Watch the replay of this event held on December 7, 2022. (Transcript below.)

Trillions of dollars every year, for decades. That’s what we need to spend on green technology and infrastructure to stave off the worst impacts of climate change, experts calculate. As negotiations continue beyond this year’s UN climate summit (COP27), join our free online conversation with Tobias Adrian, of the International Monetary Fund, and Shuang Liu, of the World Resources Institute, about how governments, banks and investors can fund a greener future — and why that’s a smart investment.

Attendees will learn:

  • The role of national governments, international organizations and private industry in addressing the economics of climate change
  • Why many argue that wealthy countries such as the US should do more to help poor countries adapt to climate change
  • Why large investments in science and technology are needed to meet emissions targets


Tobias Adrian

Financial Counselor and Director of the Monetary and Capital Markets Department, International Monetary Fund (IMF)

Tobias Adrian leads IMF efforts to find strengths and weaknesses in the global financial system, and to ensure its stability. Before joining the IMF, Tobias was a senior vice president of the Federal Reserve Bank of New York, where he contributed to monetary policy, financial stability policies and crisis management. He has published extensively in economics and finance journals and is on the editorial committee of the Annual Review of Financial Economics. He holds a PhD from the Massachusetts Institute of Technology.

Shuang Liu

China Finance Director, World Resources Institute (WRI)

Shuang Liu leads the WRI Sustainable Finance Center’s work on China finance and the Belt and Road Initiative. She works with governments, private financial institutions, NGOs and other partners to shift China’s investment to sustainable finance. Prior to WRI, Liu oversaw the development and implementation of strategies on climate mitigation and economic transition at Energy Foundation China. She developed Greenpeace’s first coal campaign strategy in China and has worked for consulting firms to assess greenhouse gas mitigation opportunities for private sector clients and government agencies. Liu holds a master’s degree in environmental and resource economics from University College London.


Emily Underwood, Knowable Magazine

Emily Underwood is the host and producer of virtual events at Knowable Magazine from Annual Reviews. She has been covering science for over a decade, including as a staff neuroscience reporter for Science. In 2016-17, she was a Rosalynn Carter Fellow for Mental Health Journalism, and her reporting has won national awards, including a 2018 National Academies Keck Futures Initiatives Communication Award for magazine writing.


This event is part of an ongoing series of live events and science journalism from Knowable Magazine and Annual Reviews, a nonprofit publisher dedicated to synthesizing and integrating knowledge for the progress of science and the benefit of society.

Future Tense is a partnership of Slate, New America and Arizona State University that examines emerging technologies, public policy and society. Sign up for Future Tense’s newsletter.


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Emily Underwood: “Hello everyone. Welcome to our 21st live online event, ‘Beyond COP27: Who will pay for climate solutions?' I’m Emily Underwood, your host today, and the producer of events for Knowable Magazine. This is a special event brought to you by Annual Reviews, Knowable Magazine and Future Tense. Future Tense is a partnership of Slate, New America and Arizona State University that examines emerging technologies, public policy and society. If you haven’t checked out Future Tense before, please do, sign up for their newsletter and sign up for Knowable’s newsletter, too. We will be recording this event. You can replay it after it’s over and share it with others.

“A few technical things, if you can’t hear the audio, please refresh your browser and make sure the mute button is off. Do the same if one of the speaker tiles goes black. This is a known quirk, so you’re going to refresh your browser — same thing. OK. Put your questions in the question box at the bottom right of the screen. This is different from the general chat that you’ve been saying hi on. So take a second and make sure you can see that question box. You’re going to put your questions there. After about 30 minutes of discussion, our editors are going to pick from the list, and then we’ll answer as many of those questions as we can.

“All right, let’s meet our guests. First, we have Dr. Tobias Adrian, who joins us from Washington, DC. Tobias is the financial counselor and director of the Monetary and Capital Markets Fund of the International Monetary Fund. He’s on the editorial committee of Annual Reviews of Financial Economics, and he’s written extensively for Annual Reviews and many other publications. So welcome, Tobias. Can we bring Tobias up?”

Tobias Adrian: “Hello, Emily.”

Emily Underwood: “Hi. OK. Let’s meet our other guest, Shuang Liu. She is the acting director of the World Resources Institute’s Sustainable Finance Center. Among many other responsibilities, she works to help China shift its massive investments, at home and abroad, away from fossil fuels toward green development. And that’s just one of her many, many roles. So Tobias and Shuang, thank you for joining us today. And I also just want to say hi to everyone in our audience. I am seeing guests from Nairobi, Detroit, Ghana. Welcome. It’s really fun to see where you’re joining from, so please do share that in the chat if you like.

