EU moves forward on carbon tax criticized by IMF: G-20 update

(Bloomberg) – Finance ministers from the Group of 20 countries sought to give momentum to the global effort on climate change during a meeting this weekend in Venice, Italy. Keynote speakers at a conference on Sunday were US Treasury Secretary Janet Yellen and International Monetary Fund Managing Director Kristalina Georgieva.

Main developments:

Lagarde says most banks don’t take climate risks into account. Yellen encourages development banks to finance fossil fuels IMF criticizes border carbon tax; EU promises to move forward

The IMF supports France on the carbon floor price at the border (10 a.m. CET)

The European Union’s carbon tax at the borders would be a protectionist measure, said Kristalina Georgieva, managing director of the International Monetary Fund. She supported France’s proposal for a minimum floor price for carbon emissions around the world, saying this measure would be more effective in reducing global emissions.

Indonesia Says Ideal Single Carbon Price (11:10 CET)

Indonesian Finance Minister Sri Mulyani Indrawati said a single global carbon price would be ideal, but it would be difficult to reach a global agreement on it. “Each country should have its own initiative,” she said, adding that most measures would hit the middle classes harder. They are “not in the social safety net, but will bear the burden of today for the benefit of tomorrow”.

Yellen Urges Development Banks on Fossil Fuel Lending (11:35 a.m.)

US Treasury Secretary Janet Yellen has said she will push multilateral development banks to curb their lending to fossil fuels, as part of a global effort to make the financial system greener. Yellen said she would convene the heads of these institutions “to express our expectations that the MDBs align their portfolios with the Paris Agreement and net zero goals as quickly as possible.” The remarks reflect an effort by finance ministers and central bankers around the world to push lending institutions to support targets for reducing greenhouse gas emissions and to prevent money from flowing into projects that add to pollution.

Italian Visco says taxes might be unavoidable for financial transitions (12:55 CET)

“One way or another,” imposing new taxes to finance the transition to a net zero economy may be inevitable, Italian central bank governor Ignazio Visco said as he concluded the morning’s discussion. Despite the fear of politicians to broach the subject, an effective mechanism to contain carbon emissions may not be feasible without new taxes.

Visco Says Covid Variant Will Reach Trust (1:15 p.m. CET)

Bank of Italy Governor Ignazio Visco has said the latest variant of the coronavirus raises concerns about the damage it will cause to trade. “There is an obvious concern that has to do with the effect this can have on real-world commerce and economics,” Visco said in an interview with CNBC. “Confidence will take some time in some countries. He also said inflation would increase this year but “we don’t think it will be permanent.”

Lagarde says most banks fall short of climate risks (2:10 p.m. CET)

Eurozone banks fail to assess and analyze climate-related risks, European Central Bank President Christine Lagarde said. Nine out of 10 lenders only partially meet the central bank’s requirements. She pledged to increase the ECB’s analytical work in modeling and assessing climate risk – for example by including carbon prices and climate policies in its economic forecasts.

“While the costs of transition may be higher in the short run, they are much lower in the long run than the costs of unbridled climate change,” Lagarde said. “Without new climate policies, the 10% of the most vulnerable banks could see a 30% increase in the average probability of default of their credit portfolios by 2050.”

BlackRock Fink Urges World Bank, IMF Overhaul (2:35 p.m. CET)

BlackRock Inc. CEO Larry Fink said the World Bank and the International Monetary Fund are outdated and in need of a complete overhaul if they are to mobilize the billions of dollars of investment needed to bring sustainability to the developing world. Focusing on their role as financiers instead of lending money would be more helpful in the clean energy transition.

“There is private capital that can be mobilized for emerging markets, but we need to rethink how international financial institutions can support large-scale low-carbon investments,” he said. “We need a financing system that does not revolve around bank balance sheets.

The EU will move forward on the border carbon tax (3:20 p.m.)

The EU will go ahead with its plan to introduce a carbon tax at the borders, because failing to do so would mean failing to meet the bloc’s ambitious climate targets, said EU Economy Commissioner Paolo Gentiloni.

“If we have European companies leaving the EU because of these higher standards, or if we encourage foreign companies which have lower standards to expand their role in the European market, the outcome will not be good for them. ‘climate balance,’ said Gentiloni. .

The EU will mirror its emissions trading system, setting the same carbon price for domestic and imported production, Gentiloni said. Earlier Sunday, the IMF managing director criticized the EU’s plan, saying it would prove to be protectionist and ineffective.

COP26 chief urges nations to fulfill $ 100 billion pledge (3:40 p.m. CET)

Alok Sharma, the British minister who will chair the UN climate talks in Glasgow later this year, has urged developed countries to keep their pledge to provide $ 100 billion a year in climate finance to developing countries. “Delivering the full $ 100 billion is a matter of trust,” he said. The meeting is known as COP26 and will attract envoys from nearly 200 countries.

“I look forward to other donors, including other G-7 countries, to make new or increased commitments ahead of COP26,” Sharma said, adding he wanted to see a “lot, lot level more ambitious recycling of the richest nations’ SDRs than in the aftermath of the financial crisis.

Carney urges G-20 to support climate disclosure rules (4:35 p.m.)

Former Bank of England Governor Mark Carney urged the G-20 to support climate disclosure regulations around the world, saying “the private sector has gone as far as it can” . The rules would force companies to expose the risks they face from both global warming and potential changes in legislation to curb fossil fuel emissions. Carney is now a UN climate and finance envoy.

He also said the $ 1 billion per year carbon offsets market is expected to grow to $ 100 billion to $ 150 billion per year by the middle of the decade. With the support of regulators, these funds would go to clean energy projects in developing countries. London and Singapore, he said, said they wanted to host the market.

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