350.org launch Fossil Free Fed campaign

The Federal Reserve must align its spending and asset purchasing with the Paris Agreement’s 1.5ºC target and pathway, environmental group 350.org has said at the launch of its new campaign.

Introduced on Monday, the Fossil Free Federal Reserve campaign also calls on the Fed to use existing regulations to end bank fossil fuel financing and for Jerome Powell to be replaced as chair with a “climate champion” when his term ends next February.

“We’re launching this campaign because climate chaos is a disaster for all of us, including the economy,” said Tracey Lewis, senior climate finance policy analyst at 350.org, in a statement introducing the initiative. “Not only does the Fed have legal authority to stop fossil fuel finance – it’s their responsibility.”

Influenced by the climate change denial of former US president Donald Trump and the Republican party, the Fed has been much slower to act on climate change than other major central banks. It only recognised climate change as a financial stability risk in November and was conspicuously late to join the Network for Greening the Financial System, a now global initiative founded by the People’s Bank of China, Banco de México, the Bank of England and four European central banks.

Although the Fed is now studying the financial effects of climate change and has set up committees to discuss macroprudential climate risk and supervision, it remains far behind other central banks in facing and responding to the climate crisis.

The European Central Bank has adopted a new climate plan incorporating climate considerations into its monetary policy, while the Bank of England is consulting on greening its corporate asset purchases. In addition, the Bank of Japan is launching a new green lending facility. However the Fed’s response to the climate crisis remains confined to risk research, two regional Federal Reserve presidents have said.

Analysts have identified Powell, a Trump-appointee, as a major barrier to deeper engagement on climate. Powell recently made clear that climate change is “not a priority” for the Fed, and his current term is coming to an end amid growing calls for his replacement to be someone more proactive on climate issues.

“Jerome Powell continues to finance climate destruction instead of supporting Black and Brown communities on the frontlines of Covid-19, racial and economic injustice, and climate devastation,” said Lewis in a video outlining the new campaign. ““We call on Biden, Secretary [Janet] Yellen, and the Senate to appoint a real climate leader who will re-imagine the role of the Federal Reserve in climate and economic recovery.”

350.org was founded in 2008 by author and climate campaigning veteran Bill McKibben and has led global campaigning for divestment from fossil fuels. It is named after 350 parts per million (ppm) — the concentration of carbon dioxide in the atmosphere considered safe for global climate stability. Atmospheric concentrations of CO2 passed 350ppm in 1988 and are currently at 419ppm, increasing by 2-3ppm per year.