“We’re going to start this event off a little differently. We’re going to start with a poll that we can all participate in. So if you look to the right of your screen, you’re going to see a little icon for a bar graph. Can everybody click on that bar graph? Does everybody see the poll? Yes? OK. What you should be seeing in front of you is a question, which is just, where do we stand when it comes to funding climate change solutions? And you have six different options.

“First, ‘It’s going great!’ We’re golden. The other is ‘It’s going in the right direction, but we need to move much faster.’ The third is, it’s hard to say: There’s either plenty of money, lots and lots of money, or not nearly enough — outlook hazy. The other is, ‘We’re in deep trouble, but it’s still possible.’ ‘We’re out of money and/or time.’ And then the answer is, ‘Wrong question! Concentrate and ask again.’

“And, yes, I did get some of these answers off of a Magic 8 Ball. So please make your votes. We will show the results of this poll when we get to the end of our conversation, but I’d like to kick things off by asking what our speakers think. So Tobias, let’s start with you. Where do you land? We’re golden or we’re doomed or outlook hazy?”

Tobias Adrian: “Well, we have our work cut out. Still a lot more needs to be done to get the planet to a green transition and to ensure that the climate that we know is preserved in the future. We have started on this journey, but we have a long way to go. Many, many trillions of dollars.”

Emily Underwood: “OK, so answer 2 for Tobias. Shuang, where do you stand right now? Do you agree with Tobias? Are you more or less optimistic?

Shuang Liu: “Yeah, I think I would like to agree with Tobias and also to add, I think what we need is that we have a lot of the pieces, but probably not in the right place. There could be sufficient funding to support it. There could be sufficient capacity to access and mobilize the funding, but it’s not really flowing fast enough for us to see where the money can support the right efforts on climate solutions.”

Emily Underwood: “OK. Thank you for playing. And now I’d like to talk a little bit about why we are here today, which is not just can we pay for climate solutions, but who will pay for climate solutions? Where is the money going to come from? This has been in the news a lot lately because of the latest UN meeting in Egypt, which, Shuang, you attended. Correct? And Tobias, I’m sure either you or your team were there.

“So when we ask this question, it starts to get really complicated obviously, because we’re really talking about at least three buckets. So paying for climate mitigation, moving away from fossil fuels. Second, all the upgrades or adaptations that we need to make to avoid the catastrophic damages from climate change. And then third, this issue of loss and damage where we need to find a way to pay for the damages and losses that are already happening and that are causing such suffering around the world already.

“What I would like to start with is to talk about you, Tobias, and what is the International Monetary Fund, and why was it such a big player at COP27? Why is it such a big part of these conversations?”

Tobias Adrian: “Yeah, absolutely. The International Monetary Fund was created, together with the World Bank, after World War II, and the International Monetary Fund is really there to ensure that the global monetary system works well. So the mandate of the IMF is anything that is macro-critical, so that amounts to economic developments that are of macroeconomic magnitude, and certainly climate change falls into that bucket.

“One of the main differences between the IMF and the World Bank is that the IMF has global membership. We have 190 countries that are members, and that is stretching everything from the richest to the very poorest country in the world. So when we think about climate change, climate mitigation, climate adaptation — as you put it so nicely, Emily — we really have to think about the entire membership. And that’s one particular advantage point of the IMF is this global membership. It’s macro-criticality, global membership and how do we get the whole world to have a strategy to address this fundamental issue.”

Emily Underwood: “Can I ask, what does it mean to be a member? What powers does that give you if you’re a member of IMF?

Tobias Adrian: “Absolutely. There’s a kind of legal foundation to the IMF, which is called the Articles of Agreement. So any country that becomes a member has to adopt domestic laws to make its own functioning compatible with the IMF. And so there are both obligations and benefits from being a member. So it is very much universal. They are only about two or three countries that are not members, because it is viewed as being so beneficial and so important to be a member.

“The IMF does three things: surveillance, lending and capacity development. Let me just elaborate a little bit on those three things and what they mean in the context of climate change. So surveillance is really about assessing policies both at the global level and at the individual country level. This is where, for example, we play an important role in the COP and we cooperate with many other institutions such as the World Bank but also the NGFS, the Network of Greening the Financial System, or the Financial Stability Board. These are all global institutions that are involved in climate to some degree. So surveillance is about policies. Lending is about lending money to countries and we can elaborate more on that in a moment. And then capacity development is about building institutions in countries to deal with climate change.”

Emily Underwood: “Great. We will come back to those big buckets, but right now I’d like to hear from Shuang about what you do at the World Resource Institute. What is your role there?

Shuang Liu: “Yeah. Well, very different from IMF. We identify ourselves as a think-do tank. So the approaches that we take to tackle basically the human, nature and climate, that’s our focus, is that we provide research so that we can provide evidence to support a lot of the policy discussion and also the practices discussions. We also do a lot of convening, and this is only achievable with our global network in 12 regional offices in Latin America, Africa, Asia, Europe and the US.

