Treasury secretary demands $78 trillion for climate change
During a speech in Brazil on Saturday, US Treasury Secretary Janet Yellen called on countries to fork over $3 trillion a year until 2050 in “climate financing” to achieve Net Zero global carbon emissions.
“The transition will require no less than $3 trillion in new capital from many sources each year between now and 2050,” Yellen said. “This can be leveraged to support pathways to sustainable and inclusive growth, including for countries that have historically received less investment.”
Yellen stressed that Net Zero is a “top priority” for the Biden administration, whose Inflation Reduction Act is “driving hundreds of billions of dollars of investments in the clean energy technologies and industries that will propel us toward our climate goals and fuel our economic growth.” The Inflation Reduction Act earmarked $370 billion for the federal government’s climate agenda, according to the Daily Caller.
Climate change: A cash cow
The treasury secretary also emphasized that ignoring climate change is “not just bad environmental policy” but also “bad economic policy.” Her assertion comes weeks after an International Monetary Fund (IMF) report found that governments raked in over $100 billion last year in revenue from climate taxes and other environmental schemes.
According to the IMF report, 75 carbon taxes and emissions trading systems (ETS) were implemented around the world in 2023. In an ETS, the government requires companies to buy permits for their greenhouse gas emissions. If a business exceeds its allotted emissions quota (which is set by the government), it must buy more permits from another company.
Countries such as Canada, Hungary, China, Taiwan, and Ireland have implemented carbon taxes. Several governments, including the European Commission, have set up ETSs. Overall, climate revenues in 2023 totaled over $104 billion, an historic record.
“Carbon pricing can be one of the most powerful tools to help countries reduce emissions. That’s why it is good to see these instruments expand to new sectors, become more adaptable and complement other measures,” said Axel van Trotsenburg, World Bank Senior Managing Director in a press release. “This report can help expand the knowledge base for policymakers to understand what is working and why both coverage and pricing need to go up for emissions to go down.”
Amount needed to solve climate crisis still unknown
But while organizations like the World Economic Forum (WEF) are celebrating the record climate revenues, they say climate change is still not subsiding.
In May, the WEF warned that the worsening climate crisis may cut average incomes by 20 percent. The organization added that by the middle of the century, extreme weather events are expected to cost $38 trillion per year.
Neither the WEF, the IMF, nor the UN have disclosed the amount of money they believe is necessary to control the weather. The IMF has only stated that “price levels continue to fall short of the ambition needed to achieve the Paris Agreement goals.”
According to the report, over half of the $104 billion collected by governments was used for “climate- and nature-related programs,” also referred to as “climate financing.” But climate financing, rather than fighting climate change, has been shown to be a financial black hole with little oversight.
Climate financing not necessarily spent on climate
A Reuters report published last year revealed that while some climate funding goes to environmental projects, many funds are spent on undisclosed ventures, and still others are spent on initiatives that aggravate “global warming.”
Between 2015 and 2020, developed countries contributed $182 billion towards climate projects. Japan made up the lion’s share, reporting $59 billion in loans, grants, equity investments, and other contributions geared towards climate projects.
According to the report — which analyzed only 10 percent of all contributions — $9 billion of Japan’s reported endowments went to climate-changing projects that used coal and natural gas. The country also reportedly has plans to spend $40 million on projects unrelated to climate such as car parks, roads, and consulting services.
Governments are also finding ways to include unrelated initiatives in their climate finance reports. The United States, for instance, agreed to lend $19.5 million for a posh hotel project in Cap-Haitien, Haiti. Since the hotel is being designed with protection against storms and hurricanes, the project was counted as part of the US government’s pledge in the 2015 Paris Agreement. Italy spent $4.7 million to open a retail chocolate franchise across Asia and reported it as climate-related, but did not specify how this was so.
“This is the wild, wild west of finance,” said Philippines Department of Finance Undersecretary Mark Joven. “Essentially, whatever they call climate finance is climate finance.”
Countries also report ventures that never get off the ground. France earmarked $500,000 for climate initiatives in China, Mexico, and Kenya. Even though these projects were later canceled, they remained on France’s report to the UN.
There appears to be no oversight body, either in the respective countries or the UN, which monitors these climate expenditures, and there are no plans to change that.
