Multilateral Clean Technology Fund gets $950m US Treasury loan

Contribution will be utilised for energy transition in developing countries

Speaking at the Centre for Global Development, US Treasury Secretary Janet Yellen called climate change 'an existential threat to our planet'. EPA
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US 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 US Treasury, makes good on a US pledge made at the 2021 G7 summit, the department said.

"We are committed to a net zero economy by 2050," Ms Yellen said in a speech at the Centre 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. The Biden administration remained committed to boosting international climate financing to over $11 billion by 2024, she said.

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 US support for emerging market countries as they transitioned away from fossil fuels.

The loan will be used to support US climate commitments, including Just Energy Transition Partnerships 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 US money could fund installation of new renewable energy equipment, retirement of older coal plants and various support programmes that promote new investment and employment in communities affected by energy transition, the Treasury said.

Ms Yellen, who also called for reforms of the multilateral development banks, was speaking before 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 programme developed by the CTF.

The four countries account for 15 per cent 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, 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 chief executive Mafalda Duarte said in a statement.

Updated: October 07, 2022, 2:27 PM