© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen holds a news conference in the Cash Room at the U.S. Treasury Department in Washington, U.S. July 28, 2022. REUTERS/Jonathan Ernst/File Photo
By David Lawder
(Reuters) – Weather disasters linked to global warming are increasingly reducing the productive capacity of the U.S economy and sapping resources from governments, U.S. Treasury Secretary Janet Yellen said on Tuesday, arguing for an accelerated transition to renewable energy.
Yellen, in the latest of a series of campaign-flavored economic speeches touting Democratic President Joe Biden’s legislative achievements, including a $430 billion climate and healthcare spending package, said weather-related shocks were exacerbating supply chain difficulties.
“These are near-term, sharp reductions in capacity that can raise prices. The reality is that shocks that were unthinkable even a few decades ago are now presenting with alarming frequency,” Yellen said in prepared remarks at Cypress Creek Renewables, a solar power developer in Durham, North Carolina.
“There’s been at least a fivefold increase in the annual number of billion-dollar disasters over the past five years compared to the 1980s, even after adjusting for inflation.”
Yellen’s remarks came as Hurricane Ian slammed Cuba and was headed for Florida’s Gulf of Mexico coast, threatening a potentially devastating storm surge to the Tampa Bay area, along with up to 2 feet of rain.
Yellen said persistent, frequent weather shocks will increase demands for fiscal disaster relief, shrinking national resources, including those needed to address climate change.
“State and local governments may increasingly be forced to devote scarce resources to disaster mitigation, potentially at the expense of investments in areas like education and worker training,” Yellen said. “And the bulk of the evidence suggests that these disasters have long-lasting negative effects on economic growth – with many economies failing to fully recover.”
The Democrat-passed climate and healthcare package provides $369 billion in funding for extending and expanding tax credits for solar and wind energy, and North American-produced electric vehicles, prompting increased investment in these technologies. It also provides $50 billion to make infrastructure more resilient to climate events.
Yellen said in the coming weeks Treasury will hold a series of roundtable discussions with a broad spectrum of stakeholders on how to implement these tax credits, to ensure that they have clarity on them so that benefits can be quickly felt.
“In sum, climate change poses a grave risk to the productive capacity of our economy while also impacting its stability,” Yellen said. “To tackle these risks, we need to accelerate our transition to a clean energy economy.”