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APEC finance chiefs agree to grow economies with eye on sustainability

SAN FRANCISCO (AFP) – Leaders of Asia-Pacific economies want to boost output with an eye on issues like reducing inequality and protecting the environment, United States (US) Treasury Secretary Janet Yellen said on Monday.

Her comments at a press conference come at the end of talks with finance ministers of the 21-member Asia-Pacific Economic Cooperation (APEC) forum.

Citing legislation like the Inflation Reduction Act – a signature achievement of US President Joe Biden – Yellen told reporters “APEC economies recognise the potential of this strategy and are pursuing similar policies.”

Economic development and environmental action need to work together if the world is to combat global warming, Yellen said.

“We need to further improve our long-term economic outlook by boosting labor supply, innovation, and infrastructure investment, in ways that are also sustainable and reduce inequality,” Yellen said in San Francisco.

After several years focused on post-pandemic recovery, 2023 was a “pivotal year” for APEC, said Yellen, a time where governments could refocus on “advancing fiscal reforms to build our economies over the long run.”

The first session of the APEC Finance Ministers Meeting. PHOTO: AFP

But economic development cannot be separated from the immediate need to wean humanity off planet-warming energy sources, she said, noting that less wealthy countries needed help to make the leap.

“We’ve discussed how to finance efficient and effective energy transitions while supporting the individuals and communities who are most vulnerable,” she said, referencing as an example the Just Energy Transition Partnerships (JETP) in Vietnam and Indonesia.

These agreements define conditions for rich countries to commit to financially assisting the energy transition of developing countries.

The JETP for Indonesia, the largest economy in Southeast Asia, was unveiled last year. It provides public and private funding of up to USD20 billion in exchange for capping emissions from the electricity sector by 2030 and reaching zero emissions in 2050.

REDUCING INEQUALITY

At the end of talks on Monday, Yellen also noted that efforts to build a stable economic relationship with China are moving “along the right path”.

She said leaders are focusing on “unlocking the flow of sustainable finance” as well, like by exploring ways to encourage the development of credible climate commitments and to create effective voluntary carbon markets.

Not all financing systems are equal, Yellen said earlier Monday, noting that the markets for carbon credits need to be examined for ways to improve their integrity.

Carbon credits, which allow companies to offset their carbon dioxide emissions, effectively permitting them to claim a heavily-polluting product is “carbon neutral”, are increasingly coming under the microscope, amid claims by critics that they amount to greenwashing.

Besides working with the private sector and international financial institutions, Yellen added, “There is also commitment to continued work on the responsible development of digital assets.”

Digital assets technologies carry risks, which calls for regulation, she noted. Such assets include unbacked crypto-assets and central bank digital currencies.

Leaders of the bloc will gather in San Francisco for a summit later in the week.

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