Yellen warns that climate change is causing huge financial losses in the US

Treasury Secretary Janet Yellen warned on Tuesday that climate change is already taking a significant economic toll in the US and could cause major losses to the financial system in years to come.

Yellen made the remarks during the first meeting with the Climate-related Financial Risk Advisory Committee (CFRAC), an advisory board created last year by the Financial Stability Oversight Council in an effort to bolster US action to minimize climate risk to the economy . .

“As climate change intensifies, natural disasters and global warming could lead to declines in asset values ​​that could flow through the financial system,” she said at the meeting. “A delayed and disorderly transition to a net-zero economy can also lead to shocks in the financial system.”

Climate-related disasters have resulted in economic losses from infrastructure damage, disruptions to critical services and loss of property values, according to a federal government report released last year. The U.S. has experienced an average of nearly eight $1 billion disasters annually over the past four decades. Over the past five years, that number has risen to nearly 18 events per year.

“These effects are not hypothetical,” Yellen said. “They’re already playing.”

Yellen said states like California, Florida and Louisiana have weathered particularly bad storms and wildfires recently, noting how tornadoes in the South and intensifying storms on the West Coast indicate that climate change is accelerating.

She said some insurers are raising rates or even pulling out of high-risk areas in response to rising losses.

“This has potentially devastating consequences for homeowners and their property values,” Yellen said. “These kinds of developments could spill over to other parts of our interconnected financial system.”

The Biden administration has taken executive action to address climate risk to the economy, including an upcoming Securities and Exchange Commission measure that will require publicly traded companies to disclose their greenhouse gas emissions. The agency is now considering scaling back the proposed climate disclosure rule.

Yellen has previously promoted historic climate investments in President Biden’s Inflation Reduction Act, specifically touting the legislation’s tax credits and other private sector incentives to reduce energy costs for consumers and domestic greenhouse gas emissions.

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