“We also work very closely through our partnership, not just within WRI, but also with partners in different countries and regions. So if I can actually make analogy of, at the finance center, how we are looking at not just the climate finance, but also a lot of the nature and people-oriented finance, it’s like we are looking at the topic as it’s serving a pie. How we can make the pie, which is the size of finance that’s available to support the climate, people and nature goals, is that we need to make the pie larger.

“There’s still a large funding gap, particularly in the Global South countries, where we need a resource to do the work. That’s the first piece, how we look into the issue. The second piece is how we can cut the pie. The topic of today’s discussion is who’s going to pay for the climate solution. It’s part of the discussion on who is getting what size of the pie on the climate finance and the other global finance.

“And the last piece, how we frame it is that how we can serve the pie right. A lot of the discussion won’t end just as the developing countries on the national level can get climate finance, all other types of finance. It’s also about how to serve that finance service to the sub-national government and ultimately to the community and people who need finance to make magic happen. So by looking at the three different angles, that’s how WRI and our finance center can make our contribution to this global discussion.”

Emily Underwood: “OK, thank you. And, Shuang, when you’re talking about this pie, who are the big players? Who do you want to get to the table, not necessarily to eat the pie but make the pie?”

Shuang Liu: “It depends on how large the table is. I think the table should be very large. It’s very difficult to answer that question because it needs to be, in a lot of cases, a country-by-country discussion, if not a community-by-community discussion. So I’m just going to simplify, if not oversimplify, the question, and particularly because we’re talking about COP27 and the whole UNFCCC [United Nations Framework Convention on Climate Change] process. A very essential discussion on the global negotiation on climate is that developed countries have to pay developing countries for their climate action.

“The rationale behind it is because developing countries historically are not responsible for the global warming problem. So that in order to support developing countries to achieve their NDC [nationally determined contributions] and other climate mitigation and adaptation goals, the developed countries will have to pay for those efforts in developing countries. Well, we have been paying attention around COP and the UNFCCC process, that there is a commitment for all the developed countries to pay at least $100 billion every single year to developing countries to help with both mitigation, adaptation goals.

“However, we are actually behind on achieving these goals. And so a lot of discussion is how we can still make this a commitment realized in the reality. The other part of the story, again — let’s take the focus on the UNFCCC first — is for next steps; there’s this discussion that we have to raise the ambition from the developed countries on the climate finance to beyond $100 billion. There hasn’t been any concrete plan on how to achieve this, but that’s actually one of the areas we need to pay attention to under the question of who should pay for the climate finance.”

Emily Underwood: “I think that this question of who should pay and the equity issue, we’re going to spend more time on that as we get towards the end of our discussion. I want to give us plenty of time to hash some of these problems out. Before that, though, I want to move back to the basics of how to raise this money. And I want to use the example of coal, because that’s something that you and Tobias have both worked on extensively.

“Tobias, you’ve argued that countries like the US should be financing, should be paying for the replacement of coal. And I mean wealthy countries like the US, often referred to as the Global North, should be paying for the replacement of coal with renewable energy around the world, not just out of responsibility or equity, but out of self-interest. And you’ve calculated that there are huge economic benefits to be gained. If we don’t do it, it’s leaving $85 trillion on the table. So your challenge is to explain how you got to that enormous sum, in a minute or less.”

Tobias Adrian: “Yes, very happy. The usage of coal in the production of energy is polluting the environment, and that is extremely costly for the world. It generates global warming. Global warming is destroying the pie, what Shuang was talking about earlier. The pie is getting smaller — i.e., the world is getting destroyed by global warming. So preserving the planet is extremely beneficial and that’s the $100 trillion number. So to preserve the planet has a huge amount of economic value.

“The costs of replacing energy production from coal with greener sources of energy production is only about $30 trillion or so. So the cost of transition is perhaps $30 trillion, say, over the next 20 or 30 years, while the benefit is over $100 trillion. So the net benefit of transitioning from, say, coal production of energy to green sources of energy, the benefit is enormous, and the benefit is essentially preserving this planet and preserving the economic pie that the planet is producing.”

Emily Underwood: “So when you’re talking about this net benefit and you’re trying to convince countries that this should happen, how do you explain, when will this net benefit arrive and who will get it and are there going to be losers, as well, in that calculation?

Tobias Adrian: “There is of course always an adjustment, right? Because you have to move from energy production by coal to other sources of energy production. So some jobs, for example, need to be reallocated, but we estimate that those costs are relatively small relative to the benefit of preserving the planet. And so think about countries that can grow agriculture that become deserts — that is the cost that we are talking about. It is the literal destruction of the planet and that is costly for everybody.

