Green Bank Act of 2014 Introduced

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Earlier today, Congressman Chris Van Hollen (D-MD) introduced the Green Bank Act of 2014 in the House. Cosponsors of the bill include House Representatives: Earl Blumenauer, Gerry Connolly, Elizabeth Esty, Jim Himes, Eleanor Holmes Norton, Jim Langevin, and Louise Slaughter. Senate cosponsors include Richard Blumenthal and Chris Murphy. The Green Bank Act of 2014 would establish a Federal Green Bank with a maximum capitalization of $50 billion from Green Bonds and the authority to co-fund the creation of state-level Green Banks with a low-interest loan of up to $500 million. Senator Chris Murphy of Connecticut also introduced a companion bill in the Senate.

Like various state green banks, the Federal Green Bank would provide financing for clean energy and energy efficiency projects that cannot deploy at scale due to lack of reasonably priced financing. Specifically, the Green Bank will address “financing gaps” where credit worthy projects are currently unable to receive adequately low-priced financing from the private capital markets.

A Federal Green Bank, as proposed in the new legislation, would provide low-cost and long-term financing for clean energy and energy efficiency projects in partnership with private investors. This activity would animate private sector investment, reduce the cost of renewable sources of power and accelerate the deployment of clean energy technology in the United States. The Federal Green Bank will also catalyze the development of state green banks through its authority to offer low-interest loans of up to $500 million to any state green bank that operates under similar principles and has its own matching funds.

CGC’s CEO, Reed Hundt, says: “Chris Van Hollen and his colleagues in the House and Senate have come up with an ingenious way to help fund state green banks. If this bill were passed, all states would have the option of receiving substantial funding from the federal government to help finance on a local level the move to the new power platform. Cleaner, cheaper, and more reliable electricity is what every state could deliver to its citizens with the help of the Van Hollen Bank.”

According to the legislation, the Green Bank will initially be supported with $10 billion in “Green Bonds” issued by the Treasury. The Bank will have a 20 year charter and the ability to acquire another $40 billion from Green Bonds. These funds will spur development of clean energy markets through loans, loan guarantees, debt securitizations, insurance, and other forms of financing support or risk management for qualified clean energy and energy efficiency projects. The legislation includes tax provisions on deductibility of foreign-related interest expenses to offset the Green Bank cost.

CGC is thrilled to see how this legislation will help state clean energy finance institutions reach their full potential!

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