U.S. Treasury Secretary Yellen: $3 Trillion Needed Annually to Reach 2050 Global Climate Goals

In an address in Belém, Brazil, United States Secretary of the Treasury Janet Yellen said the world needs $3 trillion in financing annually to reach its 2050 climate and biodiversity goals.

Yellen said transitioning to a low-carbon economy would require far more than the current amount of yearly financing, but that filling that gap is the greatest economic opportunity of this century, reported Reuters.

“Climate change poses a daily and existential threat to individuals, communities, and countries. It harms human health, damages homes and businesses, and strains government budgets,” Yellen said at the Goeldi Museum in Belém, considered Brazil’s gateway to the Amazon, according to a press release from the U.S. Department of the Treasury. “Put simply, neglecting to address climate change and the loss of nature and biodiversity is not just bad environmental policy. It is bad economic policy.”

Yellen also announced the Amazon Region Initiative Against Illicit Finance to combat nature crimes by battling their financing, as well as the international criminal organizations that benefit from it. The initiative is a partnership between the U.S., regional partners and Amazon basin countries Brazil, Colombia, Ecuador, Peru, Guyana and Suriname.

Yellen said reaching net-zero was one of the Biden-Harris administration’s top priorities, but that it would require expanding endeavors beyond the United States.

“We know that we can only achieve our climate and economic goals — from reducing global emissions to adapting and building resilience, from strengthening markets to bolstering supply chains — if we also lead efforts far beyond our borders,” Yellen said.

Yellen went on to say that she had seen the value of three specific aspects of the department’s approach to advancing the international climate, nature and biodiversity agenda of the administration. The first is strengthening ally and partner relationships, the second is making global financial architecture operate better for nations, and the third is putting to use the power of markets.

“We have also focused on making sure climate is high on the agendas of finance ministries — from together learning how to integrate climate risks into our macroeconomic models to jointly realizing climate-related opportunities,” Yellen said. “Our work will span from bolstering clean energy supply chains to collaborating on carbon market integrity principles; from developing innovative solutions to protect nature and safeguard biodiversity to strengthening the climate finance architecture.”

Yellen said this would include debt-for-nature swaps, which the treasury had been conducting for a quarter of a century. These agreements were made in support of 23 debt treatments in 14 countries with “significant tropical forests or coral reefs,” many in Latin America.

Yellen added that the treasury had been focused on creating an international financial architecture that worked better for countries on the individual and system levels.

“We cannot sustain progress on reducing poverty or achieve the sustainable development goals without more and better support for climate mitigation, adaptation, and resilience. So we need an architecture — from the multilateral development banks, to the climate and environment trust funds, to the [International Monetary Fund]’s Resilience and Sustainability Trust — that works as a system to deliver, at speed and at scale, the financial, technical, and policy assistance that developing countries need to achieve their sustainable development and climate goals,” Yellen explained.

Yellen said that as the treasury department implements the Inflation Reduction Act, American clean energy companies are looking for global opportunities and making significant investments in renewables like wind and solar, as well as supporting forest restoration and other projects across the Amazon region.

“Ultimately, through strengthening relationships, making the international financial architecture work better for countries, and harnessing the power of markets, we’re making progress toward tackling climate change, the loss of nature and biodiversity, and related challenges,” Yellen said. “This work is complex and challenging. But I come away from today’s engagements with the belief that we collectively have the ambition, willingness to collaborate, and are developing the tools to secure a better future for our planet and for all our people.”