Podesta, 75, has served in intense but behind-the-scenes roles in three Democratic administrations and has overseen implementation of Biden's signature legislative project, the so-called Inflation Reduction Act, which has committed billions of dollars to green investment.
Podesta "is an American statesman, a fierce champion for bold climate action, and a leader who without a doubt the world will know has the trust of and speaks for the president of the United States," White House Chief of Staff Jeff Zients said.
Zients said Podesta will help to "keep meeting the gravity of the moment" as he succeeds Kerry, who helped broker an agreement at the Dubai COP28 summit that for the first time calls for a global transition away from fossil fuels.
Kerry, a former secretary of state, senator and presidential candidate, is stepping down to help informally with Biden's reelection campaign and to work with the private sector to move away from carbon-intense industries.
Podesta will take on the climate diplomacy portfolio, representing the United States overseas, but also continue to supervise the team implementing the Inflation Reduction Act, a White House official said.
Podesta's appointment came days after the Biden administration said it would freeze approval of new export facilities for liquified natural gas, handing a victory to climate campaigners.
"The recent pause on gas exports has positioned Podesta to lead the fossil fuel phaseout and the clean energy expansion we desperately need," said Jean Su, director of the Center for Biological Diversity's Energy Justice program.
But Podesta takes charge during an election year in which Biden, who has called climate change an existential threat, is expected to face the climate skeptic Donald Trump, who has championed fossil fuel companies.
Podesta first became a household name, at least for political observers, as he was put in charge of managing the impeachment crisis of Bill Clinton over the president's dalliance with intern Monica Lewinsky.
The Chicago native later founded the Center of American Progress, a think tank that aimed to provide a left-of-center policy voice in Washington.
Kerry put a high focus on building a friendly rapport with his counterpart from China, with the world's two largest emitters largely avoiding clashes at the Dubai summit despite wide friction elsewhere in the bilateral relationship.
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