Yellen calls for £3 trillion annually to tackle climate change

US Treasury Secretary Janet Yellen emphasised on Saturday that the global shift to a low-carbon economy requires £3 trillion in new capital annually until 2050, significantly more than current financing levels.

Speaking in Belem, Brazil's gateway to the Amazon, Yellen asserted that achieving net-zero emissions remains a priority for the Biden-Harris administration and demands international leadership.

Yellen stressed that neglecting climate change and biodiversity loss is detrimental not only to the environment but also to the economy. Her remarks followed a G20 finance leaders meeting in Rio de Janeiro.

In 2022, wealthy economies provided a record £116 billion for climate finance to developing countries, 40% of which came from multilateral development banks (MDBs). Yellen noted that institutions like the World Bank and the Inter-American Development Bank (IDB) are setting new targets to address the funding gap.

Yellen described the financing need as "the single-greatest economic opportunity of the 21st century," highlighting its potential to foster sustainable and inclusive growth, particularly in investment-starved regions.

During her visit to Belem, Yellen met with finance ministers from Amazon basin countries and IDB President Ilan Goldfajn, reaffirming the US commitment to the IDB's Amazonia Forever platform. This programme promotes sustainable development in the Amazon through financing, project preparation, and collaboration.

"We are hopeful that this programme will incentivise greater private-sector investment in the region that supports nature," Yellen said.

Nearly two years ago, Yellen urged MDBs to expand their missions and lending capacity to include climate change initiatives. She acknowledged progress but emphasised the need for substantial private investment. The US Treasury, Brazil's finance ministry, and other stakeholders are working to boost private sector engagement.

Yellen encouraged MDBs to innovate new business models to mobilise investments that support nature and biodiversity while strengthening economies and advancing climate transitions.

Additionally, 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 wildlife harvesting, which threaten biodiversity and the Amazon ecosystem.

This initiative aims to protect the Amazon while fostering economic development and sustainability in the region, underscoring the importance of international cooperation in addressing climate and environmental challenges.