During her first travels overseas since being sworn into office, Treasury Secretary Janet Yellen called for spending on sustainable infrastructure to help combat climate change. And she wants the private sector to get in on the action.
But her pitch comes as negotiations on infrastructure between the Biden administration and Republican lawmakers have been moving slowly in Washington.
Yellen is in London this week to meet with the G7 finance ministers to discuss international priorities including economic recovery from the coronavirus pandemic. She also delivered remarks at the G20 Infrastructure Investors Dialogue, which looks to increase collaboration between officials in member nations and investors. According to the Organization for Economic Cooperation and Development, the infrastructure investment gap is set to reach $15 trillion by 2040 as public and private spending declines.
"Financing new high-quality, 'green infrastructure' – infrastructure that is both resilient to extreme climate events and emits minimal greenhouse gases – is crucial to reducing these emissions, and we need you, investors and infrastructure developers, to help lead the transition," Yellen said in prepared remarks.
She said the annual global infrastructure investment gap is as much as $3 trillion and cannot be filed by public funds.
"If the world has a realistic hope of reaching our climate goals and avoiding the most catastrophic effects of climate change, we must close this gap by investing in sustainable infrastructure," Yellen said.
This is not the first time Yellen has called for private spending to help fill the gap to help combat climate change. But it comes as the Biden administration attempts to negotiate a bipartisan deal with lawmakers on infrastructure in the United States.
On Friday, Senate Republicans in talks with the White House unveiled a $928 billion counter-offer infrastructure package after President Biden took his plan down from more than $2 trillion to $1.7 trillion, but insisted on the inclusion of spending on electric vehicles. The new GOP offer made no mention on spending to combat climate change, a key aspect in the Biden proposal. West Virginia Senator Shelley Moore Capito, who is leading negotiations for the Republicans, met with the president again at the White House on Wednesday.
In her remarks, Yellen highlighted the Biden administration proposal to spend the $1.7 trillion over 10 years to modernize roads as well as expand broadband, but said, "most importantly, they will help catalyze significant private-sector investment in infrastructure and green technologies."
She specifically focused on proposed tax credit to mobilize private spending in power lines. She also noted that in their plan, 40% of the benefits of climate and clean infrastructure spending would go to underserved areas.
During her remarks, Yellen also touched on how G20 member nations can guide investors on infrastructure without over-amping up benefits to attract them.
"There are legitimate concerns over their potential impact on investment and project costs," Yellen said of the principles the group is developing. But she said officials continue to hear from private investors that such principles to help guide investments are necessary.
Meanwhile back in Washington, Capito said she was "encouraged" after her latest visit to the White House to talk infrastructure. She will be briefing members of her own team and plans to reconnect with the president on Friday.