After reading about the recently introduced Green Bank Act of 2014, one of your first questions might be, “Why $50 billion?”
In short, $50 billion leveraged through a federal Green Bank just might be enough to finance the renovation of America’s power platform.
The Connecticut Green Bank has achieved a leverage ratio of 10:1 meaning that for every single dollar of public capital deployed by the Green Bank, 10 dollars have been invested by the private sector. The Green Bank Act of 2014 stipulates that the federal Green Bank has the 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. So, in a state such as Connecticut, the $500 million from the federal Green Bank, matched with the state-funded $500 million, would provide access to $10 billion of public-private capital invested in clean energy.
Extending this math to the federal Green Bank, if all $50 billion of federal funds were matched by state funds (totaling $100 billion) and the bank were to achieve a 10:1 leverage ratio, Green Banks could produce $1 trillion of investment in clean energy and energy efficiency!
Roughly $1 trillion of public-private investment transformed the telecommunications platform in the 1990s. A similarly sized investment could catalyze a similar transformation of America’s outdated power platform. And Green Banks can help us get that $1 trillion.