By Andrea Shalal

GLASGOW, (Reuters) – The United States announced Wednesday its support of a new capital markets mechanism. It will issue investment grade bonds and generate significant financing for the scaling up clean energy in developing countries.

Janet Yellen from the Treasury Department stated at the COP26 conference in Glasgow, Scotland that there was an urgent need to act on global warming. She said that the United States and Britain would back the Climate Investment Funds’ new Capital Market Mechanism (CIF) with its unique leveraging structure.

According to her, the initiative will help draw significant private climate funds.

CIF was created in 2008 in order to mobilise funds and invest in countries of low and middle income. The CIF has received $10.5 billion from 14 countries, and $61 billion from other sources to finance projects which have benefitted 72 countries.

The climate crisis is here already. “This is not a problem for the future, it’s something we have to confront now,” Yellen stated in prepared remarks. To meet this challenge, we must transform our carbon-intensive economy in a massive way.

She said that the project will cost $100 trillion to $150 trillion in three decades. It also provides enormous growth opportunities and investments.

U.S. President Joe Biden plans to quadruple U.S. funding for climate finance in developing countries between 2024 and more than $11 million, however, Yellen indicated that private sector participation was required.

She said that, “As large as all the efforts of the public sectors in our countries are, the global $100-trillion and more price tag for addressing climate change is significantly greater.”

Yellen spoke to financial executives Tuesday and said that nearly 100 trillion dollars of assets had been managed by financial institutions. The Glasgow Financial Alliance for Net Zero or GFANZ was formed, and the members pledged to become carbon-neutral in their respective portfolios by 2050.

Yellen stated that the Financial Stability Oversight Council in the United States was working on climate-related disclosures and data for investors and market participants. Washington will work with its international partners to support such efforts.

Yellen also stated it was crucial to raise transparency of data regarding infrastructure projects. She expressed her support for a Group of 20 initiative that implements specific principles to help infrastructure investors.