Janet Yellen has promised to make fighting climate change a priority as Treasury secretary, spurring hope among activists she will put the issue at the center of U.S. economic policy for the first time. Yellen, President-elect Joe Biden’s nominee to lead the Treasury Department, has already endorsed a tax on carbon dioxide emissions and urged countries to set up independent councils that can pursue aggressive climate policies without political interference.
Advocates are appealing for her to go even further if confirmed, seizing her role as one of the most powerful people in finance to wield fiscal policy in the campaign against global warming. Some have outlined plans for how Yellen could trigger tighter regulation of oil and gas company finances under the Dodd-Frank Act — even going so far as to require them to sell off fossil fuel assets.
“Yellen will have the power to help move trillions of dollars out of fossil fuels and trillions more into renewables,” said Jamie Henn, director of the non-profit advocacy group Fossil Free Media. “She could do more for the Green New Deal than nearly any other cabinet position.”
Yellen’s Treasury Department is expected to play a central role in that effort by helping shape stimulus spending to pull the U.S. out of recession and fulfill Biden’s promise to invest as much as $2 trillion on clean energy.
Both Biden and Yellen’s ambitions for big clean-energy spending could be constrained by Congress, where Republicans will hold at least 50 seats in the Senate. Conservatives have assailed congressional Democrats’ ambitions for a wave of spending to propel clean power and energy efficiency, including through expanded tax cuts and investments, as a socialist wish list.
Clinton Administration
Yellen’s interest in addressing climate change dates to her time in the Clinton administration, when she was the head of the Council of Economic Advisers. And she doesn’t mince words about the threat.
“It will have absolutely devastating consequences for humanity if we don’t address it, and time is running out to take the steps that are necessary,” she said in an October interview with Bloomberg News.
Climate change is already affecting energy investments, raising the risk that oil, gas and coal reserves will lose value or be barred from development as governments clamp down on the greenhouse gas emissions generated by burning fossil fuels. Even non-energy investments in commercial buildings and real estate are at greater peril with the encroachment of rising seas and more intense storms fueled by climate change.
‘Critical Links’
Yellen “understands the critical links between the country’s economic health and climate change,” said Andrew Steer, president of the World Resources Institute. As Treasury chief, “Yellen would have strong authority to bring climate risks and opportunities more centrally into U.S. economic and financial systems.”