At the World Climate Action Summit in Dubai today, President Ursula von der Leyen launched the Global Pledge on Renewables and Energy Efficiency together with the COP28 Presidency and 118 countries.
This initiative, first proposed by the Commission President at the Major Economies Forum in April, sets global targets to triple the installed capacity of renewable energy to at least 11 terawatts (TW) and to double the rate of global energy efficiency improvements from roughly 2% to an annual figure of 4%, by 2030. Delivering these targets will support the transition to a decarbonised energy system, and help to phase out unabated fossil fuels.
European Commission President Ursula von der Leyen said: “With this Global Pledge, we have built a broad and strong coalition of countries committed to the clean energy transition – big and small, north and south, heavy emitters, developing nations, and small island states. We are united by our common belief that to respect the 1.5°C goal in the Paris Agreement, we need to phase out fossil fuels. We do that by fast-tracking the clean energy transition, by tripling renewables and doubling energy efficiency. In the next two years, we will invest 2.3 billion euros from the EU budget to support the energy transition in our neighbourhood and around the globe. This pledge and this financial support will create green jobs and sustainable growth by investing in technologies of the future. And, of course, it will reduce emissions which is the heart of our work at COP28.”
The Global Pledge has been developed in close cooperation by the European Commission and the COP28 Presidency, with the support of the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA). Adopted during the first days of COP28, this Pledge should help to build momentum towards reaching the most ambitious negotiated outcome possible at the end of this year’s conference. The EU is calling for concrete actions to phase out fossil fuels throughout energy systems globally, particularly coal, and will be pushing for language that reflects this in the final COP Decision.
EU financial contribution to the pledge
To support the delivery of the Global Pledge, President von der Leyen announced that in the next two years, we will invest 2.3 billion euro from the EU budget to support the energy transition in our neighbourhood and around the globe. The EU will also draw on its Global Gateway flagships programme to continue supporting the clean energy transition. The Commission invites other donor countries to follow this lead and fast-forward the implementation of the Global Pledge.
Next steps
The Global Pledge on Renewables and Energy Efficiency will be a key tool to for the international community to measure progress and stay the course in achieving the Paris temperature goals. With support from the IEA and IRENA, an annual review of world developments contributing to achieving the global goals of 11 TW and 4% of annual energy efficiency improvements will be released ahead of COP each year. The Commission will be working closely with European financial institutions such as the European Investment Bank and the European Bank for Reconstruction and Development to deliver on its financial commitments associated to the pledge.
Background
The initiative to set global goals for renewables and energy efficiency was first announced by Commission President Ursula von der Leyen at the Major Economies Forum on 20 April 2023. As part of the European Green Deal, the EU has recently raised its domestic targets for the deployment of renewable energy and the improvement of energy efficiency, leading the way globally on the clean energy transition. By 2030 the EU will reach a minimum of 42.5% of renewables in its energy mix, and aim for 45%. Also this decade, the EU has committed to improve energy efficiency by 11.7%. In June 2023, President von der Leyen and COP28 President Dr. Sultan Al-Jaber met in Brussels and decided to work together on several joint initiatives to drive a just energy transition globally, including the Global Pledge on Renewables and Energy Efficiency.
 
