Guest essay by Eric Worrall
Deputy Managing Director Tao Zhang’s IMF plan for a green recovery from Covid-19 in my opinion would ruin whatever is left of the global economy.
Deputy Managing Director Zhang Speech: Climate Change: From Awareness to Action
Delphi Economic Forum V: “The Day After”
June 9, 2020
I was looking forward to attending the Delphi Forum in March before our world got turned upside down. But I am very pleased to be invited to participate today, in this virtual format, to discuss “The Day After.”
The world is currently focused on one crisis—namely, the COVID-19 pandemic. Greece’s response has been proactive and well-organized. Timely quarantine measures have limited the spread of the disease, while a forceful stimulus package has provided support to vulnerable households and firms. Going forward, given limited fiscal space, every effort should be made to strengthen the targeting of fiscal support.
But lurking “the day after” is another crisis—slower moving, perhaps, but equally critical. I’m talking, of course, about climate change. We’ve known for years that urgent action is needed, but it’s perhaps even more apparent now, in the wake of this pandemic, that we shouldn’t mess with Mother Nature. Moreover, the two crises are interlinked, because some of the economic policy decisions taken today will affect climate outcomes tomorrow.
Therefore, my remarks here will focus on the importance of keeping climate change in mind as we move from rescue to recovery and on how we can ensure a “green recovery” for Greece, Europe, and the planet.
Let me start with some context. Five years ago, at the COP21 meeting in Paris, countries committed themselves to taking actions to curb the rise in global temperatures. We all know that much more ambitious commitments are going to be needed at the global level if we are to succeed, but I’m happy to say that Europe has been at the forefront of the fight against climate change.
The EU has set new, more ambitious targets—including to be carbon neutral by 2050—and has outlined new policy initiatives and investment in the context of the European Green Deal. In addition, the new Economic Recovery Fund along with a revised EU budget now under discussion aim to support a green recovery after the pandemic.
The EU’s climate policies, however, also face challenges.
First, the carbon price under the Emissions Trading System is currently around €25 a ton. But to achieve carbon neutrality by 2050, more ambitious reductions in emissions are needed, implying a much higher effective carbon price.
Second, the impact of more ambitious climate policies on income distribution must be carefully assessed and addressed to ensure fairness. We need the right policies to ensure a “just and inclusive transition” to a green economy.
Third, shifting from fossil fuels to clean energy means massive investment in renewables, smart grids, and electric vehicles, and the region will need to better mobilize private finance. At the same time, however, the transition to acarbon-neutral economy also brings new growth opportunities.
Turning to Greece, there is ample solar and wind capacity that can be tapped. Likewise, smarter urban development and social policies can mean new jobs and better housing. And, better air quality will reduce illnesses and deaths related to pollution, while generating savings on health spending and attracting more tourism.
Greece is among the few countries that have already achieved their 2030 greenhouse gas emission targets. However, this mainly reflects reductions in energy demand from the recession, while Greece’s energy structure remains more carbon-intensive than that of many other European countries.
In his January meeting with our Managing Director, Prime Minister Mitsotakis described how the new Greek national energy and climate plan will help tackle this issue. It envisions a substantial boost in green investment and full closure of lignite plants over the medium term.
The commitments by the Greek government to climate-friendly policiesdeserve strong support. To start, I can think of at least two sets of questions:
First, what will happen to the lignite-producing areas of Western Macedonia as plants close and workers are adversely affected? What policies are needed to help in the transition toward greener economic activity?
Second, what are the implications for climate change, and climate policies, of Greece’s role as a shipping and tourism hub? These two industries account for about a quarter of Greece’s GDP.
While there are no easy answers, targeted support to affected groups along with sectoral diversification could be part of the solution to help mitigate the transitional cost to clean energy. And a supportive investment climate will be a key element.
Now, let me turn to where we are at the IMF.
In short, we are scaling up our work on both mitigation and adaptation.
The IMF has done a lot of analytical and policy work on carbon pricing, helping countries understand: the carbon prices they need; the trade-offs with other policy instruments; and how to design comprehensive policies in a growth-friendly and politically acceptable manner.
The IMF also works on various fronts to help countries price climate risks, provide incentives for climate-resilient investment, and integrate climate risks and adaptation spending into their economic and fiscal plans. For instance, together with the World Bank, we have begun assessing countries’ climate strategies—starting with the small countries most vulnerable to climate change.