“So as you alluded to, Emily, even for nations that are only indirectly exposed to these costs, paying for the transition can be extremely valuable. So some nations might not just be interested in transitioning in their own country, but to also pay for other countries to transition. And that is exactly the rationale why institutions such as the IMF, the World Bank and the multinational development banks are set up.

“Those are institutions to realize those net benefits for the world as a whole via transfers of financing. So I think that it is a combination of these public sector transfers of money, much of it from advanced economies to emerging markets and developing economies in combination with capital market activity, as well. So it is a combination of public and private sector funding that can solve this enormous challenging problem.”

Emily Underwood: “It seems to me that there is quite a bit of agreement and consensus about what needs to happen and a lot less agreement about how it should happen. So, Shuang, can you talk about your perspective on this, how to mobilize this transition, who should really be leading it?”

Shuang Liu: “Yes. I really love the framing that Tobias gave us. If I can actually just complement Tobias on not necessarily the macro level but micro level discussion and some of the efforts we have seen in the past several months on coal, and also particularly we’re talking about the replacement of existing coal power stations. I do want to bring our attention to the so-called Just Energy Transition Partnership, of JETP, which is G-7 countries … working with some of the countries where there’s a heavy exposure to fossil fuel, particularly to coal, in namely South Africa, Indonesia, India, Vietnam.

“And the design of the Just Energy Transition Partnership, the JETP, is for the G-7 countries to pool their funding together and to support the host country, or the JETP countries, to design a plan of how to retire the operating coal power stations earlier than those coal power stations were designed for. And what I meant is that normally, for instance, in those countries, the coal power station, when they became operating, the expectation is they will be there for 40 years, 50 years. I’m just making this as an example.

“And what funding from G-7 countries is trying to support is for those host countries to retire or put their coal power station off-grid 10 years early, 20 years early. It depends on the final package to say the details. But this is one way of how developed countries can put their funding together to pay developing countries to take the coal power stations off the grid. And this is what exactly the climate science is asking us to do.

“I just want to share one data point that IEA — that’s the International Energy Agency, who’s very good at their energy modeling work, and that’s very often that we will refer to — is asking that all the OECD countries will have to phase out all the coal power stations by 2030, and for the rest of the world, all the existing coal power stations have to be phased out by 2040. So to achieve that goal, which is in line with the 1.5-degree climate scenario we’re talking about, we’ll need a lot more funding than we currently have to replace those coal power capacities.”

Emily Underwood: “There’s a lot of talk about the need to mobilize or unleash, release money, especially private capital, for climate change solutions. And blended finance is one model for how that can work. Can you explain what that is and also, if somebody could just explain to me how money gets trapped or leashed, that’d be a bonus. But Tobias, why don’t we start with you?”

Tobias Adrian: “Yeah, happy to start. I will give you a very concrete example. At the IMF we have a new lending tool, which is called the Resilience and Sustainability Trust. That is about $40 billion at the moment — it could be scaled up over time — that is aimed at lower-income countries and vulnerable middle-income countries, oftentimes smaller countries such as islands that are really exposed to climate change. About 143 countries are eligible for this Resilience and Sustainability Trust. And we already have programs in place with Barbados and Rwanda, and our board approved a program with Costa Rica as well.

“So those countries are going to get a certain amount of funds from the IMF. Blended finance would mean that some of those funds are then combined with private sector funding to leverage up the public money. And a very good example of that was provided by the IFC, the International Finance Corporation, which is part of the World Bank Group. So that is the public-private sector arm of the World Bank.

“And so what they did a couple of years ago was to team up with a private investment operator, Amundi, to offer a tranche investment vehicle. So the public funding by the IFC and other development banks such as EBRD [European Bank for Reconstruction and Development] and EIB [European Investment Bank], those other multinational development banks, they funded sort of like the riskiest tranche in a kind of structure. And that was levered up 10 to 1. So say out of $200 million, $2 billion of total funding was generated by combining the $200 million with $1.8 billion of private sector money. So that’s a template that could generate, say, from this $100 billion, the magic number that Shuang mentioned earlier, if that was levered at 5 to 1 or 10 to 1, we would get into the sort of magnitudes that we think are needed to really have a global tranche transition.”

Emily Underwood: “OK, thank you. A couple questions. When you say give money, are you saying lending money or these are loans and are these loans with a different borrowing cost or interest rate than other types of funds? I’m just wondering if this is the same initiative that Prime Minister Mia Mottley from Barbados sort of brought about.”

Tobias Adrian: “These are loans that come with relatively low funding costs and they can be used by the country to help in building resilience and some of that could be used to be leveraged with private sector funding. So we did some work, some analytical work for the Global Financial Stability Report, which is one of our reports, where we looked systematically across development banks, how much leverage they generate. And on average it’s about 1.2. We think we can get to five times leverage or even more by structuring these public-private partnerships, which is what blended finance is about, in a better way.

