How Jerome Powell Played Biden’s Climate Games While Inflation Ran Rampant

The Federal Reserve failed to prioritize its core mission to combat inflation while embracing the Biden administration’s green energy agenda, economic and energy policy experts told the Daily Caller News Foundation.

Under Fed Chairman Jerome Powell’s leadership, the Fed joined a global climate change group and took other steps to align with President Joe Biden’s climate agenda while failing to effectively manage primary responsibilities, according to economists and energy policy experts. Though Powell once told Congress that the Fed is not made of “climate policymakers,” Biden later said that Powell “made clear to him” that the Fed would work to mitigate economic climate risks while inflation reached a 40-year high, according to multiple reports and experts who spoke with the DCNF.

“Right after the most recent presidential election, the Federal Reserve gave up on the whole green energy agenda,” EJ Antoni, chief economist at the Heritage Foundation, told the DCNF. “The Fed ultimately came to the conclusion [under Biden] that lending to fossil fuel projects involved a new level of risk — not because of repayment risk, but because of climate change.”

Antoni argued that upon Trump’s return to the Oval Office, the Fed reversed its green doctrine that was aligned with “absolutely ludicrous” Biden-era energy policy.

The Fed became a member of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in December 2020. The NGFS supports a green energy transition and seeks to inform banks on how to integrate climate risks into banking practices. The Fed announced its exit from the NGFS on January 17, right before Trump returned to office.

“They very quickly realized that there was a new sheriff in town, and that they didn’t need to try to appease the far radical left any more, especially on energy,” Antoni said.

Trump has recently criticized Powell, prompting rumors that Trump may fire him. Trump later said in an interview that he will “most likely” not fire Powell because doing so would be “highly disruptive,” and Powell is reportedly not planning to step down before the end of his term in May 2026, according to Reuters.

“You know what? People aren’t able to buy a house because this guy is a numbskull,” Trump said of Powell, according to Reuters. “I think he’s done a bad job, but he’s going to be out pretty soon anyway. In eight months, he’ll be out.”

Inflation was at 1.6% when Powell said in February 2021 that the Fed cannot decide how climate change will be addressed as it isn’t comprised of “climate policymakers,” according to RealClearPolitics. When Biden assured Americans in November 2021 that Powell was committed to tackling climate change, inflation had already reached 6.8% and was climbing toward a 40-year high of 9.1%, according to the outlet.

Powell endorsed the Financial Stability Oversight Council’s (FSOC) Report on Climate-Related Financial Risk in October 2021, stating that “climate change poses significant challenges for the global economy and the financial system” and that “the public rightly expects us to work to ensure the financial system is resilient to climate-related financial risks.” The report identifies climate change as a financial risk to the U.S. economy and recommends council members take action on climate change data.

“Chair Powell has been clear that the Federal Reserve is not a climate policymaker and that those decisions must be made by the elected branches of government,” a spokesperson for the Fed told the DCNF.

Though the Fed and Powell have consistently argued that the agency does not craft regulatory policy, Antoni argued that the Fed holds influence beyond its ability to curb inflation.

“People really underestimate the regulatory power of the Federal Reserve,” Antoni said. “The Fed will essentially force people in the financial industry to make choices based on the regulatory consequence.”

Antoni likened the Fed’s meddling in energy markets to past regulatory interventions in home loans that contributed to the ruinous 2008 housing crash

“Regulators essentially forced financial firms to make risky loans to people who likely would never be able to pay them back and just in order to meet regulatory compliance, those financial firms had to put themselves into a riskier position,” Antoni said. “Capital was diverted away from profitable enterprises … and towards unproductive ones like solar panels or windmills.”

The Fed issued principles for managing climate-related financial risks in October 2023, which increased the perceived risk of loans to fossil fuel companies, according to Antoni.

The Fed’s Biden-era embrace of climate priorities meant that green energy projects like wind or solar got financial backing they otherwise would not have while making it harder for other energy resources like coal, natural gas, oil or nuclear to secure investment, Antoni explained.

“It [the Fed] essentially created huge inefficiencies within both the financial and energy markets,” Antoni said, arguing that the wind and solar industries only exist due to government subsidies. Antoni continued to note that the Fed began to consider projects using fossil fuels as an increased risk, which he described as “mental gymnastics.”

“The Federal reserve was established to prevent financial crises in the U.S. by maximizing employment, stabilizing long term interest rates, and stabilizing prices to prevent or moderate inflation,” Sterling Burnett, director of the Arthur B. Robinson Center on Climate and Environmental Policy at The Heartland Institute, told the DCNF. “Powell’s foray in climate policy was the grossest form of politicized mission creep — and all to keep his own job. Nowhere is the Fed in its charter, granted the power to meddle in domestic policy, much less address climate change. It’s past time for Powell to go, taking his leftist politicization of the Fed with him. Powell’s climate efforts are bad for the reputation of the Fed, and bad for the nation.”

When inflation was increasing in March 2024, other critics argued that if the Fed had paid less attention to climate risks, the system might have been more stable. Despite the Fed focusing on climate change during Biden’s presidency, environmental activists still aggressively targeted the agency, pressuring Powell and claiming that he had not waged a hard enough assault on the oil and gas industry.

“Jerome Powell’s transition from a man who understood his crucial role at the Federal Reserve to man who was willing to pander to the climate ideologues at the Biden Administration, was a key reason for the unbridled inflation and weak economy of the past few years,” Executive Editor and Publisher of ClimateDepot.com Marc Morano told the DCNF. “Powell, who was facing opposition by climate activists during Biden’s term, is a case study of how officials who crave holding on to power are willing to sell out their principles and go against their own economic instincts.”

NGFS did not respond to the DCNF’s request for comment.