Climate change influences the frequency and intensity of wildfires in many areas of the United States. Trees remove carbon from the atmosphere, so tree planting can mitigate climate change. However, managing forests to prevent large destructive fires can involve thinning and prescribed burning, which releases a portion of forest carbon. To complicate matters further, large fires themselves can release significant carbon.

John W. Coulston and colleagues analyzed data from more than 130,000 national forest inventory plots to project how recent legislation to increase fire management and tree planting in the United States could affect the country’s forest carbon sequestration 30 years into the future, given various fuel management, climate, economic, and energy use scenarios. The research is published in the journal PNAS Nexus.

Fuel reduction activities could remove 194–288 million metric tons of carbon from western forests over the next 10 years. However, fuel management can also increase annual net carbon sequestration rates over the long term, both because trees in thinned stands can grow larger faster and because avoided fires reduce overall emissions.

By 2050, fuel management could actually increase annual carbon sequestration over business as usual. This increase is modest, however, and the projected cumulative 2022–2050 carbon sequestered under fuel management scenarios is 200–310 million metric tons less than business as usual.

All wood removed during fuel management was assumed to be an emission for the purposes of the analysis, but the authors note that wood product innovation could change that picture by allowing carbon removed from forests to be stored in durable wood products.

Source : Phys

The post Analyzing Policy-Driven Changes to US Forest Carbon Sequestration appeared first on Policy Print.

With each passing year, the stark reality of a hotter planet becomes clearer and the ensuing risks to the global economy intensify. But as the world is waking up to the scale of the climate crisis, geopolitical tensions and fragmentation risks are undermining our ability to coordinate global actions to solve this planetary problem.

Eight years on from the Paris Agreement, policies remain insufficient to stabilize temperatures and avoid the worst effects of climate change. Collectively, we are not cutting emissions fast enough and are falling short on the needed investment, financing, and technology. The window is closing, but we still have time—just—to change our trajectory and leave a healthy, vibrant, and livable planet to the next generation.

Limiting global warming to 1.5 degrees to 2 degrees Celsius and reaching net zero by 2050 requires cutting carbon dioxide and other greenhouse gases by 25 percent to 50 percent by 2030 compared with 2019. But, as our new analysis shows, the current global commitments reflected in nationally determined contributions would reduce emissions by just 11 percent by the end of this decade.

To make matters worse, current policies are not consistent with commitments, which means that the world is set to fall short of even that meager goal. Business-as-usual policies would see annual global emissions increase by 4 percent by 2030 and reach a cumulative level sufficient to breach the 1.5-degree target by 2035.

More ambition, stronger policies

To get back on track with the global climate goals, we need more ambition now. A fair approach is for countries to target cuts in emissions in line with per capita incomes.

For example, to keep within 2 degrees of warming, high, upper-middle, lower-middle, and low-income countries will need emissions reductions of 39 percent, 30 percent, 8 percent and 8 percent, respectively, by 2030. To stay below 1.5 degrees of warming would entail more drastic emissions cuts of 60 percent and 51 percent for high- and upper-middle income countries.

Ambition alone is not enough. We also need major policy changes to achieve these more ambitious targets. These would ideally be centered on a robust carbon price—rising to a global average of at least $85 per ton by 2030—to provide broad incentives to reduce carbon-intensive energy, shift to cleaner sources, and invest in green technologies.

A carbon price also generates more than enough budget revenues to support vulnerable groups. Around 20 percent of carbon pricing revenues can more than compensate the poorest 30 percent of households. This is in direct contrast to damaging fossil fuel subsidies, which have risen to a record $1.3 trillion annually in explicit fiscal costs alone. Countries must act to phase out such subsidies.

At a global level, cooperation is needed to help assuage fears that carbon pricing would hurt national economic competitiveness. Here, an agreement among large emitters could spur other countries to follow—such as a progressive deal between China, the European Union, India, and the United States. This would cover over 60 percent of global greenhouse gas emissions and send a strong signal to the rest of the world.

