Bessent Questions the Cause of Climate Change and Its Economic Toll

Climate change economic impact: Trump Treasury pick Bessent questions warming science

Muhammad Asghar | GlobalBeat

Billionaire hedge fund manager Scott Bessent, President Trump’s nominee for Treasury secretary, told senators he questions whether climate change is caused by human activity.

The disclosure came during Bessent’s confirmation hearing when Republican Senator Mike Rounds of South Dakota asked about climate science. Bessent’s stance creates immediate tension with US allies who have spent years urging more aggressive American action.

Bessent, 62, built his fortune running $360 billion macro funds at Soros Fund Management and his own firm, Key Square Group. His nomination faces a full Senate vote next week. Confirmation would make him the first openly gay Treasury secretary and give him oversight of climate-related financial regulations issued under Biden.

Climate economists warned that questioning basic climate science from America’s most powerful economic post could damage investment flows into renewable energy. “If the Treasury secretary doesn’t accept climate risks exist, that undermines every tool we have to price those risks,” said Princeton climate economist Gernot Wagner. Previous Treasury secretaries, including Trump’s first pick Steven Mnuchin, acknowledged human-driven warming while opposing Democratic climate policies.

Bessent testified before the Senate Finance Committee for 3 hours. Climate policy took up 8 minutes. Democratic Senator Maria Cantwell of Washington pressed him on whether Treasury would continue stress-testing banks for climate-related financial risks. Bessent replied that he wants “regular order” at Treasury but added that “climate stress tests don’t make sense if we’re not sure what’s causing climate change.”

Democrats expressed alarm at the answer. Senator Ron Wyden of Oregon called it “economic malpractice.” Republicans defended Bessent’s skepticism as reasonable given decades of failed climate predictions. Senate Finance Committee Chairman Mike Crapo said the nominee “asked legitimate questions about contested science.”

Bessent’s position contradicts major business groups that have incorporated climate science into risk planning. The US Chamber of Commerce, historically skeptical of climate regulation, now accepts human-driven warming poses economic threats. Boeing, Ford and even oil giant ExxonMobil have told shareholders rising temperatures create financial risks they must prepare for.

The stance also conflicts with the Federal Reserve. Chair Jerome Powell, a Trump appointee their first term, directed Fed economists to integrate climate risk into bank supervision after weather disasters cost US insurers $92 billion in 2023. European Central Bank officials warned that political interference with climate science at Treasury could destabilize trans-Atlantic banking relations.

Background

Climate science has become economically unavoidable for financial regulators after extreme weather caused $2.6 trillion in damage globally since 2020. The International Monetary Fund calculates warming above 2 degrees Celsius risks 7 percent of global GDP by 2100. Trump’s administration previously rejected those projections, pulling out of the Paris climate accord in 2017.

Treasury secretaries began incorporating climate models into economic forecasting during the Obama administration when Jacob Lew required federal agencies to price carbon emissions. Trump’s first term Treasury, despite Mnuchin’s acceptance of climate science, largely ignored those projections. Biden restored carbon pricing and expanded climate risk analysis before leaving office.

What’s Next

The Senate Finance Committee plans to vote on Bessent’s nomination January 28. If approved, he would face a full Senate vote the following week. European finance ministers scheduled a call for January 30 to discuss “potential implications” of US climate science denial at Treasury. Biden officials said they expect NATO allies to raise concerns about Bessent’s views during February defense meetings.

Nations representing 78 percent of global GDP have embedded climate science into banking rules. Treasury secretaries historically set US financial policy through quiet coordination with European regulators. If confirmed, Bessent may find himself isolated at international finance gatherings where climate scenarios guide central banking.

Trump won election insisting energy costs matter more than climate science. The conflicts began before he took office.