The IMF also carries out stress testing of financial systems to assess their resilience to natural disasters as well as to climate-motivated policy changes. Looking ahead, we will be working more closely with central banks, which are looking at how climate-change risks could affect financial and price stability. The Central Bank of Greece has been very active in this area as well.
And when natural disasters strike—or a pandemic for that matter—our emergency lending facilities are designed to provide speedy assistance. We have assisted many countries in the wake of hurricanes and other disasters, and in terms of the COVID-19 pandemic, as of June 4, we have provided nearly $24 billion in emergency financing to 67 countries, as well as debt relief of $229 million to 27 of our poorest members.
Looking ahead, the IMF is gearing up its effort to help its membership recover toward a better future. No institution or individual can stand on the sidelines in the fight against climate change. We must all act to reduce emissions, offset what cannot be reduced, address the social and economic consequences, and seize the economic opportunities that a new greener economy can bring.
The “Day After” can be a greener and more sustainable one if we keep the momentum on this issue—even as we are being challenged by COVID-19.
To conclude, the IMF is ready to work with our member countries to help them find the best path, as they address climate change.
IMF Communications Department
Source: https://www.imf.org/en/News/Articles/2020/06/08/sp060920-climate-change-from-awareness-to-action-delphi-economic-forum-v
MEDIA RELATIONS
PRESS OFFICER:
PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG
@IMFSpokesperson
The USA is a strong supporter of the IMF, which in turn wields enormous influence over global policy through its vast financial resources. In March this year the IMF thanked the USA for increasing the already large resources the USA puts at the disposal of the IMF.
… “The U.S. decision to speed up approval of its substantial new contributions to the IMF is a powerful message to the international community and helps solidify the IMF’s US$1 trillion lending capacity. It comes at a crucial time as the whole world fights COVID-19 and demand for IMF resources is high” said IMF Managing Director Kristalina Georgieva. She added, “Now that the U.S. has taken this important step, I am confident that other NAB contributors who have not yet done it will also expedite their commitments, so the IMF can continue to play its essential role as a lender of last resort at this time of crisis.” …
Source: https://www.imf.org/en/News/Articles/2020/03/26/pr20109-usa-statement-on-the-united-states-congress-move-to-strengthen-the-imfs-resources
Perhaps it is time for the USA to review exactly what the IMF is doing with all the support and influence they wield, largely thanks to US taxpayers.
Eric,
I’d say it’s well past time for the US to take a long, hard look at what the IMF is doing with the funds. I have a feeling the scandal would dwarf what the W.H.O. has done to aid and abet making the Chinese pandemic a worldwide disaster of monumental proportions.
Thank you for this article. It’s quite an eye-opener.
“KcTaz June 9, 2020 at 10:21 pm
Eric,
I’d say it’s well past time for the US to take a long, hard look at what the IMF is doing with the funds. I have a feeling the scandal would dwarf what the W.H.O. has done”
The problem here is that all international bodies that once had their own well defined functions are now UN agencies and they take their orders from Antonio Guterres the climate guy.
https://tambonthongchai.com/2020/03/18/the-eco-crisis-ambition-of-the-un/
What we see here is really the old communist dream of centrally planned economy and everything following an ideology. But it did not work then – it will not work now – it will not work ever. I agree fully that capitalism must have a few some hugely important reins imposed by governments (e.g. preventing monopolies, controlling banking, ensuring proper ethics) – but that is all.
My Oxford English dictionary gives the following definition :-
Monopoly – “Exclusive possession of the trade in some commodity;
This conferred as privilege by the State.”
NOTE: Conferred As Privilege By The State
Contrary to popular opinion, monopolies do not exist in truly free markets. Only the state has the power to grant monopoly privilege.
Monopolies can be conferred by the State such as water and sewer districts in the US, but capitalism affords many non-State opportunities. Rockefeller nearly captured a monopoly in oil production and distribution but was prevented from doing so by State action. Likewise Carnagie in steel and many others. You need a better dictionary.
“capitalism affords”
Capitalist economies do not tolerate monopolies and monopolistic practices under normal conditions without external regulation.
Under government warrant you can send your competitors to jail (for breaking the “law” established by the warrant).
The best that Rockerfeller and Carnegie could have accomplished would have been an oligopoly which is not the same thing – as long as you can legally compete or import against them – that keeps them on their toes and is good news for consumers.
Guess who are the first to clamour for protection from competition – local or import – and abuse valid anti-trust legislation to do so.
Ford owned the manufacturing processes of his cars entirely from coal and iron ore mines all the way through to dealerships.
