Global transition to low-carbon economy needs $3 trillion each year until 2050: Yellen

U.S. Treasury Secretary Janet Yellen recently stated that the global transition to a low-carbon economy needs $3 trillion in new capital every year until 2050, significantly above the current level of financing. However, filling this gap is the biggest economic opportunity of the 21st century.

Reaching net-zero emissions remains priority

During her participation at the G20 finance leaders’ meeting last week in Rio de Janeiro, Yellen added that reaching a low-carbon economy and the net-zero emissions goals remained a top priority for the U.S. administration. However, this goal would need cooperation of leadership far beyond U.S. borders. She reiterated the impact of climate change not only on the environment but also on the economy, restating the importance of transitioning to a low-carbon economy.

In 2022, wealthier economies provided an all-time high of $116 billion for climate finance for developing countries, 40 percent of which came from multilateral development banks (MDBs). Now banks including the World Bank and the Inter-American Development Bank (IDB) are setting new targets.

During the meeting, Yellen met with finance ministers from Amazon basin countries in addition to IDB President Ilan Goldfajn. She restated the United States’ commitment to the bank’s Amazonia Forever platform through financing, project preparation and collaboration.

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More private investment needed

“We are also prioritizing work to reform the climate finance architecture to make accessing finance from the multilateral climate funds easier for countries, to better mobilize the private sector, and to support scaling approaches that work,” she added.