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Climate super-pollutants – including methane, nitrous oxide, hydrofluorocarbons, and tropospheric ozone – are responsible for over half of today’s warming.  Under the Global Methane Pledge, launched by the EU and the US, more than 150 countries are now  implementing a collective goal of reducing global anthropogenic methane emissions by at least 30% by 2030, from 2020 levels. This global initiative will help to keep the Paris Agreement objective of limiting warming to 1.5 degrees Celsius within reach.
President of the European Commission, Ursula von der Leyen said today: “Reducing methane emissions is crucial for meeting our 1.5-degree commitment under the Paris Agreement. Every fraction can immediately shave down global temperature rises. We have the tools to tackle wasteful venting and flaring of gas, and use the recovered resources for a fair energy transition. With the “You Collect, We Buy” scheme we are showing the way forward. And with €175 million for the Methane Finance Sprint, we are helping low- and middle-income countries to act too.” 
In a Statement, President von der Leyen presented the first-ever EU law to curb methane emissions in the energy sector, with world-leading standards for measuring, detecting, and stopping emissions in the EU and globally. The EU and its Member States announced €175 million in support of the Methane Finance Sprint to boost methane reduction at the Summit. These funds will help catalyse efforts from government, industry, and philanthropy to reduce methane emissions across the energy sector, including by enabling the methane data revolution with the use of new satellites.
President von der Leyen also announced that the Commission will develop a roadmap for the global rollout of the “You Collect, We Buy” scheme by COP29. This scheme incentivises companies to capture and commercialise gas that would otherwise go to waste through venting and flaring, thereby bolstering climate action and energy security. The EU and Algeria will pilot together this scheme.
Background
The Global Methane Pledge, launched by President von der Leyen and President Biden at COP26 in 2021, is the main coordination platform for global methane emissions reduction. More than 150 signatories are now committed to at least a 30% global reduction in anthropogenic methane emissions by 2030, focusing on the energy, agriculture, and waste sectors. The strong global support for the Pledge illustrates the growing momentum to swiftly reduce methane emissions.   It is co-chaired by the EU and the United States, and works with two UNEP bodies, namely the Climate and Clean Air Coalition (CCAC) and International Methane Emissions Observatory (IMEO). Through the CCAC, the Global Methane Pledge has supported more than 50 countries in developing national methane action plans, and through the IMEO it has conducted a number of scientific studies and developed a Methane Alert and Response System for super-emitting events. This year Canada, the Federated States of Micronesia, Germany, Japan, Nigeria, became Global Methane Pledge Champions alongside the EU and the US.
The EU provides technical, political, and financial support for methane emissions reduction efforts globally, including through the “You Collect, We Buy” scheme, while ensuring the implementation of the new methane emissions rules domestically.
On 1 December, the UNEP International Methane Emissions Observatory released the first public methane emissions data through its Methane Alert and Response System as another development for effective tracking. This is a further concrete step in support of the implementation of the Global Methane Pledge Energy Pathway launched in 2022.
 
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Commission President Ursula von der Leyen today hosted a high-level event at COP28 to promote the development of carbon pricing and carbon markets, as powerful instruments to reach the Paris Agreement objectives. It builds on the Call to Action for Paris-aligned Carbon Markets that the European Commission, Spain and France launched in June 2023.
President of the European Commission, Ursula von der Leyen said today: “Carbon pricing is thecentrepiece of the European Green Deal. In the European Union, if you pollute, you have to pay a price for that. If you want to avoid paying that price, you innovate and invest in clean technologies. And it works. Since 2005, the EU ETS has reduced emissions in the sectors covered by over 37%, and raised more than €175 billion. Many countries around the world now embrace carbon pricing, with 73 instruments in place, covering a quarter of total global emissions. This is a good start, but we must go further and faster. The EU is ready to share its experience and help others in this noble task.” 
The President of the World Bank Mr Ajay Banga, Director General of the World Trade Organisation Dr Ngozi Okonjo-Iweala, and the Managing Director of the International Monetary Fund, Ms Kristalina Georgieva all participated in today’s European Commission event, which marks a new phase in cooperation on carbon pricing. The four organisations all underlined the importance of carbon pricing for the climate and for a fair transition. Today’s event also included interventions from Prime Minister of Spain, Pedro Sanchez, and President of Zambia, Hakainde Hichilema, who shared their country’s perspective on the challenges and benefits of further developing carbon pricing and ensuring the high integrity of international carbon markets.
The Commission will continue to provide technical support to countries that wish to introduce carbon pricing regimes in their domestic legislation, and to help them to build robust approaches to international carbon markets that are consistent with their long-term climate and development strategies. Carbon credits must be based on common and robust standards that ensure an effective reduction of emissions through transparent and verified projects. Following today’s event, COP28 should play an important role in setting a benchmark for international and voluntary carbon markets that would ensure their added value and reliability while promoting an equitable sharing of the benefits between participants. We need a credible standard that drives transformational investment, respects environmental limits, and avoids lock-in to unsustainable levels of emissions or unjustified reliance on vulnerable removals.
Background
Carbon pricing is a central part of the EU’s successful and ambitious climate policies, implemented through the EU Emissions Trading System (EU ETS). Putting a price on greenhouse gas emissions is a fair and economically efficient way to reduce them, as it penalises polluters and incentivises investment in clean technologies. Carbon pricing also generates revenues for public sector invest in climate action. In sectors covered by the EU ETS, emissions have fallen by over 37% since its introduction in 2005 and revenues from the EU ETS have reached €175 billion. Since 1990 the EU’s total emissions have fallen by 32.5%, while our economy has grown by around 65%, underlining how we have decoupled economic growth from emissions. Emissions trading will soon apply to new sectors in Europe under recently agreed reforms, extending to maritime and aviation, and later to fuels for buildings and road transport.
The Call to Action on Paris-aligned Carbon Markets was launched at the Summit for a New Financial Pact hosted by France in June 2023. So far 31 countries (EU27 + Barbados, Canada, Cook Islands and Ethiopia) have expressed their support for the Call. The Call includes three elements: 1) commitment to expansion and deepening of domestic carbon pricing and carbon market instruments; 2) Support to host countries for full implementation of the agreed rulebook for international compliance markets, and; 3) ensuring high integrity in voluntary carbon markets. The Call builds on and compliments existing initiatives such as Canada’s Global Carbon Pricing Challenge, which the EU formally joined at the EU-Canada Summit on 24 November, the G7 High Integrity Principles, as well as the Paris Agreement’s Article 6 rules.
Related links
Speech of President von der Leyen at the High Level Event on Carbon markets
Call to Action on Paris-aligned Carbon Markets