“So when we talk to the private sector, there’s an enormous appetite to actually invest in climate transition. Investment managers, pension funds, insurance companies, they want to do that but they can only take on a certain amount of risk. And so this is where the public sector can come in. The public sector can take on a certain amount of risk, like country risk, off the table, and then the private sector complements the kind of risk-taking of the public sector. That’s the fundamentals.”

Emily Underwood: “Thanks. Thank you for that very nice explanation with a minimum of jargon, I really appreciate it. So, Shuang, do you think that what Tobias just described, are these types of changes going to be enough to make this happen?”

Shuang Liu: “Yeah, I would think, given the funding gap we’re talking about, we need a whole package of every solution. Also, just building upon what Tobias has shared, another example I’d like to bring our attention to is some of the international financing focusing on the infrastructure sector, the power generation sector. There are some of the bilateral players who actually played a very important role in this international infrastructure of the power generation financing. The way that, Emily, you asked the question, the blended finance … de-risking, the public finance mobilizing private finance. The reason we’ll need a solution like it was because there are perceived risks for private finance investors to invest in overseas, particularly in developing countries. That’s where the public finance or public investors can help with sharing the risks so that they will make private investors more comfortable in increasing their investment in the renewable energy and other climate efforts.

“The other part is that the public finance does have a different mandate than private finance. They are not as profit-driven as the private ones. So that having the public finance creating some of the … policies for private finance to come in, that’s another reason why we are seeing that the blended finance can play a more important role than what it does nowadays. And what I shared, for instance, for the international infrastructure projects or power generation projects, very often we have seen that, for instance, OECD countries, and China as well, there will be a so-called export credit agency that’s a public money and public agency who actually provides either insurance or sometimes the concessional loans as the public money.

“But they will also engage the private players — it can be the commercial banks or it can be the corporate who can actually invest directly in the developing countries, in other countries. That’s how they sometimes come together in a project-financing structure so that the public money can work with private money to support the infrastructure and other kinds of projects abroad.”

Emily Underwood: “Tobias, do you want to respond to anything that Shuang just brought up?

Tobias Adrian: “Let me frame it in the following way. I think there are three issues. One is the scale, and that is what Shuang was really talking about. So is there enough public money available to finance the transition globally? And what the exact number is, I think we can debate, but I fully agree that more is needed, for sure.

 “The second question is what do you do with the money? Are there sufficient projects to, say, make a country, I mentioned Barbados, for example. Do you have concrete projects available to really generate transition in a country like Barbados? Or Shuang mentioned South Africa or Indonesia. So that’s the second question. And then the third question is how does the private sector complement public sector funding? And let me just spend a little bit of time on this third question.

“So the private sector is going to demand a certain return which is comparable to other returns, but the public sector can take some of the risks off the table, add a cost that is relatively lower than what would have to be asked by private sector. For example, the World Bank has a specific insurance product called MIGA [Multilateral Investment Guarantee Agency], that is specifically ensuring some of those risks that are very difficult to insure in the private sector. There is a public sector solution for those risks.

“That is, for example, something that could be used at much more scale in these blended finance structures. So it’s really thinking about how to tranche and make risk, allocate risk to different players, to the public sector with the private sector to, say, asset managers with insurance companies, with pension funds, in a way that increases the total capacity to finance the green transition. So a lot of plumbing there, but I’m quite optimistic that this can be a very important element to generating steps in the right direction.

“It doesn’t solve everything. You need the other parts, too, you need the right projects and you need sufficient public sector funding. But once you have the projects, once you have the public sector funding, combining that with the private sector I think will be very powerful and can be potentially much larger than the kind of numbers we see at the moment.”

Emily Underwood: “OK. Well, I’m glad you’re optimistic. I would like us to make sure we get to some of our audience questions. As a reminder, hey, audience, you've got to put your questions in the question box so make sure you’re putting those in there. Our editors are going to move them into a document that I will be looking at. But I’m just going to throw one question out there that’s obviously in the chat. So isn’t coal burning in China, the elephant in the room? Are these funds being focused on China? So, Shuang, can you take that question first?”

Shuang Liu: “Yes. … Is the question, those funds, like multilateral funds? Are those funds focusing on China? Those funds, are they referring to the multilateral funds?”

Emily Underwood: “It isn’t specified, so I think you should respond with the funds that are.”

Shuang Liu: “Yes. So maybe I can just take one step back. Yes, I think the coal conception, in China and the rest of the world — as I shared, the data point from IEA scenario — that’s what we need to address. And I believe that it’s also in China’s own interest to talk about the coal conception and how to reduce it. There are many policy discussions we have observed in China, including put a cap on the coal and also the total energy conception. Those are certainly the right directions that we will have to travel to.

