IMF calls for an end to fossil fuel subsidies, backs transition to green economy

New Delhi (NVI): In the wake of Covid-19, the International Monetary Fund (IMF) has said that it is a good time to end fossil fuel subsidies and create a greener, fairer economy for the future.

Speaking at the launch of the “Great Reset” initiative by World Economic Forum yesterday, Kristalina Georgieva, Managing Director of the IMF, threw the weight of IMF behind the transition and said there is a good opportunity now to save the environment from the consequences of global warming.

The “Great Reset” is the WEF’s global initiative to build a better world in the wake of COVID-19.

“We now have to step up, use all the strength we have, which in the case of the IMF is $1 trillion,” to ensure that history looks back at “the great reset, not the great reversal,” Georgieva was quoted as saying in a WEF report.

She said this means putting the right investments and incentives in place – and breaking with unsustainable ones.

“I’m particularly keen to take advantage of low oil prices to eliminate harmful subsidies,” she said.

A report by IMF last year estimated annual fossil fuel subsidies at $5.2 trillion in 2017, or 6.5% of the global economy, illustrating the scale of the challenge.

At the WEF virtual meeting the IMF head drew a parallel with the way the Second World War prompted the foundation of the National Health Service in the UK.

“The best memorial we can build for those who lost their lives in the pandemic is a greener, smarter, fairer world,” Georgieva said.

Bernard Looney, the CEO of BP, who was also in the virtual meet, agreed with the IMF chief and said that he backed an end to fossil fuel subsidies and supported the green investment policies that organizations including the EU were beginning to put into place. BP’s alternative energy portfolio includes wind power, solar power and biofuels, WEF reported.

“We all know there is a carbon budget. It is finite, it is running out,” he said.

In the absence of a real action on the ground, catastrophic warming of over 4 degrees is predicted by the end of the century, IMF reports, adding that the current policies are putting us on a course for around 3 degrees of warming – enough to drown major cities, bring mass extinctions and make large parts of the world uninhabitable.

According to the WEF report, the United States and China are currently the world’s largest polluters. Although the COVID-19 lockdown caused a lull in CO2 emissions and dirty air, air pollution has already rebounded to previous levels in China, with the resumption of economic activities and quite possibly, the use of fossil fuels to generate electricity.