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The EU has been a global pioneer in the transition to decarbonize its economy and its immediate neighbors (EUN), namely, Albania, Bosnia and Herzegovina, Kosovo,  Moldova, Montenegro, North Macedonia, Serbia, and Türkiye, which are heavily integrated with and reliant on the bloc through economic, financial and FDI and technology channels are likely to be significantly affected by such a transition. More immediately, the question whether the EU’s carbon border adjustment (CBAM)—an import tax on carbon intensive imports—will affect its neighbors has been attracting increasing attention.
The paper assesses the performance of the EUN countries to date on emissions mitigation, their policies on that front, the extent to which they have experienced inward  spillovers of tightening EU emission mitigation policies, and how further stringency in decarbonization policies in the EU in future is likely to affect them. We also study the consequences of the EUN countries trying to keep pace with the EU’s carbon transition through a unilateral and upfront adoption of economywide decarbonization policies.
EUN countries have lagged the EU significantly in emissions mitigation. Their emission problem arises, mainly, from carbon-heavy power generation and industrial sectors. The high natural endowment of coal, the highest carbon emitting fossil fuel, has been a major source of cheap locally available energy. While these countries benefited from being reliant on coal during the recent energy crisis, a more sustainable way to achieving energy security will be relying more on renewables, converging to EU standards, and eventually through EU accession, directly benefiting from EU-wide policies that also help with energy security.
EUN countries’ emissions mitigation policy efforts have been generally weak. They have significantly lagged EU members and have been moving only gradually towards market-based instruments since 2000. They still have substantial fossil fuel subsidies in place, and as a group, they compare unfavorably in terms of implicit subsidies, i.e., the cost of fossil fuel externalities not covered by consumer prices.
The EU’s heavy push to decarbonize its own economy over the past two decades appears to have spilled over and influenced emissions mitigation in EUN countries. Our  empirical findings suggest that as the EU has increased the stringency of its climate policies, the EUN countries have lowered their emissions, more so than other countries. Over the 2000-20 period, a near doubling of EU environmental policy stringency was associated with a potential reduction in emissions in EUN countries by as much as 10 to 20 percent, after controlling for other factors.
An important question we consider is how much impact CBAM will have on EUN countries in the coming years as it becomes fully operational, as well as in the more distant future when the policy is expected to be tightened further by expanding it to a wider set of the Union’s imports. We find that output effects of the CBAM, once its currently proposed form is fully operationalized in 2026, would be limited, however, exports of EUN countries’ emissions-intensive industries could be directly impacted, particularly metals and energy industries, and North Macedonia and Serbia are heavily exposed in this regard. Over the next decade, the EU ETS emissions cap for power and industry is set to converge to zero by 2040 and an ETS on emissions for buildings and transport is envisioned; these future developments could have spillover effects for EUN countries, though these countries have less of a catch up to do in the latter sectors. In addition, over the long run, further tightening of the CBA could also affect the competitiveness of EUN countries given their trade integration with the EU, necessitating the tightening of emission mitigation policies.
Putting a price on carbon is the most economically efficient and equitable policy response to the emerging challenge of decarbonization in EUN. We find that the fear that a tax on carbon will adversely affect output by hitting firms and reduce household welfare, particularly for the poorer ones, is overdone. At the same time, policymakers need to be mindful of the industries that could be hit hard by a decarbonization policy and provide social assistance and safety nets, where needed. Our analysis indicates significant fiscal impact particularly when an effective recycling mechanism is in place. Under a $75 carbon tax and relative to a business-as-usual scenario, fiscal revenues from the tax would amount to about 3 percentage points of GDP on average, and it would result in an about 25 percent reduction of CO2 emissions by 2030.
Given the strong economic integration of EUN and EU, it would be in the interest of the former to keep pace with the speed of emission mitigation in the latter in future. Most of the EUN countries are at different stages on the path to EU accession and hence adhering to EU standards in this area will likely be required under the accession process. Broadly, the EU accession process would bring a host of long-term benefits, including a reorientation of the economy to achieve higher growth and living standards. Realigning the economy with EU’s climate goals and its standards on emissions would also be a key part of the accession process. An up-front adoption of a comprehensive  decarbonization strategy, such as through the introduction of an economywide carbon tax, would be of greater benefit to these countries than postponing action for later.
 
