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US Treasury Secretary Janet Yellen has said she will push multilateral development banks to curb their lending to fossil fuels, as part of a global effort to make the financial system greener.
Yellen said she would convene the heads of these institutions “to express our expectations that the MDBs align their portfolios with the Paris Agreement and net zero goals as quickly as possible,” according to a speech she said. was to speak at a press conference. international climate conference in Venice, Italy.
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The remarks reflect an effort by finance ministers and central bankers around the world to push lending institutions to support targets for reducing greenhouse gas emissions and to prevent money from flowing into projects that help to pollution.
While the money loaned by development banks is small, these funds unlock much larger flows of money from commercial lenders, especially in developing countries. In recent years, environmental groups have focused their efforts on reducing development bank support for fossil fuels, seeing it as a way of drying up funding for polluting projects.
Since the start of the pandemic, development banks have allocated $ 12 billion to clean energy projects and $ 3 billion to polluting fuel projects like oil and natural gas, the institute said in March. international sustainable development. For the first time in the research group’s ranking, no money was allocated to coal.
Many institutions, including the Asian Development Bank, have said they will stop lending to coal projects. But most will support natural gas, the cleaner fossil fuel. Scientists say the world must reduce emissions from all of these energy sources to zero by mid-century to avoid dangerous levels of warming in the atmosphere.
Yellen also expects development banks to “discourage further investment in fossil-fueled power generation, except when other options are not possible.”
The conference followed a Group of 20 meeting for finance ministers and central bankers in Venice, which focused in part on climate efforts. In the G-20 statement on Saturday, officials also urged the MDBs to “step up efforts to continue alignment with the Paris Agreement” on climate change, which calls on all nations to reduce their emissions.
EU officials have also been pushing to include in the declaration a call for net zero carbon emissions by 2050, but have been thwarted by several countries more dependent on fossil fuels, according to people familiar with the negotiations who asked not to be named because the talks were private.
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