Federal Reserve Chair Jerome Powell dismissed the notion that the Federal Reserve should take a hand in making climate policy. “Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” he said at a forum for central bankers in Stockholm on Jan. 10. “Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections,” Powell added.
But it seems Powell is in the minority among central bankers, as well as the leaders of the administrative state in the United States.
The European Central Bank has what it describes as an evolving climate agenda. The Bank of England has a climate agenda; as does the Bank of Japan (pdf). Even the Bank of China, the central bank of the world’s leading polluter, has a climate change agenda, albeit far less ambitious than its counterparts in democratic nations.
In the U.S. administrative state, Powell’s respect for “the public’s will as expressed through elections” is an afterthought.
Securities and Exchange Commission Chair Gary Gensler is all-in on climate change dogma. He wants public companies to provide extensive disclosures related to climate policy. In March of last year, the SEC released “proposed rules to enhance and standardize climate-related disclosures” to investors that require, among other things, issuers of securities to indicate “how any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook” and how “the transition” (presumably, to a “green” economy) will affect the registrant’s financial results.
Treasury Secretary Janet Yellen has also fully embraced climate change dogma. “Of course, unmitigated climate change is an existential threat to everyone on our planet,” she told a forum last fall; she then went on to recite a litany of climate agenda initiatives in the Inflation Reduction Act and other initiatives. Her views seem to be echoed by the Office of the Comptroller of the Currency, which oversees the nation’s banks and savings institutions. The OCC says part of its “role is to ensure that national banks and federal savings associations understand their climate-related financial risks and develop risk management frameworks and capabilities to identify, measure, monitor, and control those risks.”
And the efforts to impose the climate agenda aren’t just happening among bureaucrats at the federal level. “Climate activism” is an issue among state government pension fund managers as well, along a predictable red-state/blue-state political divide.
Various state pension fund managers, many of them elected, have imposed broad climate action agendas on companies in which they are invested. Tom DiNapoli, for example, the New York State Comptroller who oversees one of the nation’s largest public employee pension funds, is using his vote to directly affect financial institutions like bank lenders. He has expressed “support for important climate proposals, such as those calling on banks in the U.S. and Canada to mitigate climate-related risks by ensuring that their financing is consistent with the [International Energy Agency] IEA net-zero 1.5°C scenario.”
But the IEA, an autonomous, self-governing, international organization established in the 1970s to ensure energy security, is headquartered in Paris and led by Fatih Birol, a Turkish economist, and a group of other officers hailing from around the globe. Nobody in New York—or anywhere else—elected them. They’re career civil servants drawn from global bureaucracies.
And their climate agenda is grandiose. It will radically alter the U.S. economy by affecting investment and capital allocations, as well as consumer costs. It includes these objectives:
- By 2025: No new sales of fossil fuel boilers * All new buildings are carbon-zero in advanced economies
- By 2030: 60 percent of global car sales are electric * All new buildings are zero-carbon-ready
- By 2035: No internal combustion engine car sales * Global fossil fuel use is 50 percent of 2020 levels * Overall net zero emissions electricity in advanced economies
- By 2040: 50 percent of existing buildings retrofitted to zero-carbon-ready levels * Oil demand is 50 percent of 2020 level.
It’s important to remember that the Federal Reserve had, prior to 1977, only one mandate: stablize prices. But in that year, Democrat supermajorities in both houses added a Fed mandate for “full employment.” It is not at all inconceivable we may soon see Congress impose an additional mandate on the Fed, as it did in 1977, to mandate compliance with the IEA climate change agenda. It would just be a matter of a majority vote in Congress and an agreeable president’s signature. With that, the Fed could one day mandate member banks to deny loans to enterprises and individuals who do not adhere to the IEA climate agenda or to mandate a minimum level of lending to borrowers pursuing the IEA agenda. And that’s an IEA that Americans didn’t elect; an IEA that sits in a foreign country; and an IEA that is answerable to no one (an attribute it shares, in many respects, with the Fed.)
Let’s hope that the nation follows Powell’s view and leaves climate policy—and its enormous effect on the U.S. economy and populace—to officials who are both elected and American. As one of the leading newspapers in the nation claims, “democracy dies in darkness,” especially in the morass of the administrative state.