You can read the full working paper here.
 
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> Euro area firms signalled a continued increase in turnover, while higher labour, production and interest costs weighed on their profitability. Firms expect their turnover to increase further over the next six months.
> The share of financially vulnerable firms increased almost to the level seen during the coronavirus (COVID-19) pandemic.
> Compared with the last survey, firms expect a noticeably smaller increase in their average selling prices (3.7%, down from 6.1%) and wages (4.3%, down from 5.4%) over the next year.
> Firms reported a modest increase in their need for external funds, while availability deteriorated further, reflecting the transmission of monetary policy. As a result, the financing gap continued to increase at a moderate pace.
> A large net share of firms reported stricter price terms and conditions for bank loans. Despite tighter financing conditions, few firms reported obstacles to obtaining a bank loan.
In the latest round of the twice-yearly Survey on the Access to Finance of Enterprises (SAFE) in the euro area, covering the period from April to September 2023, firms reported an increase in turnover, although the net percentage was lower than in the previous survey round (Chart 1).
More firms saw a deterioration in their profits than in the previous survey round (net -14%). The decline in profits once again reflects a sharp rise in labour costs and other costs related to materials and energy, although cost pressures seem to have eased. Increasing interest expenses are a further drag on profitability. Firms’ investment and employment growth has broadly held up, albeit with fewer firms reporting increases.
The financial vulnerability indicator, which provides a comprehensive picture of firms’ financial situation, suggests that 9% of euro area enterprises encountered major difficulties in running their business and servicing their debts over the past six months (Chart 2).
Firms reported on average that they expect their selling prices to increase by 3.7% over the next 12 months (down from 6.1% in the previous survey round) and their non-labour input costs to increase by 6.1% (Chart 3). They expect their employees’ wages to rise by 4.3% (down from 5.4%), with an increase in average employment of 1.7% over the year ahead.
The net share of firms reporting an increase in their need for bank loans was modest (5%, compared to 4% in the last survey round). At the same time, the availability of bank loans declined, with 10% of firms indicating a deterioration. The financing gap thus continued to widen at a moderate pace.
Firms continued to report a widespread increase in bank interest rates and other price and non-price costs of bank financing (net 86%), reflecting the transmission of past monetary policy tightening to firms’ financing costs.
Despite tighter financing conditions, the financing obstacles indicator for all firms remained at a similar level compared with the previous round (6%, down from 7%). Among firms applying for a bank loan (27% of firms), 10% reported obstacles to obtaining a loan, which was also similar to the previous round.
Looking ahead, firms expect a decline in the availability of all external financing sources, and especially bank loans. This suggests that part of the transmission of monetary policy to firms’ financing conditions is still in the pipeline.
The report published today presents the main results of the 29th round of the SAFE in the euro area, conducted between 4 September and 18 October 2023 and covering the period from April to September 2023. The sample comprised 11,523 enterprises, of which 10,499 (92%) are small and medium-sized enterprises (SMEs) (i.e. firms with fewer than 250 employees).
Notes:

The report on this SAFE survey round, together with the questionnaire and methodological information, is available on the ECB’s website.
Detailed data series for the individual euro area countries and aggregate euro area results are available on the ECB Data Portal.

Chart 1
Changes in the income situation of euro area enterprises

(net percentages of respondents)

Base: All enterprises. The figures refer to rounds 3 to 29 of the survey (March 2010-September 2010 to April 2023-September 2023) for all firms and to rounds 21 to 29 (April 2019-September 2019 to April 2023-September 2023) for SMEs and large firms.
Notes: Net percentages are the difference between the percentage of enterprises reporting an increase for a given factor and the percentage reporting a decrease. The data included in the chart refer to Question 2 of the survey.

Chart 2
Vulnerable and financially resilient enterprises in the euro area

(percentages of respondents)

Base: All enterprises. The figures refer to rounds 3 to 29 of the survey (March 2010-September 2010 to April 2023-September 2023) for all firms and to rounds 18 to 29 (October 2017-March 2018 to April 2023-September 2023) for SMEs and large firms.
Notes: Vulnerable firms are defined as firms that simultaneously report lower turnover, decreasing profits, higher interest expenses and a higher or unchanged debt-to-assets ratio, while financially resilient firms are those that simultaneously report higher turnover and profits, lower or no interest expenses and a lower or no debt-to-assets ratio. The data included in the chart refer to Question 2 of the survey.

