Progressives on Wednesday applauded Democratic Reps. Mondaire Jones, Ayanna Pressley, and Rashida Tlaib for unveiling a bill that would prevent Wall Street from continuing to bankroll fossil fuels, the primary driver of the climate emergency.
"For too long, our federal government has looked the other way while our nation's largest banks bankroll the dirtiest fossil fuel projects, exacerbating the climate crisis and setting us up for a massive, climate-induced economic collapse."
—Rep. Ayanna Pressley
The Fossil Free Finance Act (pdf) would require the Federal Reserve to mandate, via regulation or guidance, that all banks and other financial insitutions with more than $50 billion in assets phase out the funding of coal, oil, and gas extraction as well as industries linked to deforestation, in accordance with science-based targets for slashing carbon pollution.
In an effort to meet U.S. obligations under the Paris agreement to cut greenhouse gas emissions in half this decade and eliminate them by midcentury, the legislation would prohibit the financing of new or expanded fossil fuel projects after 2022 and all fossil fuel projects after 2030.
"The climate crisis poses an existential threat to every aspect of our society, including our economy and financial system," Jones (N.Y.) said in a statement. "As climate disasters grow in frequency and intensity, we can no longer afford to stand by while big banks and other financial institutions invest trillions in the companies fueling the climate crisis."
Citing a report released earlier this year by a coalition of environmental groups, Tlaib (Mich.) noted that "over the last five years, financial institutions under the Federal Reserve's supervision provided trillions in direct fossil fuel financing—and each new project brings us closer to the brink."
"Our planet is burning," Tlaib continued. "My residents deserve to breathe clean air. For over a decade, Wayne County, Michigan has not met the Clean Air Act standards, leaving us with high rates of asthma and respiratory illnesses."
Echoing her colleagues, Pressley (Mass.) said: "For too long, our federal government has looked the other way while our nation's largest banks bankroll the dirtiest fossil fuel projects, exacerbating the climate crisis and setting us up for a massive, climate-induced economic collapse. That must change."
"It's time for a financial system that is truly safe, sound, and just," Pressley continued. "One that recognizes the existential threat posed by climate change and takes aggressive action to save our economy, save our planet, and save lives."
The Fossil Free Finance Act was introduced amid a heated battle over the future of U.S. central banking, with current Fed Chair Jerome Powell's tenure set to expire in February 2022.
Powell, a Republican appointee of former President Donald Trump with connections to the private equity industry, has received praise from some economists for his response to the Covid-19 pandemic and corresponding economic crisis—namely, his embrace of monetary policies that aim to keep unemployment low instead of only focusing on price stability.
Nonetheless, progressives—including the three co-sponsors of Fossil Free Finance Act as well as Reps. Jesús "Chuy" García (D-Ill.) and Alexandria Ocasio-Cortez (D-N.Y.)—have argued that Powell's weak approach to financial regulation and unwillingness to curb climate risk should disqualify him from another four-year term, and urged President Joe Biden to appoint fresh leadership at the nation's central bank.
"As climate disasters grow in frequency and intensity, we can no longer afford to stand by while big banks and other financial institutions invest trillions in the companies fueling the climate crisis."
—Rep. Mondaire Jones
According to a report released last month by Oil Change International, the Fed under Powell has "worked to maintain and increase fossil fuel finance from the United States." The financing of coal, oil, and gas extraction under the Fed's supervision persists despite recent reports from the International Energy Agency and the United Nation's Intergovernmental Panel on Climate Change, both of which warned that averting catastrophic levels of global warming requires rapidly moving away from fossil fuels.
"The Federal Reserve's role is not to surrender our planet to corporate polluters and shepherd our financial system to its destruction," Tlaib said Wednesday. "The Federal Reserve's role is to act."
The Fossil Free Finance Act came the same day a new analysis revealed that just one country in the world, Gambia, has enacted policies compatible with limiting global temperature increase to 1.5°C above pre-industrial levels.
It was also introduced just two days after thousands of scientists demanded—ahead of the ongoing U.N. General Assembly and COP 26, which kicks off on October 31 in Scotland—that governments negotiate and adopt a Fossil Fuel Non-Proliferation Treaty, a binding international pact to achieve a swift and just transition by immediately halting the expansion of fossil fuel infrastructure, phasing out existing fossil fuel production, and investing in a plan to provide equitable global access to 100% renewable energy.
According to Jones, the Fossil Free Finance Act—endorsed by a dozen progressive advocacy organizations including 350.org, Friends of the Earth, the Revolving Door Project, and the Sunrise Movement—"will end the era of unmitigated emissions financing and ensure financial institutions do their part to address our climate crisis before it's too late."
Yevgeny Shrago, policy counsel at Public Citizen's Climate Program, commended the bill, which he said "sends a powerful message that Congress won't accept the Federal Reserve's failure to do its job."
"The agency has tremendous power to protect the financial system from the effects of the climate crisis and to make sure it's prepared for the coming clean energy transition," Shrago continued. "But just like with the 2008 financial crisis, the Fed is standing by as banks increase their risky bets on toxic assets."
"We applaud the sponsors of this bill," he added, "for addressing this threat and directing the Fed to use the tools at its disposal to protect vulnerable communities from the financial impacts of the climate crisis, instead of safeguarding Wall Street profits."
This content originally appeared on Common Dreams - Breaking News & Views for the Progressive Community and was authored by Kenny Stancil.