Boosting climate finance

The path to net zero by 2050 requires low-carbon investments to rise from $900 billion in 2020 to $5 trillion annually by 2030. Of this figure, emerging and developing countries (EMDEs) need $2 trillion annually, a fivefold increase from 2020. Even if advanced economies meet or somewhat exceed their promise to provide $100 billion a year, the bulk of the financing for these low-carbon investments will need to come from the private sector.

Our analysis shows that private sector share of climate finance must rise from 40 percent to 90 percent of the total in EMDEs by 2030. That means a broad mix of policies to overcome barriers such as foreign exchange and policy risks, underdeveloped capital markets, and too few investable projects.

For example, targeted economic policies and governance reforms can lower capital costs. Meanwhile, blended finance that combines private capital with public and donor funding—including from multilateral development banks—can bring down the risk profile of green projects. Think of first-loss capital, credit enhancements, or guarantees.

At the same time, global policies to increase transparency and comparability of projects, standardize taxonomies and strengthen climate-related disclosure requirements are vital in helping investors make low-carbon choices. Again, this highlights the importance of international cooperation.

Scaling up innovation

Of the 50 percent cut to emissions needed by 2030 to stay on track for the 1.5-degree target, more than 80 percent can be achieved from technologies available today. Getting to net-zero by 2050 will, however, require technologies that are still under development or yet to be invented.

Unfortunately, patent filings for low-carbon technology peaked at 10 percent of total filings in 2010 and have since declined. Worse, key technologies aren’t spreading fast enough to emerging and developing countries.

How can this trend be reversed? Recent IMF analysis shows climate policies—such as feed-in tariffs and emissions trading schemes—boost green innovation and investment flows,and help spread low carbon technology across borders. Moreover, in some countries, lowering trade barriers can accelerate imports of low carbon technologies by 20 percent to 30 percent. Yet again this points to the importance of cooperation: to avoid protectionist measures that would impede the broader spread of low-carbon technologies.

Helping countries meet goals

Wherever climate policy intersects with macroeconomic policy, the IMF is here to help. Our new Resilience and Sustainability Trust provides long-term financing on affordable terms to help vulnerable middle- and low-income countries cope with threats such as climate change. The $40 billion trust has already supported programs for 11 countries, with twice that number in the pipeline.

For our wider membership, we add a climate lens to our economic analysis, policy advice, capacity development and data provision. Why? Because macroeconomic and financial sector policies are critical to harnessing the opportunities of the green transition: for low-carbon, resilient growth, and jobs.

But no country can tackle climate change on its own. International cooperation is more important than ever. Only with concerted action, now, will we bequeath a healthy planet to our children and grandchildren.

Source : IMF

The post World Needs More Policy Ambition, Private Funds, and Innovation to Meet Climate Goals appeared first on Policy Print.

Climate change poses severe and multiple threats to Nigeria’s current and future development and should be taken more seriously by the Nigerian government and other critical stakeholders, a new report by Agora Policy, an Abuja-based think tank, has said.   

• “It is evident that climate change is not a marginal or peripheral issue that the government and the people of Nigeria can take lightly,” says the report titled “Climate Change and Socio-Economic Development in Nigeria,” which was released today in Abuja and was produced with the support of the MacArthur Foundation.  

The report acknowledges and details a plethora of climate-related initiatives, including policies, programmes and projects and even the 2021 climate change law put in place or undertaken by successive Nigerian governments but it claims that the potentials of these initiatives and interventions are undercut by the absence of commensurate action, lack of synergy and inadequate funding.  

According to the 84-page report, Nigeria, despite her relatively low emission profile, is already bearing the brunt of the effects of changes in climatic conditions and of adverse weather events but that the tolls could be significantly higher. 

Unless urgent and bold actions are taken, the report adds, Nigeria risks becoming one of the worst-affected countries by climate change, with grave implications for the country’s currently fragile economic, social and human development indicators.   

• “Climate change is compounding poverty challenges in Nigeria and impeding the attainment of Sustainable Development Goals,” adds the report. 
• “Climate change is already increasing hunger, poverty, disease-burden, migration, conflict and insecurity in Nigeria. It is damaging infrastructure, changing Nigeria’s coastlines, fueling desertification, producing water scarcity, facilitating erosion and resulting in the loss of revenue for states and the national government.” 