Chart 3
Expectations of selling prices, wages, input costs and employment one year ahead

(weighted percentages)

Base: All enterprises. The figures refer to rounds 28 and 29 of the survey (October 2022-March 2023 and April 2023-September 2023).
Notes: Mean and median euro area firm expectations of changes in selling prices, wages of current employees, non-labour input costs and number of employees for the next 12 months, along with interquartile ranges, using survey weights. The statistics are computed after trimming the data at the country-specific 1st and 99th percentiles. The data included in the chart refer to Question 34 of the survey. Questions on non-labour input costs and employees were not available in round 28.

 
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November 28, the Commission is taking another step to make the EU’s energy system fit for the future by adopting the first list of Projects of Common Interest (PCIs) and Projects of Mutual Interest (PMIs) that is fully in line with the European Green Deal. These key cross-border infrastructure projects will help the EU reach its ambitious energy and climate goals. The projects will benefit from streamlined permitting and regulatory procedures, and become eligible for EU financial support from the Connecting Europe Facility (CEF).
This list is adopted under the revised Trans-European Networks for Energy Regulation (TEN-E) which ends support for fossil fuel infrastructure and focuses on cross-border energy infrastructure of the future. It includes PCIs, which are projects within the EU territory, and for the first time PMIs, which connect the EU with other countries. The Commission will ensure the projects are swiftly completed and can contribute to doubling the EU’s grid capacity by 2030 and meeting its 42.5% renewable energy target.
Out of the 166 selected PCIs and PMIs:

over half (85) are electricity, offshore and smart electricity grid projects, with many expected to be commissioned between 2027 and 2030.

for the first time, hydrogen and electrolyser projects (65) are included, which will play a major role in enabling energy system integration and the decarbonisation of EU industry.
the list also includes 14 CO2 network projects in line with our goals to create a market for carbon capture and storage.

Following the adoption of the PCI and PMI List by the Commission today, as a Delegated Act under the TEN-E Regulation, it will now be submitted to the European Parliament and the Council for their scrutiny. Both co-legislators have two months to either accept or reject the list in full, but may not amend it. This process can be extended by two months, if requested by the co-legislators. Once the list is adopted, the Commission will work with project promoters and Member States to support the rapid implementation of this list of projects, in line with the enhanced measures proposed today in the EU Action Plan for Grids.
Background
The list adopted today is the 6th Union List including PCIs, and the first Union list of PCIs and PMIs established under the revised TEN-E Regulation, which was adopted in 2022. The revised Regulation ensures that EU-supported cross-border energy infrastructure projects help the Union achieve its climate and energy goals as set out in the European Green Deal. As set out in the TEN-E Regulation, such lists are adopted every two years, following extensive stakeholder consultation in regional groups which are established by the TEN-E regulation.
 
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The Commission welcomes the provisional agreement reached last night between the European Parliament and the Council strengthening the current provisions for emissions from industry and large intensive rearing farms.
The updated law will help guide industrial investments necessary for Europe’s transformation towards a cleaner, carbon neutral, more circular and competitive economy by 2050. It will spur innovation, reward frontrunners, and help level the playing field on the EU market and increase long-term investment certainty for industry. 
New measures for a less polluting and carbon neutral industry, more innovation and transparency 
Once adopted and applied, the new law will more effectively limit polluting emissions from industrial installations. Compared to the directive currently in force, the new law will cover additional sources of emissions, make permitting more effective, reduce administrative costs, increase transparency, and give more support to breakthrough technologies and other innovative approaches. The revised law will also tighten rules on granting derogations to further protect the environment and human health.
The updated rules will also provide more opportunities to EU innovation frontrunners who will be able to test more environmentally performing emerging techniques thanks to more flexible permits. A new Innovation Centre for Industrial Transformation and Emissions (INCITE) will help industry identify pollution control solutions and transformative technologies. Finally, operators of industrial installations will need to develop Transformation Plans to achieve the EU’s 2050 zero pollution, circular economy and decarbonisation goals, and will benefit from flexible permits to implement deeply transformative techniques.
The updated law will also support circular economy investments by including resource use performance levels, as well as lower chemical pollution through requirements for a reduced use of toxic chemicals during industrial processes.
The new law will cover more installations, notably:

More large-scale intensive livestock farms. Under the new rules, the largest pig and poultry farms would be covered, while the inclusion of cattle farms would be assessed in a review at a later stage. As farms have simpler operations than industrial plants, all farms covered will benefit from a lighter permitting regime also reflecting the size of farms as well as the livestock density.

