# Plain Language Summary: Fossil Free Finance Act

This bill requires the largest banks in America to create plans for reducing the greenhouse gas emissions they finance through their investments and lending. Specifically, it targets banks with at least $50 billion in assets—essentially the major financial institutions that most Americans interact with. The bill asks these banks to measure how much carbon pollution is generated by the companies and projects they fund, then commit to cutting those emissions in half by 2030 and reaching zero by 2050.

Here's what this means in practical terms: When a bank lends money to an oil company to drill for oil, or finances a coal plant, or invests in a natural gas pipeline, those emissions count as "financed emissions" that the bank is responsible for. Under this bill, banks would need to stop funding new fossil fuel projects by 2023, stop financing coal by 2025, and completely phase out fossil fuel financing by 2030. The plans must also address deforestation—so banks couldn't finance companies that are clearing forests for agriculture or other purposes. Banks can't use carbon offsets (essentially paying someone else to reduce emissions elsewhere) as a shortcut; they have to actually reduce the real emissions from the projects they fund.

If banks don't submit acceptable plans or fail to meet their targets, the Federal Reserve can penalize them, force them to sell off certain assets, or even recommend that the FDIC terminate their deposit insurance. The bill also requires the Federal Reserve to report to Congress on the total financed emissions in the U.S. financial system and what would be needed to meet climate goals, while identifying how the transition away from fossil fuels might affect workers and communities that depend on those industries.

For everyday people, this could mean that banks have less money available to fund fossil fuel projects, potentially affecting energy prices and availability. It could also create pressure on banks to invest more in renewable energy and green technology. The bill specifically requires banks to prioritize lending that helps workers transition out of fossil fuel industries through retraining and severance benefits, which could provide support for people whose jobs are affected by this shift.

Fossil Free Finance Act

Jones, Mondaire

Fossil Free Finance Act This bill requires large bank holding companies to develop and implement emission reduction plans. Such a plan must include strategies for a company to equitably reduce and eventually eliminate financed greenhouse gas emissions by January 1, 2050, and to discontinue specified fossil fuel projects and financing. The bill also prohibits the use of carbon offsets in such a plan, sets forth technological requirements for reductions, and requires the prioritization of specified social impacts. Plans must be submitted to the Board of Governors of the Federal Reserve System for approval every two years.