The report states that as at 2020 Nigeria losses at least $100 billion annually to the effects of climate change and the country may lose trillions of dollars in manufacturing, construction and oil and gas assets likely to become stranded as the world gravitates to a green economy.  

• “Nigeria risks becoming a stranded country,” the report asserts. “Climate change has the potential to further jeopardize Nigeria’s economic development and alter its geographical, social and political trajectory for decades.” 

The report highlights the different channels through which adverse effects of climate change could worsen in Nigeria and further compound the country’s developmental challenges.

Some of the highlighted areas include: projected 2.9- and 5.7-degree Celsius rise in temperature across different ecological zones in the country; increased occurrence of floods, droughts, erosion and rising sea levels; the likelihood that 75% of the delta could be lost; and further adverse effects on agricultural yields, food security, health burdens, water and energy sufficiency, peace and security, and adequacy and longevity of critical infrastructure.  

However, the report also identifies opportunities for Nigeria to address climate change while supporting economic growth and resilience.  

• “Climate change offers opportunities for economic competitiveness, energy security, and sustainable development,” states the report.
• “There are many climate-led opportunities that Nigeria can explore to enable rapid economic growth, create jobs for a rapidly growing youthful and urbanizing population, and address high levels of abject poverty and inequality through a just transition.” 

Urging Nigeria to consciously pursue a climate-compatible development agenda, the report recommended the following strategies to the country: investing in renewable energy and energy efficiency, promoting climate-smart agriculture, embracing green manufacturing, harnessing natural resources for adaptation, and enhancing disaster risk reduction systems. 

• “Leveraging climate action to pursue economic development in Nigeria is not only a viable but an essential strategy,” says the report.  
• “The global transition from a high-carbon economy to a low-carbon economy is already well underway and will produce winners and losers across the world.
• Whether Nigeria will swim or sink in the face of the transition will depend on its willingness to take urgent action now and re-align its national development strategies towards a low-carbon economic future.
• To transform climate change from a significant threat into an opportunity requires deliberate planning supported by immediate, bold and courageous action.” 

Other prescriptions made by the report for Nigeria include: strengthening national climate change framework; mainstreaming climate change into the country’s development process; building a climate-resilient and competitive economy; boosting adaptive capacities of communities in different ecological zones in the country; incentivizing investment in low-carbon industries; increasing public awareness about climate change; advocating for a fair and just energy transition; and pursuing a collaborative approach to low-carbon development.  

• “It is our hope that this report will further raise the policy profile of climate change issues in Nigeria and trigger the necessary actions on what is clearly an existential issue for our country,” says Waziri Adio, the founder of Agora Policy.
• “Climate change did not feature as a major issue in the 2023 general election, despite the significant challenges and opportunities it presents to the country.
• It has also not featured as a major priority of the new administration. This needs to change, and urgently too.”  

The release of the report will be followed by a policy conversation in Abuja on 22 November 2023, with the theme: “Nigeria, Climate Change and the Green Economy.”

The event will be organized with partners as part of the buildup to COP28 starting in UAE later this month.  

The report was put together by a team of four renowned experts: Professor Chukwumerije Okereke, director of the Centre for Climate and Development at Alex Ekwueme Federal University Ndufu-Alike, Ebonyi State; Professor Emmanuel Oladipo, a leading specialist on sustainable development, environment and climate change; Ms. Ifeoma Malo, co-founder of Clean Technology Hub and a development and governance expert; and Dr. Fola Aina, a development, peace and security expert.   

Produced with the support of the MacArthur Foundation, the report is the fifth policy paper commissioned by Agora Policy to contribute to national debate before, during and after the landmark 2023 elections in Nigeria. The other four reports focused on the state of the economy, security, gender and social inclusion, and transparency and accountability. 

Source : Naira Metrics

The post Agora Policy: Climate Change Poses Grave Risks to Nigeria, Deserves Greater Attention appeared first on Policy Print.

Gov. Maura Healey has unveiled what she’s touting as two “groundbreaking” new policies aimed at protecting the Massachusetts coastline.