The Dodge brothers and GM used anti-trust suits to get this broken up – this was not good news for the customer. Carnegie didn’t like Ford having his own steel mills etc. etc.
No customer of Ford ever sued Ford under anti-trust legislation.
Government interference is no friend of competition.
“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” P. J. O’Rourke
That’s why Washington has so many lobbyists, they’re falling out the windows.
Nothing wrong with my dictionary ISBN 0 19 861 121 8
Rockefeller’s engineers developed a better process for refining oil.
Rockefeller used this better process to create a better and cheaper product.
Under the pressure of competition, Rockefeller’s competitors improved their own processes and started to regain market share.
Other competitors decided it was cheaper to have government step in and break up Standard Oil.
Market competition benefits the customers.
Government intervention benefits those who would rather not compete.
Rockefeller was not close to having a monopoly, and his competitors were already in the process of taking back market share when the government stepped in.
Carnegie was big, but he was never close to a monopoly either.
Ken doesn’t need a better dictionary, you need a better understanding of history. IE not one written by big government socialists.
Without the backing of a state, monopolies are impossible.
Just because banks need some regulations is not evidence that the government needs to control banks.
Ethics, that’s dangerous territory. Whose ethics do you want government to enforce?
MarkW – Ethics are vital territory. We do not want anarchy. We want a society with fair, equitable and humane legislation that first and foremost sets out to protect each and every individual’s freedom to pursue his ambition and his goal in life.
This necessarily most often will mean working for wages or salary in some business or other. Fair ground rules for working conditions are a must – and other conditions exist for ethical legislation to cover (e.g. environmental). Free capitalism is the goose that lays the golden eggs – but what would be the point of golden eggs if huge numbers of us little creatures don’t enjoy them?
That goose must be controlled by ethically minded governments.
Who gets to define what’s “fair”? You. Me.
The socialists who are rioting in the streets as we speak, claim that they are just want what is “fair”.
Whenever government starts to dictate fairness, totalitarianism is soon to follow.
Zang must be an anarchist
The IMF is in it up to its neck! Let’s be serious……an opportunity for Bankers and financiers to be the lenders and enablers on the disbursement of colossal sums of money for the build out of this fantasyland of “renewables”! All that public money from taxpayers sloshing around, all the private investment in “green” nonsense due to CEOs in companies like BP and Shell genuflecting to decarbonising an industry whose main product is hydrocarbon fuel. How totally ridiculous!
There is money to be made from all those loans and all those fees and all that research and advice on a “just transition” to renewables.
The whole thing is a scam and the Bankers know exactly what they’re doing! President Trump needs to yank their chain and serve notice on their malfeasance.
I’m sure China would love it if the west neutered themselves. EU, go ahead and “lead”.
The IMF like many international organisations including the UN have been infiltrated and White-anted by Leftists and Socialists with the aim of destroying Capitalism and replacing it with the same socialism that ruined the Soviets and other communist satellites. The Leftists and their Banking Cronies, in addition, are making money hand over fist from these initiatives especially under the scam of ‘Climate Change’.
Socialists study the past and decide that had they been in charge, mistakes of the past would never have been made. So they decide that they need to be in charge so that such mistakes can never be made again.
The problem is that socialists aren’t smart enough to figure out that just because hind sight is great for figuring out what went wrong in the past, it has no use in figuring out what might go wrong in the future.
This economically suic!dal advice comes from a graduate of Tsinghua University in Beijing who ‘held a number of high-level positions in the People’s Bank of China’.
All that is known is that the virus came from China one way or another through negligence and/or malfeasance and spread worldwide through Chinese negligence and/or malfeasance.
I’m trying hard to resist a conspiracy theory.
The good Deputy Managing Director would be hard pressed to find a worse exemplar in Europe.
Greece annual GDP growth is now going negative again after a brief and weak recovery from 2016, the GDP per cap PPP is now at the same level as in 1999 (USD 25,000), the government debt is 180% of GDP with a personal tax rate of 45%, for those Greeks who pay tax (Trading Economics).
Stupefying, turbocharged nonsense, all to justify control-freakery.
He was doing so well right up to the point when he introduced himself after that it all went down hill. The moment his presentation went out of control completely was when he mentioned Greece and its wonderful efforts to embrace carbon reduction. He compounded his false story of progress through policy decisions when he mentioned the EU leading the way.
Greece has reduced its carbon footprint, (for what that’s worth) thanks entirely to the destruction of its economy due to the concerted effort of the EU and its influence over the European Central Bank, along with the IMFs involvement in that financial rescue package.
