Save for later Print Download Share LinkedIn Twitter Climate financing is currently stuck in a "ditch" and — in addition to putting a high enough price on carbon emissions — incentives are needed to involve more private capital, the head of the International Monetary Fund (IMF) said on Thursday.Speaking on a panel at the World Economic Forum in Davos, IMF Managing Director Kristalina Georgieva said there are "plenty" of funds available for climate financing, but "they don't go where they should go.""We are in the ditch and we have to climb out of it," Georgieva said, adding that carbon emissions needed to be cut by 25%-50% from 2019 levels by 2030 to keep the world on track to meet its climate goals. But even if all pledges made so far were to be met, emissions would only be reduced by 11%, she said, adding that the gap which needs to be closed is "huge.""We are still resisting the necessity to accept that carbon has to be priced and the price has to climb up," Georgieva said. She put the current global average carbon price at $5/ton but said that it should rise to at least $75/ton."If you don't send a signal to consumers and to investors that low carbon intensity pays off, why would they go [for it]?" she asked.Oil majors such as BP have previously suggested a carbon price of at least $100/ton is needed to incentivize rapid deployment of renewable electricity and support other energy transition solutions such as hydrogen and biofuels.Public Sector CatalystsSpeaking on the same panel in Davos, Standard Chartered CEO Bill Winters said there is private capital that is "dying to get in" to climate finance.But private financial institutions need governments to set standards that define what constitutes a good investment project, "because we're all terrified of being accused of greenwashing," he said, Winters agreed with Georgieva that private-sector involvement in efforts to tackle climate change will require the placing of an appropriate price on carbon."I can tell you that the decision framework for every company, including banks like mine, would be fundamentally different … if we were charged the cost of what we are actually doing to the environment," he said."But that won't be enough. There has got to be some public sector catalysts as well," he said, adding that the funds committed by the Global North to the Global South via multilateral development banks are only about 1/15th of what they should be.Furthermore, a significant amount of the $3 trillion in ESG funds earmarked for climate projects is not finding its way to the right place, he added. Winters suggested that those funds should be put to work through smart public-private partnerships and allocated to managers who understand both the technical risks and the financial implications.Georgieva agreed, saying: "You're not going to move money into climate investment in emerging markets and developing economies fast enough if you don't accept that public money should sweeten the deal for [private players] to put their money at risk."