Yellen says $3 trillion needed annually for climate financing, far more than current level

The US treasury secretary says that the amount of funding needed for a global transition to a low-carbon economy is far above the current amount

FILE PHOTO: US Treasury Secretary Janet Yellen speaks during a G20 event in Barra da Tijuca, Rio de Janeiro, Brazil, on Jul 25, 2024. REUTERS/Tita Barros/File Photo

US Treasury Secretary Janet Yellen said on Saturday that the global transition to a low-carbon economy requires $3 trillion in new capital each year through 2050, far above current annual financing, but that filling the gap is the biggest economic opportunity of the 21st century.

Yellen said in Belem, Brazil's Amazon gateway city, that reaching net-zero emissions goals remained a top priority for the Biden-Harris administration and this would require leadership far beyond US borders.

"Neglecting to address climate change and the loss of nature and biodiversity is not just bad environmental policy. It is bad economic policy," Yellen said in a speech after attending a G20 finance leaders meeting on Thursday and Friday in Rio de Janeiro.

Wealthy economies provided and mobilized a record $116 billion for climate finance for developing countries in 2022, 40% of which came from multilateral development banks (MDBs). Yellen said the banks, including the World Bank and the Inter-American Development Bank (IDB) were setting new targets.

The financing need is "the single-greatest economic opportunity of the 21st century" and can be leveraged to support sustainable and more inclusive growth, including for investment-starved countries, she said.

While in Belem, Yellen met with finance ministers from Amazon basin countries and IDB President Ilan Goldfajn. She reaffirmed the U.S. commitment to the bank's Amazonia Forever platform, which provides a holistic approach to sustainable development in the region through financing, project preparation and collaboration.

"We are hopeful that this program will incentivize greater private-sector investment in the region that supports nature," she added.

Yellen called on MDBs nearly two years ago to expand their missions and lending capacity to include fighting climate change. She said this was "now in their DNA," but massive private investment was needed, and the Treasury, Brazil's finance ministry and other stakeholders were working to boost engagement with the private sector.

She said the banks should also catalyse new business models to mobilize investments that support nature and biodiversity while strengthening economies and advancing climate transitions.

Earlier on Saturday, 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 harvesting of wildlife and minerals, that are threatening biodiversity and the Amazon ecosystem.