US backs new push to issue green bonds – Treasury Chief Yellen

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Secretary of the Treasury Janet Yellen attends the House Financial Services Committee hearing in Washington, USA on September 30, 2021. Al Drago / Pool via REUTERS

GLASGOW, Nov. 3 (Reuters) – The United States on Wednesday announced support for a new capital market mechanism that will issue investment-grade bonds and mobilize significant new financing to develop clean energy and sustainable infrastructure in economies emerging.

Stressing the urgency to act to stop global warming, Treasury Secretary Janet Yellen told the COP26 climate conference in the Scottish city of Glasgow that the United States would join Britain in supporting the new climate investment fund (CIF) capital market mechanism.

She said the initiative would help attract significant new private climate finance and provide $ 500 million per year to the CIF’s Clean Technology Fund, as well as its new investment program, Accelerate the Transition from Canada. coal.

The CIF was established in 2008 to mobilize resources and investments in low- and middle-income countries. It has raised some $ 10.5 billion in pledges from 14 contributing countries and leveraged $ 61 billion in funding from other sources for projects that have benefited 72 countries to date.

“The climate crisis is already here. It is not a challenge for future generations, but a challenge we face today,” Yellen said in prepared remarks. “Meeting this challenge will require the total transformation of our carbon-intensive economies. “

The company is expected to cost between $ 100,000 and $ 150 trillion over the next three decades, and also offers huge opportunities for growth and investment, she said.

The CIF said the new mechanism could generate around $ 50 billion for developing countries over the next decade.

He said it was the first time that a multilateral climate fund focused on bonds to “help reduce the clean infrastructure gap” in developing countries.

As part of this program, CIF said it would monetize the existing assets of its Clean Technology Fund to issue bonds and then pay them through multilateral development banks in the form of equity, debt. , mezzanine financing, guarantees and other forms of financing.

“Emerging economies need a lot more resources to achieve their climate ambitions and we are responding to their call,” said CIF Managing Director Mafalda Duarte, adding that the model of capital mobilization was “scalable, replicable and revolutionary. “.

Developing countries are home to two-thirds of the world’s population and are on track to consume 70% of the energy supply, but investments in clean energy are far behind in these countries, threatening efforts to achieve a net zero economy. ‘by 2050.

US President Joe Biden has announced plans to quadruple US support for climate finance for developing countries by 2024 to more than $ 11 billion, but the private sector is also expected to participate, Yellen said.

“As important as the public sector effort is in all of our countries, the price of over $ 100,000 billion to tackle climate change globally is far greater,” she said.

Yellen, who met with financial executives on Tuesday, said financial institutions with collective assets under management of nearly $ 100,000 billion had united under the Glasgow Financial Alliance for Net Zero, or GFANZ, pledging to make their portfolios carbon neutral by 2050.

In the United States, Yellen said the Financial Stability Oversight Council is working to improve the climate data and information available to investors, market players and regulators, and that Washington will work with its partners to support similar efforts globally.

It was also essential to increase the transparency of data on infrastructure projects, Yellen said, stressing his support for a new Group of 20 initiative to implement specific principles for infrastructure investments.

Reporting by Andrea Shalal; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.


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