“We do also notice that a lot of the coal power stations in China are actually not really economical to run … anymore. There is a lot of more political economic analysis and also discussions we can have. But just look at the performances, also how many hours those coal power stations in China are running. It doesn’t really make sense from, of course, the environmental perspective but also from the economic and financial perspectives, to keep them on the grid. And that’s certainly something that we will need to look into.

“On the multilateral funds, and I’m sure that Tobias will be able to give more answers to, but I do think that for China and maybe the other countries, we’re talking a lot about those international financing so far. But we also need to pay attention to how to mobilize the domestic finance within certain countries to support those efforts. China’s one example. Even in Africa, where the COPS27 countries, the data shows in the past decades, almost half of the investment in energy in Africa was actually from the domestic funding sources. I was actually surprised, looking at the data point, so just want to flag that domestic finance as well as the international finance are needed to support the climate efforts.”

Tobias Adrian: “Emily is not visible at the moment, and I’m not sure we can hear Emily, so why don’t I just complement what Shuang was saying. In many countries, I fully agree that domestic funds can be very instrumental in generating a green transition, and China of course is a good example because China is one of the largest countries in the world, by GDP, right? It’s the second-largest economy and by some measures it’s very close or comparable to the US in terms of size. So there’s certainly financing capacity there to finance transition and it is a question of policy priorities to get there. And this is where I think both the IMF and institutions such as the WRI, where Shuang is working, I think are pushing the debate in the right direction and policy orientation in the right direction is very first order.

“I did want to mention a complementary thought. We have been very much focused on coal and carbon in terms of carbon production. But of course, preserving nature is the other first order priority. We have rainforests around the world, in the Americas, in Africa, in Asia, and the value to the planet, to everybody on the planet, of preserving those forests is tremendous.

“But of course, this benefit, from the global perspective and from the global citizens’ perspective, in some sense, is not fully internalized at the local level, right? Because everybody is better off by having forests around the world. But of course any individual might be better off by planting agriculture or raising cattle on those areas where the rainforests are. So aligning the global interest with the local interests is another first order objective in this debate.”

Emily Underwood: “Tobias and Shuang, can you hear me?

Shuang Liu: “Yes.”

Tobias Adrian: “Yes, we can hear you.”

Emily Underwood: “Can you see me?”

Shuang Liu: “No.”

Tobias Adrian: “No.”

Emily Underwood: “Well, luckily you don’t need to see me and you’re carrying on beautifully without me. Sorry, we had a connectivity issue. I just want to make sure we get to a few more of our audience questions, and apologies if I’m repeating anything.

“From Donald Samulack, it’s a mixture of a statement and a question: ‘I find that we are all in the same conversation loop globally, lots of commitment through talk and money but not much political will to affect change. Other priorities like Covid seem to stifle the momentum. In the end, real solutions are going to come from private sector rather than big government.’

“Basically, the question is, ‘Are we going about this all wrong?’ You’ve talked a bit about incentivizing the private sector to offer a better and faster return on investment. But I want to actually add to this question with a metaphor of my own that has been on my mind. When I think about the job that you’re trying to do, Tobias, and the job of the IMF, I think of this car hurtling towards a cliff. And to me, it seems like you’re sort of trying to change the tires of the car without slowing down or stopping, because there’s an element of risk to changing these moving pieces, but you also have to keep the car from going off the cliff. So does that metaphor ring true for you? And that goes to the ‘Are we going about this all wrong?’ question. Does something fundamental need to change?”

Tobias Adrian: “I think we have to work on many different solutions and hopefully all of them in combination are going to make a difference. I fully agree that the private sector plays an enormously important role, but it’s not clear to me that the private sector has the full incentives to go all the way. When I talk to major financial institutions, for example, at COP26 in Glasgow, GFANZ [Glasgow Financial Alliance for Net Zero], often called the Glasgow Alliance, was created. Mark Carney is very much associated with that. At this point, $150 trillion of financial institutions in their alliance. So, enormous amount of money.

“But they always say we need collaboration from the public sector. Because they can’t take all those risks from the private sector side. Incentives are not fully aligned. This is why I think that blended finance, the public-private partnerships are so important. Similarly, research of the private sector is certainly going in the right direction, but is it going all the way? If the private sector can solve it, that’s great. I’m very happy. From what I hear, we do need the partnership between the public and the private sector at this point.”

Emily Underwood: “Shuang, do you want to add anything to that?”

Shuang Liu: “Yes, I would love to. I think, because we are talking about everything on climate change, there are very different initiatives we’re talking about. Again, simplify everything. We have mitigation, which means we need to cut the greenhouse gases emission. We also have adaptation, which is climate change is happening. So we need to have better infrastructure and a resilient way of protecting people in the community who are already suffering from climate change. And particularly for adaptation — I’m just giving this as example — the private finance have even less incentives to invest in a lot of climate adaptation efforts.