The governor spoke about the policies during the keynote speech to a panel on ocean conservation at the Clinton Global Initiative’s meeting in New York City on Monday. She announced that, later this week, she’ll sign an executive order directing the state to create new biodiversity conservation goals for 2030, 2040 and 2050, as well as strategies for meeting them. Those targets, which will include coastal and marine habitats, will be “the strongest in the nation,” Healey vowed.

In addition, Healey said, she’ll sign another executive order that immediately bans the purchase of single-use water bottles by state agencies, a step she described as unprecedented among U.S. states.

“In our coastal state, we know climate change is our biggest threat,” Healey said. “We also believe that taking action is our greatest opportunity — to secure a safe, prosperous and sustainable future.”

Karissa Hand, a spokeswoman for the governor, said the state annually purchased about 100,000 single-use plastic water bottles. She added that while the ban will apply to state agencies including the Department of Elementary and Secondary Education, it won’t affect individual school districts, which are controlled by municipalities.

Healey has positioned herself as a national climate leader since taking office in January, and she used her remarks to review previous steps she’s taken, including creating the nation’s first cabinet-level climate chief position — a role filled by former Environmental Protection Agency Administrator Melissa Hoffer — and moving to fill 25% of the state’s annual electricity needs via wind energy.

Local environmental activists were especially bullish on Healey’s announcement of new biodiversity targets Monday. 

Chris Powicki, who leads the Sierra Club of Massachusetts’ Cape Cod and Islands group, said the biodiversity push has “transformative potential.”

“That’s the most exciting part of today’s announcement,” Powicki said.”The idea that we can start to focus state policies and programs and investments and industries on protecting ecosystems is a really novel one, and one that has been a long time coming. And if the government actually succeeds in adopting it, I think there’s potential for really significant change.”

David O’Neill, the president of Mass Audubon, said he and his colleagues were “thrilled” by Monday’s announcement.

“The commitments that they are making, we hope. are hard and fast targets to protect land around our biodiversity hot spots around the commonwealth,” O’Neill said. “We’d love to see a commitment of resources to be able to protect more land, and to restore and manage land.”

Amy Boyd Rabin, the vice president of policy at the Environmental League of Massachusetts, said the push for new biodiversity targets will prove to be the more significant initiative. But she also praised the immediacy of the ban on water bottle procurement, noting that single-use plastics create new demand for fossil fuels, spread forever chemicals, and clog waterways.

Several Massachusetts municipalities have implemented similar bans, but prohibitions in some communities have been repealed after sharp debate.

“Doing things that can have immediate impact has a lot of significance, because the climate crisis and our ocean pollution crisis are not getting better with each passing day,” Boyd Rabin said.

Source : WGBH

The post Healey Unveils ‘Groundbreaking’ Policies on Biodiversity and Single-Use Plastic appeared first on Policy Print.

Sparked by its narrow win in the Uxbridge and South Ruislip by-election – a battle fought and won by the Conservatives’ opposition to London’s Ultra Low Emission Zone (ULEZ) scheme – some in the party are calling for a rethink of their current climate commitments, with Sir Jacob Rees-Mogg claiming they are “unpopular” and “expensive”.

Downing Street has confirmed ministers are scrutinising existing pledges “in light of some of the cost of living challenges”.

And Prime Minister Rishi Sunak has hinted at a watering down of proposals, saying measures must be “proportionate and pragmatic”, instead of adding cost and “hassle” to households.

But others from both the Tory benches and the opposition warn any rollback would not only add to the damage caused to the planet, but see the UK fail to cash in on the jobs, industry and investment offered by green technologies.

So what are the current pledges from the government that could be facing either delays or the axe?

Reaching net zero by 2050

The overarching promise from the Conservative government was to ensure the UK reduced its greenhouse gas emissions by 100% from 1990 levels by 2050.

The measure was made law by Theresa May in the dying days of her premiership back in 2019 and it was backed by Boris Johnson throughout his time in Number 10.

But when Liz Truss entered Downing Street, she ordered a review into the target – though her stint ended before it came to pass – showing not everyone in the party was onboard.

Mr Sunak has insisted he is committed to the pledge.

