Global leaders should take bold decisions to reduce carbon emissions and reach the goals set on the Paris Agreement to limit global warming, says Kristalina Georgieva, managing director of the International Monetary Fund.

As “politically challenging as it may be” the world needs to rid itself of all fossil fuel subsidies, equivalent to more than USD5 trillion annually, Georgieva wrote in an article published in the September’s edition of Finance & Development, the magazine created by the Washington-based multilateral lender. The Paris Agreement is a legally binding international treaty on climate change adopted by 196 parties at COP 21 in Paris, on 12 December 2015, which entered into force on 4 November 2016.

The solutions to global warming may reside in market-oriented policies and global political determination. A “robust carbon pricing” will help to redirect private investment and innovation to clean technologies and encourage energy efficiency since “without it, we simply cannot reach the goals of the Paris Agreement,” Georgieva says.

The executive reiterated her proposal to set an average global carbon price of $75 per ton by 2030 vs today’s $3 per ton. “Major emitters agreeing on an international carbon price floor would be a good start,” she wrote. “We need market signals that work for the new climate economy, not against it.”

Earlier in the year, during a virtual climate summit hosted by U.S. President Joe Biden, Georgieva presented a similar idea to limit the rise in global temperatures.

Scaling up the so-called green investments is needed. IMF’s research projects that green supply policies could boost global gross domestic product by about 2 percent this decade and create millions of new jobs, she argues. “On average, about 30 percent of new investment is expected from public sources, making it vital to mobilize private financing for the remainder.”

National leaders around the world must work for a “just transition’’ to a low carbon economy and she said that revenues from carbon pricing can be use as cash transfers, social safety net and retraining, as a way to “compensate workers and businesses in affected high-emission sectors.”

Georgieva says that the world’s poorest countries have contributed the least to climate change, but are most vulnerable to its effects and least able to cover the cost of adaptation. “With many of the lowest-cost mitigation opportunities in emerging market and developing economies, it is in the global interest that developed economies fulfill their commitment to provide $100 billion a year in climate finance for the developing world.”

“We have no time to waste,” she stresses in the article, “we know what must be done; now we must do.”

Also relevant:

Science, Solutions, Solidarity: United Nations

Climate Change: World Resource Institute

Climate Change and Global Warming: NASA