Extraction of metals and large-scale production of batteries. These activities will significantly expand in the EU to enable the green and digital transitions. The governance mechanisms of the revised Industrial Emissions Directive will support the sustainable growth of these activities in the EU, thus contributing to the objectives of the Critical Raw Material and Net-Zero Industry Acts.

Finally, the improved measures on penalties and opportunities for citizens to seek compensation will increase transparency and public participation in the permitting process, and will reinforce environmental governance and enforcement. With the new EU Industrial Emissions Portal, citizens will be able to access data on permits issued anywhere in Europe and gain insight into polluting activities in their immediate surroundings in a simple way.
Next steps
The European Parliament and the Council will now have to formally adopt the revised Industrial Emissions Directive and the new Industrial Emissions Portal Regulation in line with the agreement reached. Once formally adopted, they will enter into force on the 20th day following publication in the Official Journal.
Once the revised Industrial Emissions Directive enters into force, Member States will have 22 months to implement the new rules. Before the Industrial Emissions Portal Regulation becomes law, the Commission will work on reporting manuals and secondary acts so that the operators and Member States are ready to report under the new regime in 2028.
Background
The Industrial Emissions Directive currently covers some 50 000 large industrial installations and intensive livestock farms in Europe. These installations need to comply with emissions conditions by applying activity-specific ‘Best Available Techniques’. These techniques are determined together by industry, national and Commission experts, and civil society.
 
 
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Blog post by Simon Black, Florence Jaumotte, Prasad Ananthakrishnan |  With each passing year, the stark reality of a hotter planet becomes clearer and the ensuing risks to the global economy intensify. But as the world is waking up to the scale of the climate crisis, geopolitical tensions and fragmentation risks are undermining our ability to coordinate global actions to solve this planetary problem.
Eight years on from the Paris Agreement, policies remain insufficient to stabilize temperatures and avoid the worst effects of climate change. Collectively, we are not cutting emissions fast enough and are falling short on the needed investment, financing, and technology. The window is closing, but we still have time—just—to change our trajectory and leave a healthy, vibrant, and livable planet to the next generation.
Limiting global warming to 1.5 degrees to 2 degrees Celsius and reaching net zero by 2050 requires cutting carbon dioxide and other greenhouse gases by 25 percent to 50 percent by 2030 compared with 2019. But, as our new analysis shows, the current global commitments reflected in nationally determined contributions would reduce emissions by just 11 percent by the end of this decade.

To make matters worse, current policies are not consistent with commitments, which means that the world is set to fall short of even that meager goal. Business-as-usual policies would see annual global emissions increase by 4 percent by 2030 and reach a cumulative level sufficient to breach the 1.5-degree target by 2035.
More ambition, stronger policies
To get back on track with the global climate goals, we need more ambition now. A fair approach is for countries to target cuts in emissions in line with per capita incomes.
For example, to keep within 2 degrees of warming, high, upper-middle, lower-middle, and low-income countries will need emissions reductions of 39 percent, 30 percent, 8 percent and 8 percent, respectively, by 2030. To stay below 1.5 degrees of warming would entail more drastic emissions cuts of 60 percent and 51 percent for high- and upper-middle income countries.

Ambition alone is not enough. We also need major policy changes to achieve these more ambitious targets. These would ideally be centered on a robust carbon price—rising to a global average of at least $85 per ton by 2030—to provide broad incentives to reduce carbon-intensive energy, shift to cleaner sources, and invest in green technologies.
A carbon price also generates more than enough budget revenues to support vulnerable groups. Around 20 percent of carbon pricing revenues can more than compensate the poorest 30 percent of households. This is in direct contrast to damaging fossil fuel subsidies, which have risen to a record $1.3 trillion annually in explicit fiscal costs alone. Countries must act to phase out such subsidies.

At a global level, cooperation is needed to help assuage fears that carbon pricing would hurt national economic competitiveness. Here, an agreement among large emitters could spur other countries to follow—such as a progressive deal between China, the European Union, India, and the United States. This would cover over 60 percent of global greenhouse gas emissions and send a strong signal to the rest of the world.
Boosting climate finance
The path to net zero by 2050 requires low-carbon investments to rise from $900 billion in 2020 to $5 trillion annually by 2030. Of this figure, emerging and developing countries (EMDEs) need $2 trillion annually, a fivefold increase from 2020. Even if advanced economies meet or somewhat exceed their promise to provide $100 billion a year, the bulk of the financing for these low-carbon investments will need to come from the private sector.
Our analysis shows that private sector share of climate finance must rise from 40 percent to 90 percent of the total in EMDEs by 2030. That means a broad mix of policies to overcome barriers such as foreign exchange and policy risks, underdeveloped capital markets, and too few investable projects.

