Official aid and funding from governments in developed countries alone will not be enough to close the funding gap for climate change initiatives in developing countries, IMF Director Kristalina Georgieva told CNBC.
More private investment is needed to help developing countries meet their climate change goals, the managing director of the International Monetary Fund has said.
“We will never close it if we rely on the generosity of rich countries, because it is too big to be close [sic] with public money,” Georgieva told CNBC during an interview at the COP27 climate change summit in Sharm el-Sheikh, Egypt.
“The most important thing here, and in the months to come, is therefore to work tirelessly to create opportunities for private investment in the developing world.”
Ahead of the summit, the United Nations called for “increased funding and implementation of actions” to help vulnerable nations adapt to the climate emergency.
“Climate change is dealing blow after blow to humanity, as we have seen throughout 2022,” UN Environment Program Executive Director Inger Andersen said, citing the devastating floods in Pakistan. .
Vulnerable and developing countries will need between $160 billion and $340 billion by the end of the decade to bring about climate-related change, and up to $565 billion by 2050, according to the report. UN.
Official aid and funding from developed country governments alone would not be enough to close the funding gap for climate change initiatives in developing countries.
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“Adaptation needs in the developing world are projected to soar to $340 billion a year by 2030. Yet support for adaptation today is less than a tenth of that amount” said UN Secretary General António Guterres.
“The most vulnerable people and communities are paying the price. This is unacceptable.”
Why advanced countries should fight climate change
It is in the interest of advanced economies to help developing countries meet their climate change targets, Georgieva said, citing stability as the main reason.
“If we are to let climate shocks, again and again, devastate poor countries, we are contributing to the instability that Europe feels very strongly, especially when migration flows increase,” she said.
Stability in developing countries also secures trade between advanced and developing countries, Georgieva said.
“If you want your savings to export to these countries, there needs to be prosperity and stability there,” Georgieva said.
Disruptions to supply chains caused by climate change-related events could present a greater risk than that posed by the pandemic, she added.
Efforts also need to be stepped up to hold companies in advanced countries accountable for reducing emissions, and taxes and regulations are levers that many governments can use, the IMF chief said.
“We have to recognize that we are way behind where we should be in protecting the well-being of our children. If you look at this decade – 2020 to 2030 – we need to reduce emissions by somewhere between 25% and 50% and the emissions are still growing,” added Georgieva.