“So I personally don’t think that we can only rely on private investors on a lot of the projects where we don’t see a very clear... Private investors are profit-driven and when we are seeing this is actually public good that we need to provide under the climate umbrella, then perhaps private finance is not the only solution and the sole solution that we can rely on. But I absolutely agree they need to play an essential role in many ways with the other finance resources.”

Emily Underwood: “Next, I would like to ask a question from Chirag ‘Jay’ Patel. ‘Why can’t there be an implementation of a global carbon tax to fund a transition to clean and green energy?’ This is certainly a question I have wondered about. Tobias, do you want to take that first?”

Tobias Adrian: “Yeah, that is very much aligned with our No. 1 policy priority at the IMF, which is carbon taxes. So from a sort of economics principle point of view, that is the right answer. You have to align pricing with externalities. So the cost you’re paying for pollution is way too low relative to the damage you’re doing. And so carbon taxes are fixing that problem. The problem with carbon taxes are the politics. In some European countries, carbon taxes are fairly close to what economists think is the right level.

“But outside of Europe, the gap is very, very large in between what the price of carbon is and what the social cost of carbon or the right price of carbon, from a pollution point of view, is. And the politics are very, very difficult around getting from the currently very low price of pollution, to the right price. So it’s not only politically hard to do, that’s why I think carbon pricing in practice has to be complemented by things like blended public-private kind of finance.”

Emily Underwood: “Thank you. That’s helpful. Shuang, what is your take on a global carbon tax or how carbon taxation should be applied?”

Shuang Liu: “I wish that somebody can give me the clear answer on that. In my previous job, I worked on the carbon market or the emission trading program in China, on the national level and sub-national level. I very much with agree with what Tobias has shared. It’s actually not a technical discussion. And as an economist by training, I also agree this probably should be the most convenient solution and the minimum that we can do to have this global carbon pricing. But because of the political will and, as Tobias has pointed out, that I think there are only very few existing carbon markets where the carbon pricing is at a level that will make a difference to the mitigation efforts.

“In a lot of the regions and countries where there is a carbon market, because of the lack of ambition, in a way, the carbon market pricing or the carbon tax is actually not at a level where we can make a difference in there. So again, I think a lot of groups, including IMF, are still working on how we can push for global carbon pricing, but we can’t afford not to be looking at the other options, just given how challenging it can be to have such global initiative.”

Emily Underwood: “This really also speaks to the issue of accountability and tracking all of these things. One of our questions is, ‘We see a lot of goodwill money being talked about or being made available, but how do we track how much is actually spent and spent properly?’ Shuang, I know that you do a lot of this type of work at WRI. Can you speak to that? And then we’ll hear from Tobias.”

Shuang Liu: “Yes, I’m happy to. Yes, at WRI, that’s one of our work … that we get really excited and talk about this all the time — the accountability and transparency and tracking. For instance, some of the efforts we have is that how we can … As Tobias has pointed out, some of the private financial institutions last year around Glasgow has found this defense and a lot of them have this commitment of whether that they can set up their science-based target, to make sure their investments are aligned with the 1.5 degree and the other targets.

“But there isn’t a go-to place to find out how the financial institutions are making progress towards their targets. So organizations like WRI, and we know there are other key organizations working on this as well … we go out to collect the information from different reports that the private financial institutions publish on either the environmental performances from their annual report to pool out the data and consolidate them into one so we can put those efforts from different financial institutions next to each other to give us a better mapping of where they are in terms of their progress on the climate goals.

“The other players we’re talking about also, the public ones, including the developed countries and naturally their progress on $100 billion. Also, there is a reporting program, how these developed countries will have to report. So a lot of the organizations, including us, will also try to provide some of the more timely efforts, watching how they’re making progress. The other effort is that a lot of the … development financial institutions publish their own report on the climate finance progress with shared methodology. So I think there are different groups working on different angles, but ideally in the coming future there will be more comprehensive and consolidated efforts, making it much easier for us to track where the progress is. And of course it has to come…”

Emily Underwood: “Great. We’ve been getting some requests for resources, including visibility on what grant opportunities are available for the private sector to access funds and innovate, deploy solutions. So I think after this we will hopefully compile some resources that people can learn more about and follow up on. Tobias, do you want to add anything to what Shuang was talking about?”

Tobias Adrian: “Yeah, I would add something that is closely related but a little bit different, which is about data and disclosure. What Shuang was talking about is really think tanks or public institutions like the IMF and the World Bank are certainly keeping track on what are the needs and how much is being spent and who’s spending what and where it’s being spent. The other element that I think is very important is for the private sector to be able to assess what is green and what is brown.

“So to what extent is a certain company using clean inputs and producing clean outputs, or is polluting. This is where this whole discussion around data and disclosure is coming in. About a year and a half ago, the ISSB, the International Sustainability Standard Board, was created to basically generate an accounting system globally for the degree of greenness of corporations and products.