It is not surprising the latest ECB president Christine Lagarde was the past head of the IMF.
In this modern financial world, they play musical chairs with more chairs than players, that way everyone has somewhere safe to sit when the music stops…..
ASK
>Statler and Waldorf<
“We need a much higher carbon price”
And a much lower uncertainty in carbon cycle flows.
https://tambonthongchai.com/2020/06/10/a-monte-carlo-simulation-of-the-carbon-cycle/
How are carbon pricing and carbon credits any different from a ponzi scheme? A few benefit enormously but many, many more end up with devastating losses and impoverished.
“Michael in Dublin June 10, 2020 at 1:55 am
How are carbon pricing and carbon credits any different from a ponzi scheme”
Good question. Carbon pricing operates in a legal vaccuum.
https://tambonthongchai.com/2019/09/30/cer/
What is physically impossible to do, doesn’t usually get done. But the economic damage inflicted trying to do it will be incalculable.
The IMF is not a scientific institution and cannot be relied on for a scientific assessment about Earth’s climate. Like many bureaucratic institutions, to get more funding they like to expand by pretending to be relevant when they are not. You can look me up on Quora to find out what the real climate science tells us.
” …. we shouldn’t mess with Mother Nature ….”
He is absolutely right, we can’t influence the temperature by much (if at all) by changing our CO2 emissions, Mother Nature is doing fine on her own so lets just let her get on with it as she has done over the last few billion years and learn to live with it.
People who advocate placing a price on the release of carbon dioxide to limit its release simply make too much money. An extra buck per gallon of gasoline would be a big hit on those towards the bottom of the income scale while it makes no difference at all to Bill Gates. In my mind, the only fair way to limit carbon dioxide release from fossil fuels is to ration consumption. That way, everybody including Bill Gates has the opportunity to buy their X gallons per week, but no more. It worked during WWII, but lots of luck today.
So the road map for success is based on a little debt ridden socialist wasteland with nice tourist spots for elite visitors to party and hang out at the beach. That same debt ridden socialist nation is also known for extreme rates of tax evasion that makes them another bad example for others and the IMF staff in promoting them.
Love the reference to “The Day After”, a 1983 movie (https://www.imdb.com/title/tt0085404/) which tells the frightening story of the weeks leading up to and following a nuclear strike on the United States.
Talk about irony!
Very little carbon tax in the US. Some euphemistically called ‘Cap and Trade’ but it means the same thing. Ask where that money is spent in California and you’ll get a shoulder shrug. Everyone knows it’s just an excuse for the politicians to accumulate more money to spend.
Of course he needs a higher carbon price.
He’s not rich enough yet.
The prophets of doom continue to pound the drums of fear trying obediently to do the will of the UN. They try invoking the magic word “science” to instill the horror of an entirely imaginary, model created to scare the proles into submission based on their lack of time and energy to properly research the lies they are being fed.
A tax on a trace gas necessary for life and exhaled about 14 times a minute by each and every one of us, each exhalation containing 40,000 ppm CO2, which is then used by plants to grow and in turn turned to oxygen. If taxing that doesn’t sound obscene there is simply no reasoning with you.
We need a “Much Higher Carbon Price”
===========
Indeed, in Canada PM Trudeau has said that the carbon tax will return more money to Canadians than it costs.
Under that argument, the carbon tax in Canada should be raised to a million $$ a liter or more. In this fashion, after only a few tanks of gasoline, every Canadian will be able to buy the US and China many times over.
The Green New Deal, not a problem. Trudeau Economics 101 – the budget will balance itself.
Note there is no mention of what China will do to manage the transition to a greener economy, only that Europeans should further burden their struggling economies with heavy carbon taxes. The intent of these remarks is to make the world redder, not greener.
Does anyone know how many carbon credits are out there? Given that no one is expected to “solve” climate change with real money, who is out there trading these credits?
It has been suggested that European (and other?) banks are buying (fake) carbon credits. That is, (somewhat real, fiat) currency is being given in exchange for fake carbon credits.
This is the biggest financial scam in history. I suspect that so-called “shadow banks” such as Blackrock financial are involved in this.
I believe we will soon have an “reckoning” of this situation. In the US, the Federal reserve is expected to come under the influence of the American government. At that time the “bad debt” will be revealed.
For your information:
https://www.imf.org/en/News/Articles/2020/06/03/sp060320-remarks-to-world-economic-forum-the-great-reset
Davos:
https://www.weforum.org/great-reset