According to one estimate, the cost of achieving net zero carbon emissions by 2050 could climb to $ 2.5 trillion over 10 years for the United States alone.
Treasury Secretary Janet Yellen said private funding, not just government spending, will be needed to tackle the “existential threat” of climate change.
The overall cost of achieving net zero carbon emissions by 2050 – in line with the 2015 Paris Agreement to which the United States is a party – could reach $ 2.5 trillion over 10 years for states alone United, according to one estimate, Yellen said in a speech at a virtual conference Wednesday hosted by the Institute of International Finance.
“It will be extremely important for the financial services industry to raise and allocate the necessary capital to make the transition to net zero issuance,” she said in a question-and-answer segment that followed the speech. “Massive investments are likely to be needed and most of it needs to be private.”
The Treasury chief also stressed the need to strengthen the disclosure of financial risks – making them more reliable, consistent and comparable between markets and countries – so that investors can accurately assess risks and opportunities.
Yellen pledged the United States would help developing countries that are particularly vulnerable to threats from climate change, but refrained from making specific financial pledges on this front.
The infrastructure-focused economic proposal that President Joe Biden unveiled last month, including funds to fight climate change, “will be the largest public investment in America since the 1960s, dramatically reducing U.S. emissions by greening the electricity and transportation sectors, ”said Yellen. .
Yellen’s comments come as Biden summons leaders from 40 countries, business leaders and union leaders to a two-day virtual summit on climate change, with a focus on how to galvanize finance in this business.
While many recent international discussions on climate change have focused on the role of multilateral development banks and formal climate assistance programs, the conversation at the summit will include a broader look at the role of private funds in propelling clean energy and building resilience, administration officials said Wednesday.
Yellen said the Treasury was involved in a number of initiatives to remove barriers, including efforts to improve financial reporting and increase the reliability of climate-related disclosures.
The Financial Stability Supervisory Board, a multi-agency body of regulators chaired by Yellen, will be the Treasury’s main tool in trying to minimize financial sector risks associated with climate change, she said.
“It is the job of the FSOC to understand these risks, to coordinate among US regulatory agencies to assess the risks and, if necessary and appropriate, to act to mitigate the risks to the overall financial stability of the United States,” she said in the questions and answers.
Yellen said U.S. officials will also work with the Multilateral Financial Stability Board and other international bodies to make reporting requirements consistent and comparable across borders. She endorsed a “strong framework” for climate-related disclosures from an FSB task force chaired by Michael R. Bloomberg, founder and majority owner of Bloomberg News, parent company Bloomberg LP.
Yellen has not offered any new specific pledges of additional funding from the U.S. government to help developing countries adapt to global warming or build clean energy projects.
Rich countries pledged in 2009 that by 2020 they would collectively spend $ 100 billion a year on climate finance, but they fall far short of the mark. As the world’s second-largest emitter of greenhouse gases, the United States is under pressure to loosen its purse strings.