Global economic governance and environmental crisis: the widening repertoire of IMF economic ideas and limits of its climate policy advocacy

This article analyses the IMF’s economic thinking on climate policy to explore the scope and limits of working towards green transition within global economic governance institutions. It distils the essence of and synthesises core insights from the international political economy (IPE) literature on the IMF as an actor in world politics, and on Fund ideational change, to inform how to make sense of their role within climate policy. Although a relative late-comer to tackling environmental crisis, in a key shift the Fund now sees climate change as ‘macro critical’. Examination of flagship publications and selected other IMF outputs delineates the evolving economic ideas underlying its climate policy approach which places enormous faith in market-based approaches, notably ‘efficient pricing’ to fully reflect the social and environmental cost of carbon. The Fund highlights environmental tipping points and the urgency of curbing fossil fuel use, advocating prompt and bold action (especially eradicating fossil fuel subsidisation) to achieve the deep decarbonisation of the world’s economies. The analysis thus unearths a widening repertoire of economic ideas, including greater catalysing role for the state and public power in green transition, creating internal tensions and some dissonance regarding appropriate climate policy. The IMF sets out ambitious reforms, yet its apolitical, technocratic worldview neglects the political power dynamics central to contemporary fossil-fuelled capitalism. These incumbent power relations, compounded by limited IMF traction, constitute significant impediments to tackling climate change. More fundamentally, this article identifies a decoupling between IMF recognition of the enormity of the climate emergency, and its relatively unchanging mindset and practices. All these factors, taken together, explain the contradictions and some discord within the Fund’s still predominantly market-based climate policy approach.