BELEM, Brazil: US Treasury Secretary Janet Yellen said on Saturday that the global transition to a low-carbon economy requires $3 trillion in new capital each year through 2050, far above current annual financing, but that filling the gap is the biggest economic opportunity of the 21st century. Yellen said in Belem, Brazil’s Amazon gateway city, that reaching net-zero emissions goals remained a top priority for the Biden-Harris administration and this would require leadership far beyond US borders.
"Neglecting to address climate change and the loss of nature and biodiversity is not just bad environmental policy. It is bad economic policy,” Yellen said in a speech after attending a G20 finance leaders meeting on Thursday and Friday in Rio de Janeiro.
Wealthy economies provided and mobilized a record $116 billion for climate finance for developing countries in 2022, 40 percent of which came from multilateral development banks (MDBs). Yellen said the banks, including the World Bank and the Inter-American Development Bank (IDB) were setting new targets. The financing need is "the single-greatest economic opportunity of the 21st century” and can be leveraged to support sustainable and more inclusive growth, including for investment-starved countries, she said.
While in Belem, Yellen met with finance ministers from Amazon basin countries and IDB President Ilan Goldfajn. She reaffirmed the US commitment to the bank’s Amazonia Forever platform, which provides a holistic approach to sustainable development in the region through financing, project preparation and collaboration. "We are hopeful that this program will incentivize greater private-sector investment in the region that supports nature,” she added.
Yellen called on MDBs nearly two years ago to expand their missions and lending capacity to include fighting climate change. She said this was "now in their DNA,” but massive private investment was needed, and the Treasury, Brazil’s finance ministry and other stakeholders were working to boost engagement with the private sector.
She said the banks should also catalyze new business models to mobilize investments that support nature and biodiversity while strengthening economies and advancing climate transitions. Earlier on Saturday, Yellen launched a new initiative with Amazon basin countries Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname to combat nature crimes, such as illegal logging and harvesting of wildlife and minerals, that are threatening biodiversity and the Amazon ecosystem.
Yellen said that emerging markets, including some G20 countries, share her concerns about China’s excess industrial capacity and should press Beijing to change its economic model.
Yellen told Reuters in an interview that the concerns about China overinvesting in factories and flooding the world with cheap goods extends well beyond the wealthy G7 democracies to countries including G20 host Brazil, which has raised tariffs on Chinese steel and electric vehicles.
Yellen said that China is not taking advice from other countries and the International Monetary Fund to revive its economy with measures to increase consumer spending and demand for services.
Instead, Beijing was channeling too much of its GDP into investment in advanced manufacturing that is flooding the world with cheap Chinese goods, adding that China’s economy was now too large to grow through that model.
"There are a lot of countries around the world that are not willing to say, "Well, China, you want to dominate manufacturing, so all of our manufacturing sectors can just go out of business because you want to be the world’s factory. We’re not willing to do that,’” Yellen said. "And that’s the fundamental thing that unites us, and that should be a message that we’re sending.”
Brazil is gathering support from other countries for the creation of a fund that will send resources to nations with tropical forests in order to preserve them, Finance Ministry officials said at the sidelines of the G20 meeting of finance leaders in Rio de Janeiro. The so-called Tropical Forest Finance Facility will be financed by the governments that join the initiative and will also rely on private funds. Income from investments by the fund will be passed on to countries committed to forest preservation. — Reuters