President Biden issued a major executive order on Thursday requiring federal agencies to analyze and mitigate the financial risks of climate change.
“Our modern financial system was built on the assumption that the climate was stable,” said Brian Deese, the chairman of the National Economic Council. “And today it’s clear that we no longer live in such a world.”
The executive order requires senior-level climate and treasury officials to undertake a “comprehensive government-wide” review of administration programs that contribute to climate change. Its goal is to remove the federal government from financing projects with taxpayer dollars that produce greenhouse gas emissions.
Mr. Biden’s order could potentially have wide-reaching consequences, given how much of the U.S. economy is tied to fossil fuels.
For instance, the executive order requires federal agencies that provide loans to review their climate risks. In practice, federal lending programs will have to determine the climate change impacts of their loans and are likely to be required at some to curtail such risks.
The impact would be most felt in the banking, agricultural and housing sectors that rely heavily on federal loans and subsidies.
“The federal government needs to be conducting its own business in a way that makes [climate] change risks clear and makes responsible choices based on the risks they see,” said White House National Climate Adviser Gina McCarthy.
Mr. Biden’s order is only the latest step to imbed combating climate change at the center of government.
Earlier this month, Mr. Biden unveiled his goal of cutting greenhouse gases by more than 50% throughout 2030.
The proposal is significantly more ambitious than that offered by President Obama in 2015. At the time, Mr. Obama proposed to curb emissions by at least 26% by 2025.
The White House argues a more aggressive climate change goal is needed because former President Donald Trump’s energy policies and decision to shun the Paris climate accord set the U.S. back.
“The United States isn’t waiting — we are resolving to take action,” Mr. Biden said recently.
Experts say such an ambitious goal would require a massive transformation of the U.S. economy.