But questions have been raised over whether the government is doing enough to even meet the target, with the Climate Change Committee warning progress had been “worryingly slow”, and time is “very short” to correct the path.

Phasing out petrol and diesel cars by 2030

In 2020, then prime minister Mr Johnson made a commitment to ban the sale of new petrol and diesel cars in the UK after 2030 – bringing the target forward by 10 years.

The £12bn plan promised to accelerate the rollout of charge points for electric vehicles, as well as the development and mass production of electric vehicle batteries, in an attempt to lower emissions and clean up the air.

Number 10 has said Mr Sunak is committed to the 2030 date, but hinted the ban is to be kept under review to ensure it hits that “proportionate and pragmatic” goal as technology evolves.

However, Levelling Up Secretary Michael Gove later doubled down on keeping it in place, saying the target is “immoveable”.

Energy efficient landlords

Another pledge made by Mr Johnson in 2020 was to ensure all private rented homes had an energy efficiency rating of C or better – where A is the best and G is the worst – by 2028.

While the plan could be costly for landlords, it would lead to a reduction in bills for many renters and stop leaky homes adding to emissions.

But this is one proposal that looks to set to have a pin put in it.

Mr Gove, the former environment secretary who is now the minister in charge of housing, said he wanted to see the government “relax the pace” of the 2028 deadline, adding: “We’re asking too much too quickly”.

Another target that may be pushed back is ensuring all new homes are built with an alternative to a gas boiler – such as a heat pump – after 2025.

The measure will not impact people who already have gas boilers in their homes, or stop them from replacing like for like, as it will only be a rule for developers building properties.

However, making the move will cut emissions from new buildings and again help towards hitting that net zero target.

There is a wider ambition for all new heating system installations to be low carbon by 2035, with a pot of £450m to help with household grants.

But again, the government has insisted people will not be forced to remove their existing fossil fuel boilers.

Now, Downing Street has hinted these dates could change as part of a review of their policies as the cost would hit people’s pockets.

Hydrogen levy

Another move that already appears to have been shelved is the introduction of an annual levy to cover the cost of producing low-carbon hydrogen, instead of using fossil fuels, for energy at home.

The fee – which was expected to cost households around £118 a year – was due to be added to bills in 2025, and would help cut emissions by cleaning up the energy market.

But Energy Security Secretary Grant Shapps has made numerous protestations about the cost being borne by people rather than companies, and has pledged numerous times to find another way of funding the change.

What about the other parties?

As mentioned earlier, most of this debate has been brought about by the result of the Uxbridge by-election which, before Thursday’s vote, seemed like a safe bet for Labour to seize.

However, the Conservatives managed to turn the campaign into a referendum on the expansion of ULEZ to the outer boroughs of London – a policy from the capital’s Labour mayor to clean up air quality, but with a cost to drivers of £12.50 a day.

Having initially stood by the plan – and Sadiq Khan – Labour is now making a lot of noise about reviewing the policy and asking the mayor to “reflect” on its impact on voters.

Yet, the party is still is making much of its green credentials, with one of Sir Keir Starmer’s missions for government to “make Britain a green energy super power”.

Labour said, if it got into power, it would cut bills and increase energy security by making all electricity zero-carbon by 2030, and carry out upgrades to 19 million homes to make sure they are insulated.

It would also create a new publicly owned company called GB Energy, tasked with championing clean energy, increasing jobs and building better supply chains.

But Labour has backtracked on its £28bn a year investment pledge to accelerate the shift towards net zero, with shadow chancellor Rachel Reeves blaming rising interest rates and the “damage” the Conservatives had done to the economy since the announcement was made.

The Liberal Democrats have a raft of green policy proposals, including upgrading insulation in all existing homes by 2030 and ensuring all new builds are “eco friendly”.

Other measures include investing to get 80% of the UK’s electricity from green energy by 2030, and creating a £20bn Clean Air Fund to create walking and cycling routes to schools, and invest in pollution-free public transport.

Source: Sky News

The post What are the Conservatives’ green policies – and what could be scrapped? appeared first on Policy Print.

As policymakers and business leaders gather at the World Economic Forum in Davos, they are facing a Gordian knot of challenges .

