Treasury Secretary Janet Yellen said in her keynote address at the Virtual Cornell OFR Conference on Global Climate Finance and Risk on October 25 that mitigating climate risks now will foster economic prosperity in the future.
“The future of our global economy depends on tackling climate change,” said Yellen, one of five keynote speakers and more than 30 experts who participated in the event. “And everyone at this conference has a role to play, including governments, international organizations, non-governmental organizations, the private sector and universities.”
US Treasury Secretary Janet Yellen
The conference brought together leaders from a variety of sectors to discuss financial strategies to mitigate both the environmental threat of climate change and the financial disruption of the transition to a green economy. The event was hosted by the Cornell SC Johnson College of Business, the Cornell Atkinson Center for Sustainability, and the U.S. Department of the Treasury’s Office of Financial Research (OFR), and co-chaired by Andrew Karolyi, the Charles Field Knight Dean of SC Johnson University. Served. College; Alyssa M. Kleinienhaus, Visiting Assistant Professor, SC Johnson University; and Dasol Kim, OFR’s principal investigator. More than 750 people from 48 countries participated.
Following the morning’s discussions, Yellen spoke on topics including climate science and risk, measuring companies’ biodiversity footprints, using financial market tools to reduce carbon, and the challenges of an incomplete carbon tax. Experts from NASA, Quepos Capital, the World Bank, the Brookings Institution, the European Commission, and various universities and organizations contributed to the dialogue.
“There is no question that climate risk should be on the agenda for regulators and other stakeholders involved in financial stability,” Yellen said. He said the Treasury Department is working with state regulators to improve data collection on the cost and availability of homeowners insurance and to better understand the impact of climate change on GDP, growth, employment and interest rates. He emphasized the move to incorporate climate change into macroeconomic models in order to
Yellen also spoke about the Inflation Control Act, which increases private sector incentives to invest in clean energy, and the Just Energy Transition Partnership in Indonesia, South Africa and Vietnam, for which the U.S. and others have approved about $3 billion in funding. He also mentioned other initiatives. Examples of government initiatives include loans to support the transition to green energy, with further negotiations underway.
“Reducing climate-related risks and driving the transition to net zero will make our lives safer and our economy more secure, with fewer threats to our well-being and that of future generations.” I strongly believe that we can bring about a prosperous world,” Yellen said.
Following Yellen’s remarks, the Kleinnienhaus roundtable moved to a policy brief co-authored by Kleinnienhaus, “The Economic Case for Large-Scale Climate Finance.” Patrick Bolton, Professor, Imperial College London. Jeromin Zettelmeyer, director of economic policy research firm Bruegel.
“Essentially, the message here is that it makes economic sense, not moral sense, for developed countries to only pay for the decarbonization of the Global South, excluding China.” Zetelmeyer said.
For most countries, the costs of phasing out coal outweigh the economic benefits to them, according to the briefing. However, for developed countries, the benefits of even a small coalition such as the G7 or the G7 plus the European Union exceed the costs, and if public contributions of 25% complement private investment, the costs would be around 0.3% of annual GDP. becomes.
“Even though developed countries have decarbonized to some extent, emissions still increased last year,” Kleinnienhaus said. “It is not possible to achieve net zero globally without involving[emerging markets].”
Nuno Fernandes, professor at IESE Business School and chair of the European Investment Bank Supervisory Board, said developed countries have polluted the most over the past 50 years. “And now, after we’ve done the pollution, after we’ve created a carbon budget, we want to spread that cost around the world?” he asked. “Well, this isn’t going to work. That’s not acceptable.”
Ethan Zindler, climate advisor at the U.S. Treasury Department, said cleaner, more cost-competitive technologies exist and more people are recognizing the economic opportunities presented by climate change.
“What caused these paradigm shifts?” he said. “I would argue that public policy and public financing created the conditions for private investors to feel comfortable deploying large amounts of capital.”
The afternoon session continued with a session on investment and macroprudential policy, which ended with Mr. Karolyi’s remarks.
“We are at a critical juncture in human history, with only 200 gigatonnes of carbon remaining to maintain the critical 1.5 degrees Celsius threshold,” Kleinnienhaus said. . “We face a decisive choice between closing the climate finance gap and unlocking the most transformative economic opportunity of the 21st century, or continuing down a path that will increase climate damage for generations to come. The time for big, decisive action is now.”
Alison Fromm is a writer at the Cornell SC Johnson College of Business.
