitive disadvantage due to more ambitious domestic climate policies. An interesting question from the global perspective is whether border carbon adjustment would deliver substantial additional emissions reductions or incentivize other countries to join a carbon price floor agreement.
Keywords:
climate policy; border carbon adjustment; international coordination; global minimum carbon prices; ICPF scenario; carbon price floor agreement; B. policy scenario overview; baseline emission projection; GDP cost; Greenhouse gas emissions; Climate policy; Climate change; Global; Africa; East Asia; Caribbean
Cover Policy Papers
Statement by the Managing Director on the Work Program of the Executive Board - Executive Board Meeting - December 3, 2021
International Monetary Fund
This Work Program puts forward an IMF Board agenda focused on activities of critical importance to our members. In line with the strategic directions laid out in the Fall 2021 Global Policy Agenda and the International Monetary and Financial Committee (IMFC) Communiqué, the Work Program supports three policy priorities: (i) vaccinate the world to combat the pandemic everywhere; (ii) calibrate bilateral and multilateral policies to support the recovery and reduce scarring and divergences; and (iii) accelerate the transformation of the global economy to make it greener, more digital, and inclusive. To deliver on this agenda, it is also important to ensure that the Fund remains appropriately equipped to maintain its role at the center of the global financial safety net.
Keywords:
Monetary policy; Political economy; Vaccinate; Calibrate Policies; Accelerate Transformation; Fund Operations; IMF Board agenda; Fund policy; policy priority; modernization initiative; learning culture; Board work agenda; Policy agenda; D. Fund operations; IMF-WHO vaccine supply tracker; COVID-19; Climate policy; Digital currencies; Debt relief; Central Bank digital currencies; Global