As Prepared for Delivery
I am glad to welcome all of you to the Treasury Department.
Since the start of the Biden-Harris Administration, we have been pursuing far-ranging actions to achieve our climate and economic goals. The private sector has been key to our approach: Treasury has been undertaking extensive efforts, in partnership with many of you, to encourage financial institutions and other market participants to realize the opportunities created by the transition to clean energy.
Let me highlight a few recent developments. Last fall, I announced Treasury’s Principles for Net-Zero Financing and Investment. The Principles were a key step forward, meeting a need for greater clarity around best practices related to net-zero commitments. With the Principles, we affirmed the importance of credible commitments and encouraged financial institutions that make such commitments to take consistent approaches to implementation. But we recognized that a one-size-fits-all approach would not work and that approaches will likely evolve over time, so we also designed the Principles to be flexible. I was pleased that alongside the launch of the Principles, philanthropies committed $340 million to fund needed research and technical resources; civil society organizations committed to develop these technical resources; and more financial institutions announced their intent to develop and publish net-zero transition plans.
As of this spring, three quarters of the largest investors in North America have made net-zero commitments. Over 65 percent of globally systemically important banks have transition plans. And we have heard from many firms that the Principles are helping shape transition planning, leading to more consistent, credible, and impactful approaches.
But our work didn’t stop with the launch of the Net-Zero Principles. In conversation with you, we identified several additional steps necessary to make progress on our sustainable finance goals.
As one example, the Principles referenced voluntary carbon markets but did not provide specific guidance. In May, we filled this gap by publishing, in partnership with other federal agencies, the Principles for Responsible Participation in Voluntary Carbon Markets. VCMs have the potential to drive significant decarbonization—but only if challenges related to supply integrity, demand integrity, and market integrity are met. The VCM Principles are a key step toward unlocking that potential.
Treasury has also been focused on advancing work on transition finance in multilateral fora. The G20 Sustainable Finance Working Group, which the United States co-chairs, is working to develop high-level principles for financial institution and corporate transition plans. We hope that the G20’s efforts will complement at the international level the progress we’ve seen with the Net-Zero Principles at home—further promoting emerging best practices, as well as reducing the risk of fragmentation across jurisdictions.
And let me end here at home, where Treasury continues to focus on implementing the Inflation Reduction Act. The IRA is not only the single biggest climate legislation in our nation’s history: It is also helping create massive economic opportunities for the private sector, as it incentivizes private investments in the industries that will propel us toward our climate goals and drive our country’s growth.
We are seeing early signs the legislation is having its intended impact. The private sector has announced over $336 billion in new investments in clean energy in the less than two years since the IRA was passed. And there has been a surge in clean energy manufacturing. In the first quarter of this year, solar manufacturing investment was almost 3.5 times its level a year earlier. New battery manufacturing investment has increased by an average of $1.6 billion in each quarter since the IRA was passed. And demand is growing. Last year, the first full year the IRA’s clean vehicle credits were in effect, the sale of electric vehicles increased 50 percent over the previous year. We’ve also seen over $60 billion in investment in emerging climate technologies like hydrogen, carbon capture, and sustainable aviation fuel. Over time, investments at home will have positive global impacts, unleashing new technologies and lowering the cost curves of these technologies for other countries as well.
That said, we know that companies are still facing challenges. As we implement the IRA, we are committed to doing all we can to remove barriers to investment.
Today is an opportunity for Treasury to get your input on the developments I have highlighted, and for you to hear from each other as well. Facilitating shared approaches to defining, measuring, and scaling transition finance will help unlock investment opportunities, and I look forward to our continued engagement and collective work to move the ball forward on transition finance and on implementing the IRA.
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