IMF Chief Advocates Carbon Pricing in COP28 Climate Talks

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In Dubai at the COP28 climate summit, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), emphasized the imperative for carbon pricing, stating that the oil and gas industry acknowledges “the writing on the wall.” A longstanding advocate for carbon pricing, Georgieva highlighted its capacity to incentivize rapid decarbonization by determining the cost companies must pay for their emissions, regarded as an effective and flexible means to reduce pollution.

The IMF recently revised its average price forecast to $85 per ton by the end of the decade, up from the previous projection of $75. Georgieva noted the current average price is approximately $20 per ton. Speaking at the COP28 conference, she addressed the need to accelerate decarbonization and emphasized that without a carbon price, progress would not be swift enough.

Georgieva underscored that countries, both affluent and developing, are witnessing the severe impacts of climate change, making COP28 a pivotal moment to reassess policies favoring fossil fuels. She highlighted that global government subsidies for coal, oil, and gas amounted to $1.3 trillion last year, emphasizing the gradual transition away from these subsidies and the need for carbon pricing.

The IMF chief emphasized the effectiveness of carbon pricing, citing examples like the EU’s Emissions Trading System, which has demonstrated a rapid reduction in emissions. She noted that carbon pricing generates revenues, citing the EU’s collection of 175 billion euros ($191 billion) from carbon pricing. Georgieva also emphasized the fairness of carbon pricing, stating that it correlates with pollution levels.

Regarding the role of the oil and gas industry at COP28 and aligning Big Oil with carbon pricing, Georgieva expressed optimism about reaching the peak of oil and gas consumption in this decade. She highlighted the commitment to triple renewables within the next few years, emphasizing the industry’s awareness of the evolving energy landscape. Georgieva noted a shift in oil-producing countries diversifying rapidly and investments from oil money into renewables at a significant scale.