“I think that it is difficult to overstate the importance of that. That allows economic actors, individuals, whether you are in the supermarket or whether you are an investor or whether you are in the public sector, it’s allowing you to assess to what degree production is green or brown and to provide incentives to move in the right direction by directing new purchases, by directing new investments and by directing tax dollars, so public money.

“The initiative here is to generate the data, disclose the data and then basically classify what is green and what is brown. And so there it’s really on the classification, the third leg, it’s the European Union and China that are leading there. Data and disclosure, it is a global effort where actually the SEC [Securities and Exchange Commission] in the US has made an important step in a proposed rule this year. And this is done very much aligned with this is ISSP, which is the global standard data for essentially climate data.”

Emily Underwood: “Thank you. And there are so many acronyms in this field. That’s my own personal comment here. So we only have four minutes left, and I want to make sure that we see the results of our initial poll. And I hope that people who have attended this have learned something and found it interesting. Maybe you’ve become a little bit more optimistic, maybe you’re less optimistic. That’s something I’d be curious to see. You could tell us in the chat.

“And I’m wondering, since we have four minutes, I just want to get to one last audience question. This is kind of an interesting proposal from Moira Magneson. ‘Might a global climate conservation core — with buy-in and recruits from constituent IMF countries — be launched as a workforce to develop and build green alternative infrastructure in the countries that need it most? Or does such an organization already exist?’ I’ve never heard of one.”

Tobias Adrian: “Is the question for me or for Shuang?”

Emily Underwood: “Well, you’re from the IMF, so let’s start with you.”

Tobias Adrian: “OK, I will start. So I told you at the beginning that we do three things: surveillance, which is essentially policy advice; lending, which is getting the dollars in the countries; and capacity development. And I think your question is very closely related to capacity development. So we do that at the IMF, but also the World Bank is doing that. And capacity development is really about having people in countries to build institutions to put the right policies into place. So we are not building an energy company. If you’re thinking about engineers that are building solar panels, that, neither the World Bank nor the IMF is doing, but creating policy frameworks that allows to then build those solar panels, that is already something we do through capacity development, and the World Bank, as well. So let me stop here and perhaps pass to Shuang.”

Emily Underwood: “Oh, that’s helpful. I have learned a lot about what the World Bank and IMF do and what they don’t do in the course of this conversation. Shuang, is there anything you want to add to that? And we do have to end in a minute.”

Shuang Liu: “Yeah, maybe just one point. I don’t think such one organization exists, but there are certainly efforts working this way, and I think it’s extremely important to have on-the-ground, in-country capacity because a lot of the solutions are actually country by country and it has to be so customized to the local situation.”

Emily Underwood: “Thank you. OK, one last question from me. If you could have one superpower that would help you do your job well, what would that be? And as you guys think about it, I want everybody to take a look at the poll results. You can click on the bar graph again and take a look.

“As a reminder, if you’ve enjoyed this event from Future Tense and Knowable, please sign for our newsletters, follow us on Facebook and Twitter. And thank you everybody for taking the time.

“We’re going to be working on an exciting new series of events in 2023, so please keep an eye out for those invites. We’ll also send out a survey soon to gauge what’s working well at these events, what we could do better and get your ideas for future topics. Thanks again, and we’ll end with our superpower reveal. Shuang, what superpower would help you do your job?”

Shuang Liu: “If I can only choose one, I want just unlimited power to clone colleagues, peers I work with. Because the job can be sometimes very frustrating, just with the scale of disaster we are facing, but the inspiring talent, kind, caring colleagues I work with in and outside of my organization — I really wish I can have the superpower to clone as much as possible so that we can have more capacity to solve the climate change.”

Emily Underwood: “Excellent. Tobias, what about you?”

Tobias Adrian: “Climate change is a choice. Humanity can make the right choice or the wrong choice. And so the superpower would be to help humanity to think through the future. So it’s not so much seeing the future, but it’s seeing the future along those two different paths, making the right choices and making the wrong choices. And when you make the wrong choices, you are going to have a planet that will be a desert everywhere or nearly everywhere, and you make the right choices, you preserve the planet, you preserve livelihoods and happiness. And so making people understand so that they can make the right choice to preserve this planet, that would be my superpower.”

Emily Underwood: “That’s a fantastic note to end on. I wish we could talk much longer. This has been really fascinating. Thank you again, Tobias and Shuang, for joining us. And I’m sorry I can’t say goodbye to you with my face. I don’t know if anybody can see me, but I can’t. So apologies for that. But luckily we can see our guests, still.”

Shuang Liu: “Thank you.”

Tobias Adrian: “Thanks for having us.”

Emily Underwood: “Thank you so much.”

Shuang Liu: “Thanks, everyone.”