From the global economic slowdown and climate change to the cost-of-living crisis and high debt levels: there is no easy way to cut through it. Added to this are geopolitical tensions that have made it even more difficult to address vital global issues.

Indeed, even as we need more international cooperation on multiple fronts, we are facing the specter of a new Cold War that could see the world fragment into rival economic blocs. This would be a collective policy mistake that would leave everyone poorer and less secure.

It would also be a stunning reversal of fortune. After all, economic integration has helped billions of people become wealthier, healthier, and better educated. Since the end of the Cold War, the size of the global economy roughly tripled, and nearly 1.5 billion people were lifted out of extreme poverty. This peace and cooperation dividend should not be squandered.

Rising fragmentation risks

And yet, not everyone has benefited from global integration. Dislocations from trade and technological change have harmed some communities. Public support for economic openness has declined in several countries. And since the global financial crisis, cross-border flows of goods and capital have been leveling-off.

But that’s only part of the story. Trade tensions between the world’s two largest economies have been rising amid a global surge in new trade restrictions. Meanwhile, Russia’s invasion of Ukraine has caused not only human suffering, but also massive disruptions of financial, food, and energy flows across the globe.

Of course, countries have always placed some restrictions on trade in goods, services, and assets for legitimate economic and national security considerations. Supply chain disruptions during the COVID-19 pandemic have also increased the focus on economic security and making supply chains more resilient.

Since the outbreak, mentions in companies’ earnings presentations of reshoring, onshoring, and near-shoring have increased almost ten-fold. The risk is that policy interventions adopted in the name of economic or national security could have unintended consequences, or they could be used deliberately for economic gains at the expense of others.

That would be a dangerous slippery slope towards runaway geoeconomic fragmentation.

Estimates of the cost of fragmentation from recent studies vary widely. The longer-term cost of trade fragmentation alone could range from 0.2 percent of global output in a limited fragmentation scenario to almost 7 percent in a severe scenario—roughly equivalent to the combined annual output of Germany and Japan. If technological decoupling is added to the mix, some countries could see losses of up to 12 percent of GDP.

Yet, according to new IMF staff analysis, the full impact would likely be even larger, depending on how many channels of fragmentation are factored in. In addition to trade restrictions and barriers to the spread of technology, fragmentation could be felt through restrictions on cross-border migration, reduced capital flows, and a sharp decline in international cooperation that would leave us unable to address the challenges of a more shock-prone world.

This would be especially challenging for those who are most affected by fragmentation. Lower-income consumers in advanced economies would lose access to cheaper imported goods. Small, open-market economies would be hard-hit. Most of Asia would suffer due to its heavy reliance on open trade.

And emerging and developing economies would no longer benefit from technology spillovers that have boosted productivity growth and living standards. Instead of catching up to advanced economy income levels, the developing world would fall further behind.

Focus on what matters most: trade, debt, and climate action

So, how can we confront fragmentation? By taking a pragmatic approach. This means focusing on areas where cooperation is essential, and delay is not an option. It also means finding new ways to achieve common objectives. Let me highlight three priorities:

First, strengthen the international trade system.

In a global economy beset with low growth and high inflation, we need a much stronger trade engine. Trade growth is expected to decline in 2023, which makes it even more critical to roll back the distortionary subsidies and trade restrictions imposed in recent years.

Strengthening the role of trade in the global economy begins with vigorous World Trade Organization reform and by concluding WTO-based market-opening agreements. But finding agreement on complex trade issues remains challenging, given the diverse World Trade Organization membership, increasing complexity of trade policy, and heightened geopolitical tensions.

In some areas, plurilateral agreements, among subsets of WTO members, can offer a path forward. Take the recent agreement on regulatory cooperation in service industries—from finance to call centers—which can reduce the cost of providing services across borders.

We also need to be pragmatic about strengthening supply chains. To be clear, while most supply chains have been resilient, recent disruptions to food and energy supplies have raised legitimate concerns. Still, policy choices such as reshoring could leave countries more vulnerable to shocks. IMF research shows that diversification can cut potential economic losses from supply disruptions in half.

