As we reported earlier, Rep. Chris Van Hollen has introduced the Green Bank Act of 2016 in Congress. Sen. Chris Murphy intends to introduce companion legislation later this session in the Senate. (Update 9/22/16: the Senate bill has been introduced). At the request of Sen. Murphy and Rep. Van Hollen, CGC provided advice on bill. We believe this legislation represents a significant step for Green Banks across the country. This post provides a summary of the bill and CGC’s analysis of what it means for Green Banks around the country.
Overview of the National Green Bank
- Total capitalization of up to $50 billion
- Would provide loans, loan guarantees, or other forms of financing to eligible institutions on a competitive basis
- Would solely be a pass through for funding qualified institutions; the Bank would not have its own projects
- Regional, state, and local Green Banks are eligible to receive funding from the National Green Bank
- Institutions that receive funding from the National Green Bank must provide matching funds equal to at least 20% of any federal funds
- After receiving initial funding from the National Green Bank, institutions may request up to two times the amount capital committed by
What this means for state and local Green Banks
In short: great news. Although Green Banks are designed to operate at zero cost to taxpayers over time, states still need to provide initial funding to capitalize Green Bank activity. From CGC’s work, we know that states large and small are interested in forming Green Banks, but often face difficulty in coming up with these initial dollars. The National Green Bank would provide up to five federal dollars for every local dollar used to fund a Green Bank—an enormous boost for states looking to overcome that early hurdle.
States across the country are also figuring out how to comply with the Clean Power Plan. Green Bank are effective resources for meeting efficiency and renewable targets. Since its founding in 2013, the New York Green Bank’s closed transactions are estimated to have increased renewable energy capacity by 128MW and saved up to 1 million MWh. The Green Bank Act enables states to leverage federal dollars in meeting Clean Power Plan goals through their local Green Banks.
To take advantage of this funding opportunity, states and municipalities should begin laying the ground work for Green Bank creation now. This involves stakeholder engagement, analysis of energy markets and existing programs, (frequently) new legislation, and more. CGC is a nonprofit that provides advice, tools, and other resources for undertaking the Green Bank formation process. Get in touch with us to learn more.
What happens next
The National Green Bank concept received bipartisan support when it was last introduced in 2014, and we expect the idea of a more efficient way of funding local clean energy projects will again resonate with lawmakers on both sides of the aisle. Looking ahead to 2017, Hillary Clinton’s policy plans include a $25 billion national infrastructure bank. Clinton praised the Connecticut Green Bank for engaging in the types or projects a national infrastructure bank might fund, suggesting this idea would carry over into her administration.