It’s the federal government’s role to leverage how the private sector creates and distributes the technology to slow climate change, Treasury Secretary Janet Yellen said Tuesday.
“To really make progress on climate we need both public investment and private investments and things like charging stations, and an electrical grid that’s capable of handling renewable energy sources appropriately. These core investments are critical in order to provide the infrastructure, the public infrastructure to support private investments incentives,” she said.
Yellen made the remarks as part of the virtual spring meetings of the World Bank and the International Monetary Fund, which addressed a “green” recovery from the COVID-19 crisis. The IMF upgraded its economic outlook in its Tuesday report.
Yellen continued: “We’re also looking at tax incentives to stimulate private R&D. I think technological change will be important and we want to incentivize in a green direction. We see the potential for tax incentives for electric vehicles and the like, these are some ways in which we hope to stimulate private sector investments, and there will be opportunities. You know, we sometimes think this as something that’s costly, but it’s really important to emphasize that addressing climate change is going to bring opportunities to the private sector for investment and for our society.”
The Biden administration has tied climate change and renewable energy initiatives to a big infrastructure ask it is advancing to Congress, with a proposed a $2.25 trillion price tag.
Speaking on the broader recovery, the Treasury secretary said the learnings of the financial crisis are still front of mind.
“We’re expecting a rapid recovery. I’m hopeful, we’ll be back to full employment next year. And once we are, we’re going to turn to a longer-term agenda of investment: investment in infrastructure, in R&D, in people,” Yellen said. “But globally, I think that what we’re doing domestically is helpful to the entire global community, stronger growth in the U.S. is going to spill over positively, to the entire global outlook. And we are going to be careful to learn the lessons of the financial crisis, which is, don’t withdraw support too quickly.”
Yellen is also holding her first meeting with the Coalition of Finance Ministers for Climate Action, which the Biden administration joined last week.
Yellen said Tuesday she was pleased to be co-chairing the Group of 20’s newly re-established sustainable finance group, which she said would provide an important approach to tackle climate-related issues.
Under her watch, it’s been announced that the U.S. Treasury would play a critical role in a government-wide push to reach an ambitious 2030 emissions target under the Paris climate agreement. Biden returned the U.S. to the voluntary agreement embraced by many developed and emerging economies, reversing former President Trump’s withdrawal.
In a speech Monday to the Chicago Council on Global Affairs, Yellen said Treasury will work to “promote the flow of capital toward climate-aligned investments and away from carbon-intensive investments
That position has already raised the ire of some Republican members of Congress, who say it threatens the ability of the U.S. oil and gas industry to access needed lending, impacting their consumers and investors.
World Bank President David Malpass said Tuesday that his group is finalizing a new climate change action plan, which includes a big step up in financing.
“Our plan identifies key priorities for action, with a focus on both adaptation and mitigation. It also includes a strong focus on a just transition from coal, and we’re working toward aligning our financial flows with the objectives of the Paris agreement,” he said.
IMF Managing Director Kristalina Georgieva welcomed the U.S.-led infrastructure push in fundamentally changing the climate change remedy.
The IMF is “zeroing in on climate-related financial stability risks, and we have a big role to play: standardized reporting of this risks, stress testing, and looking at the role of supervisory authorities,” Georgieva said. “We have an instrument together with the World Bank, the financial sector assessments. We are integrating climate-related risks in these assessments.”
The IMF is nearing the launch of climate-change dashboard that would help policymakers to see in one place, their growth numbers, employment numbers, carbon intensity numbers.