Meanwhile, countries should carefully weigh the costs, at home and abroad, of national security measures on trade or investment. We also need to develop guardrails to protect the vulnerable from unilateral actions. A good example is the recently agreed requirement to exclude from food export restrictions the exports to humanitarian agencies such as the World Food Program.

But these efforts, while important, aren’t enough. We also need better policies at home, from improving social safety nets, to investing in job training, to increasing worker mobility across industries, regions, and occupations. This is how we can ensure that trade works for all.

Second, help vulnerable countries deal with debt.

Fragmentation could make it even more difficult to help many vulnerable emerging and developing economies that have been hard hit by multiple shocks. Take one particular challenge that many countries face: debt. Fragmentation will make it harder to resolve sovereign debt crises, especially if key official creditors are divided along geopolitical lines.

About 15 percent of low-income countries are already in debt distress and an additional 45 percent are at high risk of debt distress. Among emerging markets, about 25 percent are at high risk and facing default-like borrowing spreads.

There are signs of progress on the Group of Twenty’s Common Framework for debt treatment: Chad recently reached an agreement with its official and private creditors; Zambia is progressing toward a debt restructuring; and Ghana just became the fourth country to seek treatment under the Common Framework, sending a signal that it is seen as an important pathway for debt resolution. But official creditors have a lot more work to do.

Countries seeking debt restructuring under the Framework will need greater certainty on processes and standards, as well as shorter and more predictable timelines. And we need to improve processes for countries not covered by the Framework. To support these improvements, the IMF, World Bank and Indian G20 presidency are working with borrowers and public and private creditors to quickly establish a global sovereign debt roundtable, where we can discuss current shortcomings and make progress to address them.

These and other pragmatic actions, such as further progress on majority voting provisions in sovereign loans and climate resilient debt clauses, can help improve debt resolution. That would reduce economic and financial uncertainty, while helping countries get back to investing in their future.

Third, step up climate action.

Collective action is just as vital to address the climate crisis. Just last year, we saw climate disasters on all five continents, with $165 billion in damages in the United States alone. It shows the massive economic and financial risks of unmitigated global warming.

But last year also brought some good news. The agreement at COP27 to set up a loss and damage fund for the most vulnerable countries shows that progress is possible with enough political will. Now we must take further pragmatic steps to cut emissions and curb fossil fuels.

One potential game changer could be an international carbon price floor among major emitters. It would focus on carbon pricing or equivalent measures in an equitable process that would complement and reinforce the Paris Agreement. Or consider the “just energy transition partnerships” between groups of donors and countries such as South Africa and Indonesia.

We also need to step up climate finance to help vulnerable countries adapt. Innovative use of public balance sheets—such as credit guarantees, equity and first-loss investments—can help mobilize billions of dollars in private financing.

And, of course, we need better data around climate projects: harmonized disclosure standards and principles will help, as will taxonomies to align investments to climate goals.

The role of the IMF

In all these areas, the IMF will continue to support its members—through policy advice, capacity development efforts, and financial support.

Since the start of the pandemic, we have provided $267 billion in new financing. And thanks to the collective will of our membership, we provided a record $650 billion allocation of special drawing rights, boosting our members’ reserves. This allowed many vulnerable countries to maintain access to liquidity, freeing up resources to pay for vaccines and health care.

And we are now helping countries with stronger reserves to channel their SDRs to countries whose need is greater. This pragmatic measure could make all the difference in many countries. So far, we have around $40 billion in SDR pledges to our new Resilience and Sustainability Trust, which will help low- and vulnerable middle-income countries address structural challenges such as pandemics and climate change.

In other words, we know the global issues that matter most, and we know that confronting fragmentation in these vital areas is essential.

Pragmatic measures to fight fragmentation may not be the simple sword swipe that cuts the Gordian knot of global challenges. But any progress we can make in rebuilding trust and boosting international cooperation will be critical.

The discussions in Davos will be a hopeful sign that we can move in the right direction and foster economic integration that brings peace and prosperity to all.

Source : IMF

The post Confronting Fragmentation Where It Matters Most: Trade, Debt, and Climate Action appeared first on Policy Print.