Letter to Hon. Janet Yellen, Secretary of Treasury - Prioritize Global Climate Justice

Letter

As you know, last month, the Intergovernmental Panel on Climate Change (IPCC) released a
sobering assessment declaring "code red" on human-driven global warming. The report finds
that climate change is already affecting weather and climate extremes around the world, and
many of these changes are already irreversible. According to IPCC Working Group 1 Co-Chair
Panmao Zhai, "Stabilizing the climate will require strong, rapid, and sustained reductions in
greenhouse gas emissions," including that of methane. These scientific findings make evident
that climate change, and the worsening natural disasters and climate indices as a result, are
locked in for the next 30 years. However, the report highlights that if significant reductions in
greenhouse gas emissions occur in the near future, we still have time to right the ship for the
second half of this century, preserving a future for our children and posterity. It is in this light
that the U.S. government, and all governments, have a moral obligation to advance global
decarbonization and support adaption efforts, particularly among the most marginalized and
vulnerable domestic and global populations.

With this alarming global alert in mind, we applaud your efforts to restrict U.S. public financing
for fossil fuels globally through the recently released guidance on the U.S. government's voting
position on fossil fuel projects at multilateral development banks (MDBs). As one of the largest
shareholders at the MDBs, the Department of Treasury's ("the Department") voice and vote
carry significant weight, and the Guidance commits the Department to voting against many types
of fossil fuel projects that the MDBs have continued to support despite the dire warnings from
the IPCC and opposition from civil society and impacted communities. However, while this
guidance sets an important precedent, it lacks critical implementation details. For this guidance
to decisively spur a shift of resources away from fossil fuels at the MDBs, currently a major
global financier of fossil fuels, it will require clear implementation guidelines. In particular,
criteria for exceptional support for natural gas projects in developing (IDA-eligible) countries,
and financing going through indirect channels, need to be more clearly defined.

In addition, the Guidance does not explicitly state that the Department of Treasury will seek to
align MDB policy with its provisions. Instead, it commits the Department to use the Guidance to
"inform" its positions on "fossil fuel policies, strategies, and projects at the MDB Boards." To be
truly effective, the Guidance should be used in a way that proactively seeks policy change at the
institutions, rather than trying to shape the portfolio on a project-by-project basis. One important
and timely opportunity to align the World Bank's ("the Bank") policies with this guidance and
further limit its financing of fossil fuels is the 20th Replenishment of the International
Development Association (IDA). The policy package attached to IDA20 replenishment will
include several policy commitments related to climate change and, as the largest historical donor,
the Department has significant influence in these negotiations. However, the draft policy
commitments are vague and lack ambition or specificity when it comes to supporting countries to
transition away from fossil fuels and avoiding locking them into fossil fuel investments that will
soon become stranded assets. Therefore, we hope to see these draft commitments significantly
strengthened in the final IDA20 policy package, along the following lines:

The Bank should support all IDA countries to implement and update their
Nationally Determined Contributions (NDCs) in line with 1.5C through specific
policies and investment plans that are integrated into national budgets and
expenditure frameworks, with specific support for a just transition away from fossil
fuels. If NDC's are not incorporated into the country's national budget, it becomes more
difficult for countries to implement them and attract more investments. The draft policy
commitments only offer support to 40 out of 74 IDA countries to update and/or
implement their NDCs. IDA19 committed to support at least 15 countries, but according
to the Bank itself, after less than two years there are already 21 countries receiving
support. Clearly there is room for greater ambition to support all IDA countries, and the
urgency of the crisis demands it.

To truly boost its support for renewable energy and assist the world's poorest
countries to leapfrog fossil fuels, the Bank should commit to facilitating the
development of "low-carbon energy sector development strategies" in at least half of
the IDA countries it supports--and commit to supporting the rest in the next
replenishment period. The Bank has so far only committed to supporting 20 IDA
countries to develop these strategies, which is less than one third of its IDA members.
The Bank's own draft documents state that "renewable energy and related battery storage
will be key priorities in IDA20, because of their potential to enable IDA countries to
scale up energy provision and expand energy access."It is critical that it offers support
for both off-grid and mini-grid solutions, especially in rural areas, and that it measures its
progress on facilitating energy access by tracking the number of low-income households
provided with new, affordable, reliable, and sustainable electricity service over the
replenishment period.

To ensure the greatest impact of its analytical work on climate, the Bank should
commit to integrate climate diagnostics and/or NDC-based results indicators in IDA
Country Partnership Frameworks (CPF). The draft documents commit the Bank to
develop Country Climate and Development Reports, a new analytical tool introduced by
the Bank's recently released Climate Change Action Plan (CCAP) in at least 30
countries, which is a welcome development. However, the relationship they will have to
CPFs, which guide the World Bank's support and selection of projects for member
countries over a three-five-year period, is unclear. The CCAP currently state that these
new reports will be used to "inform," and "prioritize" climate action through the
engagement process. However, too often the Bank's knowledge products are ignored
when CPFs are developed.

We understand the need for the World Bank to accelerate IDA20 negotiations in the face of the
unprecedented crisis we are experiencing and appreciate the role the Bank is playing to support
the world's poorest countries in weathering the pandemic as well as tackling climate change.
However, we also hope to see much stronger climate policies in the final policy package as we
have detailed in this letter. We thank you for your leadership on this important matter and look
forward to your timely response.

Sincerely,

Adriano Espaillat
Member of Congress

Rashida Tlaib
Member of Congress

Barbara Lee
Member of Congress

Ilhan Omar
Member of Congress

Earl Blumenauer
Member of Congress

Nanette Diaz Barragán
Member of Congress

Mondaire Jones
Member of Congress

Jared Huffman
Member of Congress

Cori Bush
Member of Congress

Alan Lowenthal
Member of Congress

Dina Titus
Member of Congress

Jesús G. "Chuy" García
Member of Congress

Jamaal Bowman, Ed.D.
Member of Congress

Mark DeSaulnier
Member of Congress

Julia Brownley
Member of Congress

Andy Levin
Member of Congress

Grace Meng
Member of Congress

Marie Newman
Member of Congress

Ritchie Torres
Member of Congress

Jamie Raskin
Member of Congress

Raúl M. Grijalva
Member of Congress

Alexandria Ocasio-Cortez
Member of Congress

Mark Takano
Member of Congress

Sean Casten
Member of Congress

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