For example, targeted economic policies and governance reforms can lower capital costs. Meanwhile, blended finance that combines private capital with public and donor funding—including from multilateral development banks—can bring down the risk profile of green projects. Think of first-loss capital, credit enhancements, or guarantees.
At the same time, global policies to increase transparency and comparability of projects, standardize taxonomies and strengthen climate-related disclosure requirements are vital in helping investors make low-carbon choices. Again, this highlights the importance of international cooperation.
Scaling up innovation
Of the 50 percent cut to emissions needed by 2030 to stay on track for the 1.5-degree target, more than 80 percent can be achieved from technologies available today. Getting to net-zero by 2050 will, however, require technologies that are still under development or yet to be invented.
Unfortunately, patent filings for low-carbon technology peaked at 10 percent of total filings in 2010 and have since declined. Worse, key technologies aren’t spreading fast enough to emerging and developing countries.
How can this trend be reversed? Recent IMF analysis shows climate policies—such as feed-in tariffs and emissions trading schemes—boost green innovation and investment flows,and help spread low carbon technology across borders. Moreover, in some countries, lowering trade barriers can accelerate imports of low carbon technologies by 20 percent to 30 percent. Yet again this points to the importance of cooperation: to avoid protectionist measures that would impede the broader spread of low-carbon technologies.
Helping countries meet goals
Wherever climate policy intersects with macroeconomic policy, the IMF is here to help. Our new Resilience and Sustainability Trust provides long-term financing on affordable terms to help vulnerable middle- and low-income countries cope with threats such as climate change. The $40 billion trust has already supported programs for 11 countries, with twice that number in the pipeline.
For our wider membership, we add a climate lens to our economic analysis, policy advice, capacity development and data provision. Why? Because macroeconomic and financial sector policies are critical to harnessing the opportunities of the green transition: for low-carbon, resilient growth, and jobs.
But no country can tackle climate change on its own. International cooperation is more important than ever. Only with concerted action, now, will we bequeath a healthy planet to our children and grandchildren.

 
 
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From tomorrow to 1 December the Commission is hosting a high-level conference in Vilnius, Lithuania on the green recovery in Ukraine. Commissioner Virginijus Sinkevičius will represent the Commission and stress the commitment for a continued cooperation with and assistance to Ukraine in its sustainable reconstruction efforts. Commissioners Wopke Hoekstra and Iliana Ivanova will participate in the event via video messages.
Comprising a policy and a business segment, the conference aims to take stock of the challenges ahead and discuss with Ukrainian policymakers, mayors and businesses the strategies and concrete solutions underpinning a green reconstruction and recovery. The high-level event aims to create a momentum for high sustainability ambition for the benefit of all Ukrainians. In addition to supporting Ukraine’s European perspective, a sustainable recovery and reconstruction is essential to guarantee Ukraine’s prosperity, resource autonomy, and the quality of life of Ukrainians when the war finally ends.
Holistic approach to green recovery of Ukraine
The Conference aims to offer all key stakeholders a holistic approach to the green recovery and reconstruction of Ukraine. The hybrid policy segment on 28-29 November focuses on policymakers and civil society, setting out the overall challenges and presenting the main policy support measures to the green reconstruction of Ukraine and the first concrete results of the PHOENIX initiative, launched by President von der Leyen in February 2023 during a College visit to Ukraine. The initiative aims to help Ukraine rebuild its cities in a high-quality, sustainable and inclusive way with the New European Bauhaus community. High-level personalities, such as Gitanas Nausėda, President of Lithuania, Simonas Gentvilas, Minister of Environment of the Republic of Lithuania, and Ruslan Strilets, Minister of Environmental Protection and Natural Resources of Ukraine will take part in the policy segment, followed by a debate session with Ukrainian mayors.
The business segment from 30 November to 1 December 2023 will introduce specific, applicable solutions in green reconstruction, discuss systemic barriers to the deployment of a more circular and greener economy, and connect companies from the EU and Ukraine.
Damage of the war to the environment in Ukraine
The Commission supports a range of efforts to monitor and record the environmental damage, going much beyond natural areas. Environmental damage from Russia’s war against Ukraine brings devastating consequences for essential infrastructures, natural resources, critical ecosystems and people’s health, livelihoods and security. A green recovery is about remedying that damage and setting Ukraine on a new path of environmental and social sustainability.
Damage of the war to the environment and environmental infrastructures estimated so far:

Over €52 billion of total damage
497 water management facilities damaged or destroyed
Over €1.4 billion damages in the forestry sector
20% of protected areas under threat

Environmental devastation resulting from the destruction of the Kakhovka Hydropower Plant, the worst man-made disaster since the Chernobyl accident
Ukraine is now the most heavily mined country in the world.

