Climate action and the cost of transition

Climate action poses significant challenges for countries, especially in emerging markets and developing nations. The cost of transitioning to sustainable practices is a major obstacle, particularly for countries with high debt levels. Governments face a policy trilemma of balancing climate goals, debt sustainability, and political feasibility. While the world came together to acknowledge the climate problem and set goals in 2015, achieving these goals strains government finances. Current efforts are insufficient, and a 13% reduction in emissions across G20 countries is projected, falling short of the required 25% to 50% reduction. The Fiscal Affairs Department of the IMF is working to assist countries in managing their limited resources.