Tough decisions ahead for finance chiefs and their climate promises

In the main speeches and communiqués of the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB) This week in Washington, one word was ubiquitous: weather.

Two weeks from the summit of climate change COP26 from Glasgow, the hierarchs pledged to take action to meet global climate goals of keeping temperature rise below 1.5 degrees Celsius relative to the industrial age, and achieving net zero carbon emissions by 2050.

“I’m afraid it is time to roll up our sleeves and detail our action plan,” Britain’s Prince Charles said at a World Bank event on Thursday.

“I can only encourage all of us to act against climate change and the loss of biodiversity, for a just transition, as it is more urgent than ever to get down to work and solve this problem,” he added.

But behind the rhetoric hides the harsh reality of the enormous work that remains to be done to meet the objectives set.

Washington is seeking multilateral lending agencies to boost financing for climate-friendly projects, while BlackRock, the world’s largest asset manager, warns that large investments are needed to avoid catastrophe.

“Rich countries must put up more taxpayer money to drive the net transition to zero,” BlackRock CEO Larry Fink wrote in an column in The New York Times on Wednesday.

Reaching the goal of zero net emissions will require $ 1 trillion a year in investments destined for poor countries, which Fink estimates would need $ 100 billion in subsidies per year to be viable.

“Although the figure seems discouraging, especially now that the world is recovering from the COVID-19 pandemic, the lack of investment will lead to higher costs in the future,” he said.

Growing alarm

The meetings came amid growing alarm over the effects of uncontrolled climate change on the planet.

Last month, a disturbing WB report warned that reduced agricultural production, water shortages, rising sea levels and other adverse effects of global warming could force 216 million people to leave their homes and migrate within from their own countries by 2050.

A study by the International Monetary Fund (IMF) estimated that direct and indirect subsidies to fossil fuels totaled up to US $ 5.9 trillion in 2020, 6.8% of global GDP that year, undermining the fight against climate change with cheap fuel .

While IMF and World Bank officials insisted that they are highly focused on climate change, not all were convinced.

On Thursday, 77 environmental defense organizations signed a petition to demand the resignation of the president of the World Bank, David Malpass.

Malpass highlighted the investment in climate issues by the World Bank, an entity that, he said, provides half of all multilateral loans for green projects, a big change from previous years when the body financed controversial plans criticized for their environmental impact.

But civil organizations say that since the 2015 Paris climate agreement, the World Bank has directed US $ 12 billion towards fossil fuels.

“The World Bank needs leadership that supports developing countries with a green and inclusive vocation,” said Luisa Galvao, from Friends of the Earth US, who signed the petition.

Mitigate damage

The actions of the United States during the meetings were closely followed, as Washington has the highest voting power in both bodies, while the world’s largest economy is also a major emitter of carbon.

However, President Joe Biden promised an offensive to address climate change. In fact, this Friday the White House launched a strategy to mitigate the damage that extreme weather causes in the country.

Treasury Secretary Janet Yellen this week convened the leaders of various credit agencies – including the World Bank and development banks in Europe, Latin America, Asia and Africa – and pressured them to dedicate more capital to projects aimed at mitigating climate change.

Likewise, Biden presented two initiatives to Congress to inject huge sums into infrastructure, social spending and the fight against climate change that are stagnant in the Legislative division.