By Paul Kiernan
WASHINGTON -- The Treasury Department appointed a senior official on Monday to a new post coordinating wide-ranging efforts to fight climate change through economic and tax policies.
John E. Morton, a former adviser to the Obama administration, will lead a newly formed climate hub, the Treasury said. He will report directly to Treasury Secretary Janet Yellen and focus on financing for investments needed to reduce carbon emissions.
The move is part of the Biden administration's effort to address climate change and its impact on various industries. Gary Gensler, the newly confirmed chairman of the Securities and Exchange Commission, is expected to require more disclosure from public companies on the potential impact of climate change on their businesses.
The Treasury Department and Federal Reserve have said they want to better understand risks to financial stability and the economy emanating from climate change.
In a March 19 paper, Federal Reserve economists said that climate-related hazards, such as more-frequent storms, floods, or wildfires, can quickly change the value of financial assets and affect the availability of credit. Even slow-moving events, like rising sea levels, could cause abrupt changes in investor sentiment, they said.
In addition, government policies to curb climate change -- for instance, by reducing carbon emissions -- can affect the market value of assets such as oil refineries, a phenomenon known as "transition risk."
"Both the impact of climate change itself and policies to address it could have major impacts, creating stranded assets, generating large changes in asset prices, credit risks and so forth that could affect the financial system," Ms. Yellen said at her confirmation hearing in January. "These are very real risks."
Biden administration officials have said they plan to unveil a new U.S. target for emissions reductions in the run-up to a climate-change summit in Washington this week. The administration is expected to set a goal for reducing U.S. emissions over the next nine years.
Climate is also a central focus of President Biden's $2.3 trillion infrastructure plan. The proposal includes $174 billion for investments in electric vehicles, offering tax incentives to consumers to buy the vehicles and proposing new grant and incentive programs to build 500,000 electrical-vehicle chargers by 2030.
Ms. Yellen has made countering climate change a major policy thrust for the Treasury Department. That represents a departure for the Treasury, which in the past hasn't explicitly focused on the issue.
"Finance and financial incentives will play a crucial role in addressing the climate crisis at home and abroad and in providing capital for opportunities to transform the economy," Ms. Yellen said in a statement on Monday.
Mr. Morton, whose title is climate counselor, served as senior director for energy and climate in the National Security Council during President Obama's final year in office and has since worked as a consultant on climate-related finance. He was most recently a partner at Pollination, a climate-change advisory and investment firm, according to the Treasury.
Following Treasury's announcement Monday, several progressive groups criticized the appointment of Mr. Morton.
"It is disappointing...that the Treasury has appointed someone who lacks experience with financial regulation or a history of using regulatory tools to drive change," Public Citizen, a Washington-based consumer advocacy group, said in a statement.
In February, 147 organizations including Public Citizen, Amnesty International, the Sierra Club and the Union of Concerned Scientists signed a letter to Ms. Yellen urging her to pick "someone with deep regulatory experience and experience at the Federal Reserve and Treasury Department" to lead the climate hub.
The Wall Street Journal previously reported that the Treasury was looking to Sarah Bloom Raskin, who has held senior positions at both the Fed and the Treasury, as a leading contender for the job.
While the Treasury Department doesn't directly supervise or regulate banks or markets, it helps steer the regulatory agenda and monitors risks to the financial system. Ms. Yellen heads the Financial Stability Oversight Council, a panel of regulators that also includes the Fed, the SEC and the Commodity Futures Trading Commission.
The Treasury Department's focus on climate change will also factor into tax policy and international financial diplomacy. The department will play a key role coordinating on climate issues with global counterparts through the Group of Seven and G-20 groups of leading economies.
The new push comes as some major financial firms have taken steps in recent years to reduce their exposure to what they considered the worst climate offenders. JPMorgan Chase & Co. and other international banks have also committed to aim their financing in ways that help the world meet the goals of the Paris accord on reducing greenhouse-gas emissions.
The Federal Reserve has created a committee to study the implications of climate change for financial institutions and infrastructure. Ms. Yellen has floated the idea of so-called stress tests to test banks' resilience to climate-related risks. Sen. Pat Toomey (R., Pa.) has said he was concerned regulators could use climate stress tests to keep banks from lending to the oil-and-gas industry.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
04-19-21 1751ET
