U.S. Treasury Secretary Janet Yellen announced a $950 million loan to the Clean Technology Fund (CTF), a multilateral trust that helps developing countries accelerate their transition from fossil fuels to clean energy.
The contribution, the first of its kind from the U.S. Treasury, makes good on a U.S. pledge made at the 2021 Group of Seven summit alongside other G7 countries, Treasury said.
“We are committed to a net zero economy by 2050,” Yellen said in a speech at the Center for Global Development, calling climate change “an existential threat to our planet.”
“We must also help developing countries transition their economies away from carbon-intensive energy sources and expand access to clean energy,” she said, adding that the Biden administration remained committed to boosting international climate financing to over $11 billion by 2024.
In a statement, Treasury Assistant Secretary for International Trade Alexia Latortue called the loan a “strong down payment” on President Joe Biden’s G7 pledge and said it reflected continued U.S. support for emerging market countries as they transitioned away from fossil fuels.
The loan will be used to support U.S. climate commitments, including Just Energy Transition Partnerships (JETPs), while funding CTF projects developed by multilateral development banks in alignment with South Africa, Indonesia, India, and the Philippines as they accelerate their shift away from coal.
The U.S. money could fund installation of new renewable energy equipment, retirement of older coal plants and various support programs that promote new investment and employment in communities affected by energy transition, Treasury said.
Yellen, who also called for reforms of the multilateral development banks, spoke ahead of next week’s annual meetings of the World Bank and International Monetary Fund.
South Africa, India, Indonesia and the Philippines last year became the first recipients of the Accelerating Coal Transition (ACT) program developed by the CTF.
The four countries account for 15% of global emissions related to coal, the dirtiest fossil fuel. Cutting their emissions more quickly will help the global effort for net zero carbon emissions by 2050.
The CTF is one of two multi-donor trust funds set up under the Climate Investment Funds (CIF), an initiative created by the world’s biggest economies in 2008 to help poorer countries shift more quickly to a low-carbon economy.
“With this new contribution, the United States is helping create new jobs, new sustainable markets while reducing emissions, and by doing so, securing our shared climate future,” CIF CEO Mafalda Duarte said in a statement.
