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Yellen Expected to Bring Climate Concerns to New Role as U.S. Treasury Secretary

U.S. President-elect Joe Biden’s nomination of former Federal Reserve chair Janet Yellen as treasury secretary is being interpreted as the latest sign the new administration is planning a serious response to the climate crisis.

The decision to appoint Yellen, an early supporter of the Kyoto Protocol who first became concerned about the financial risks of climate change in the late 1990s, “is both another sign of Biden’s government-wide approach to addressing climate change and the return of another Obama-era figure to the highest levels of government in Washington,” the Washington Post reports. If she receives Senate confirmation, Yellen “may play a crucial role in getting corporations to take global warming seriously.”

Since her departure from the Fed, Yellen has advocated for a carbon tax and dividend, joined ex-Bank of England governor Mark Carney in arguing that “carbon prices alone are not enough” to address the climate crisis, and supported requirements for banks to run stress tests for their climate risk, and for companies to set emission reduction targets, the Post says. With Yellen at the helm, “climate activists now hope the [treasury] department will guide the Biden administration’s tax, regulatory, and budget policies with that in mind.”

Click here for our Special Report on climate and the U.S. election.

The news story goes into the role of the treasury department and the Financial Stability Oversight Council, a body set up in 2008 and chaired by the treasury secretary, in coordinating financial regulation and anticipating market risks. Ceres President Mindy Lubber pointed out that the climate crisis is one of those risks.

“If there is anything COVID taught us, it’s that you can shock the system,” she told the Post. “We don’t want it to happen again. And climate risk is as great, if not bigger, than the sub-prime meltdown risk at the end of the 2000s, or COVID risk.”

Treasury is also responsible for tax credits for solar and wind technologies, and for more speculative options like carbon capture and storage, and would also have the ability to turn some of those credits into direct grants—as the Obama administration did in the late 2000s. “Treasury can be catalytic in moving recovery funds into hard-hit domestic industries, like clean energy,” said Evergreen co-founder and senior policy advisor Bracken Hendrick.

The mini-profile of Yellen appeared just a day after U.S. climate envoy John Kerry used his first speech in his new role to emphasize that countries must now push past the commitments in the landmark Paris Agreement he had a hand in negotiating in 2015. “You’re right to rejoin Paris on day one,” he said,” in a reference to Biden’s commitment to do exactly that. And “you’re right to recognize that Paris alone is not enough.” At COP 26 next year in Glasgow, he added, “all nations must raise ambition together, or we will all fail together. Failure is not an option.”

Brandon Wu of Washington, DC-based ActionAid sees pros and cons in Kerry’s statement.

While Biden steadily introduces his cabinet and White House staff, a couple of the issues his team will face are coming into view, with the American Petroleum Institute vowing to use “every tool at its disposal” to fight the new administration’s plan to ban new oil and gas drilling permits on public lands. CEO Mike Sommers told Reuters he would “draw the line” if those restrictions targeted lands that were “always meant for multi-use”.

“This would be a far reaching proposal that would undermine American national and energy security to the detriment of the American people,” Sommers said. “We would be very concerned about those kinds of proposals coming out of the Biden administration.”

Meanwhile, E&E News looks at the “outsize role” the country’s biggest public utility could play in helping to implement Biden’s green energy agenda. Biden will be entitled appoint as many of six of the nine board members of the Tennessee Valley Authority in the next year. So “clean energy advocates are hoping Biden’s wide-ranging climate platform will lead TVA to adopt more aggressive carbon-cutting and energy efficiency plans and use new technologies to clean up its power grid,” E&E says.