A press conference by Commissioner Virginijus Sinkevičius and Ruslan Strilets, Minister of Environmental Protection and Natural Resources of Ukraine, can be followed on Tuesday at 13h00 CET can be followed here.
Background
The conference comes at a critical juncture, following the adoption of the 2023 Enlargement Package, where the Commission recommended opening accession negotiations with Ukraine.  The Ukrainian government is also set to propose by the end of this year an overall plan on recovery and restoration, closely tied to the €50 billion Ukraine Facility proposed by the European Commission and now under adoption.
The Commission is helping Ukraine align its environmental laws with the EU acquis and build administrative structures to enforce and implement this regulatory framework. It is also building coalitions, closely interacting with international partners (such as UNEP, UNIDO, World Bank) and support groups such as the High-Level Working Group on Environmental Consequences from the War.
With the proposed in June this year €50 billion Ukraine Facility over the 2024-2027 period, the EU Ukraine Facility will help rebuild Ukraine’s infrastructure, while ensuring that environmental sustainability is considered in future investments. 
 
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Central bank digital currencies can improve payment systems as well as financial inclusion—if they are appropriately designed. If not, they could pose risks.

While not all countries may see an immediate case to deploy a CBDC, many countries are exploring CBDCs so they will have the option to introduce one in the future if it becomes pertinent for them. Benefits are more likely to come in time, following the policies pursued by countries and the private sector’s response, as well as the evolution of technology.
In most cases, it would be useful for countries to continue exploring CBDC, carefully and systematically, as IMF Managing Director Kristalina Georgieva noted in her recent speech at the Singapore Fintech Festival.
The Bahamas, Jamaica, and Nigeria have already introduced CBDCs. And more than 100 countries are in the exploration stage. Central bankers in Brazil, China, the euro area, India, and the United Kingdom are at the forefront.
The IMF recently launched a virtual CBDC Virtual Handbook to collect and share knowledge with policymakers around the world, and to serve as a basis for the IMF’s engagement with country authorities. We intend this to be a living document that will be updated and expanded as our body of knowledge and analysis grows, and as new lessons and insights emerge from countries.
The chapters published so far cover process and policy topics:

How Should Central Banks Explore Central Bank Digital Currency? Countries that decide to pursue CBDCs will take different paths, depending on the degree of digitalization of the economy, the legal and regulatory frameworks, and the central bank’s capacity. We propose a dynamic decision-making process in which central banks can proceed despite uncertainty, and adjust the pace, scale, and scope of their initiatives in response to changes in domestic and international conditions.

A Guide to Central Bank Digital Currency Product Development. To help guide central banks in exploring and developing CBDC, we’ve established a step-by-step guide to address the complex requirements and risks associated with CBDCs. We call it the 5P methodology: preparation, proof-of-concept, prototypes, pilots, and production.

Implications of Central Bank Digital Currencies for Monetary Policy Transmission. We analyze how CBDCs would likely affect monetary policy. In general, policy transmission is not expected to be affected much under normal circumstances, but the effects can be more significant in an environment with low interest rates or financial market stress.

Implementing capital flow management measures with CBDC. We explain how CBDCs could be designed to facilitate cross-border payments while still managing capital flows. With new digital technologies that can make payment infrastructure programmable, some of the capital-flow management measures could be implemented more efficiently and effectively with a CBDC compared to the traditional approach.

Central Bank Digital Currency’s Role in Promoting Financial Inclusion. As a risk-free and widely acceptable form of digital money, with potentially lower costs and greater accessibility, CBDCs can increase financial inclusion. If properly designed to replicate some of the properties of cash, CBDCs could gain acceptance as a payment mechanism for financially excluded populations—and be an entry point to the broader formal financial system.

Looking ahead, our engagement with central banks will continue as they pursue new technologies. We will keep assessing the potential effects of CBDCs on areas from financial stability to cybersecurity and cross-border payments and build on these first five chapters with new publications planned for next year. And we’ll continue our collaboration with other global bodies, including the Group of Twenty.
The IMF will continue assisting countries exploring CBDCs, along with efforts by other global bodies like the Bank for International Settlements.

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