Kate Mackenzie Profile picture
16 Oct, 17 tweets, 5 min read
By me: the IMF’s featured chapter on economics of climate mitigation suggests we might have crossed a tipping point - macro policy types are seeing beyond the reductive models that have plagued thinking about climate action for decades. bloomberg.com/news/articles/…
The IMF’s latest World Economic Outlook dedicates one of its three main chapters on the merits of a global climate mitigation plan. It’s actually pretty interesting in itself. imf.org/en/Publication…
The report sets the stage by pointing out that our knowledge about the damages of climate change is still pretty limited. Even though models & methodologies are improving, some impacts (sea level rise) aren’t captured; neither are some mitigation benefits (eg less air pollution).
In this it reminds me of the @NGFS_ (central banks’ green network) first big report last year, which also grokked this issue - known in academia but long overlooked in policy. ngfs.net/en/first-compr…
If you want to understand this better - ie that models often under estimate climate damages and how that’s a big deal - @GernotWagner has the goods! My most recent attempt is here but it’s from a couple of years ago ftalphaville.ft.com/2018/10/18/153…
Anyway back to the IMF’s WEO. Unlike that *other* WEO that was recently updated, this considers *why* we have to cut emissions. It proposes a set of policies - not just a carbon tax - for a net zero 2050 target & models how they affect growth. It finds little sign of a trade off.
In fact, as other recent analysis suggests, in these COVID ravaged times, green econ recovery measures would be good, even just in purely economic terms ox.ac.uk/news/2020-05-0…
It’s not all smooth sailing in the IMF modelling. Initial boosts to growth prompted by spending can taper off around mid 2030s-2050. But by the end of the century it is again, net positive.
Oh, the proposal also requires loading up on debt for the first decade, but in a low-for-long interest rate environment this seems not a terrible idea.
I thought it was very cute and fun that the IMF put it against the Nordhaus model (which tends to find that we are better off burning the world) and the Burke et al method (which the NGFS called a more “robust” approach that finds more damages). And it still looks pretty good:
They say the net cost under Nordhaus would be negated if stuff like air pollution was considered. (A reminder that our knowledge of the harm caused by fossil fuel air pollution is growing very rapidly, eg: nytimes.com/2020/07/09/wel…
But wait! It’s not all backslapping for the IMF. Its leader & many of its staff may understand the huge benefits of climate action, but it’s a sprawling, powerful institution that needs to walk the talk. That has not exactly been happening...
One of many ways the IMF wields influence is its Article IV reports on countries’ economies. A new NGO report says these assessments and recommendations overlook climate risks and support expanded fossil fuel dependence re-course.org/news/imfs-poli…
Anyway. It’s encouraging that this thinking about climate policies - not hindered by models that minimise harms of impacts & co-benefits of mitigation, and not limited by a too narrow response of “carbon taxes!” - are becoming the orthodox global macroeconomic view.
I should say this @MESandbu column kind of spurred me, & it notes not just the climate chapter but other ways the latest IMF WEO moves away from old conventions on.ft.com/3dtSVDi
It reminded me of the Blanchard box in 2012 about whether austerity might be bad for growth. Which also seemed a big deal, perhaps marking a turning point. I hope this is also happening on climate. If it is, it’s been a long time coming & credit is due to many, many people.
More evidence of IMF not walking the talk... Boston Uni researchers assessed the massive IMF disbursements since March; they scored reasonably well for public health & protecting the vulnerable. But dismally for greening the recovery. bu.edu/gdp/2020/09/28…

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More from @kmac

17 Oct
Ghana’s finance minister, Ken Ofori-Atta, wrote about oped in the FT a couple of weeks ago, saying that Africa deserves more Int’l support for the damage wreaked by COVID.
He points out that the amount of support from IMF, WB, G20 debt servicing suspension etc is welcome but not enough. What’s needed is still only a tiny fraction of what OECD nations have spent on their Covid responses. But with the US blocking new SDR issuance; China..
..negotiating on a country by country basis which slows things down, and private creditors nowhere to be seen, the environment is pretty tough. Image
Read 8 tweets
16 Oct
Thread on what looks to be some very important new research (as with most things Fran does!).
co author @Capi_Planeta has a blog post: “Economists are well aware that human wellbeing is highly dependent on natural systems, however, it often remains unnamed in the guts of the computational models used to calculate the costs of climate change.”

Great to see all that effort by accountants to develop intricate “natural capital” is finding a use beyond voluntary sustainability reports.
Read 4 tweets
2 Oct
My latest for @climate looks at what *might* go wrong when "climate-related financial risk" concepts are applied to sovereign bonds. What does this mean for developing countries that are highly vulnerable to climate impacts? bloomberg.com/news/articles/…
Feels sometimes like I am repeating myself but:
1) financial actors protecting themselves from climate risk does NOT necessarily create positive externalities.
2) this is apparent when you consider real world effects of managing for “transition risk” vs “physical risk”.
3) this would all be fine and hunky dory if the same actors being pro active about “climate risk” were just being all about the financial risks. They’re not, for the most part. They’re also talking about SDGs and “doing well by doing good” etc.
Read 7 tweets
1 Oct
Climate Change: World’s Biggest Polluters Are Hiding in Plain Sight
... for all the activity about “sustainability” etc, scope 3 emissions are still woefully underreported. bloomberg.com/graphics/2020-…
“The 182-page, 15-category guidance for Scope 3 disclosures offers so much scope for discretion and ambiguity that companies can more or less mark their emissions to model — or even refuse to disclose them at all.“
Sound familiar?
As anyone who’s spent time wrangling scope 3 numbers out of the CDP database knows, even after years, TCFD, shareholder resolutions, glossy reports etc... the standard of disclosure is poor and many of companies are not even pretending to try (hello, Exxon).
Read 4 tweets
15 Sep
"Because green labels apply to standalone projects rather than to the firm’s overall activities, projects promising carbon reductions could be offset by carbon increases of the same firm elsewhere." Suggests firm-level green ratings instead. (Taxonomy?) bloomberg.com/news/articles/…
Duh, I forgot the EU is already on it: Image
That's from the BIS paper bis.org/publ/qtrpdf/r_…
Read 5 tweets
13 Sep
Wow. Read this and the replies. Facebook is an utterly malign force in society today:
Prof Hayhoe is a well known & highly respected scientist for those who don’t know:
Events for climate scientists deemed “political”:
Read 4 tweets

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