This post originally appeared on the site of CGC’s campaign for a federal Green Bank.
Decarbonizing the US economy will ultimately require all states and sectors to transition to clean energy. But looking at just a few states can show how much progress a Climate Bank could help us make against the problem.
Consider the ten states that generate the most power. These states represent half of all carbon-emitting power generation in the US. Meaning, if these ten states could transition to clean power, we’d be halfway to a fully clean US power sector.
Private investors are increasingly interested in renewable power projects, but the flow of capital is uneven, and this chart helps to illustrate the obstacles involved. Not every geographic region or project type is equally attractive for private clean energy investment.
The chart above shows the ten states, the total power they generate, and the share of that generation that comes from renewable energy based on EIA data. It also shows the current residential retail power price in each state in cents per KWh.
Some states, like New York, California, and Illinois are on the list mainly due to their large size. They already generate half or more of their power from zero-emissions energy sources. They have policies in place that support the growth of renewable energy; New York and California have targets in place to use fully clean power before 2050. More investment in these states will be needed in order to become fully clean, but significant progress has been made.
Other states present less favorable environments for clean power, both in terms of policy and economics. Texas is a windy state and its wind capacity is growing, but shortages of transmission and energy storage loom as constraints to the state’s renewable energy usage. Texas’ market design means that energy storage has been unable to compete economically, despite the advantages it would provide to the grid. The state has a renewable portfolio standard, but a relatively low one at ten thousand megawatts of clean capacity by 2025. Overall, Texas has the highest power sector emissions of any state.
In Florida, despite being known as the “Sunshine State,” renewable energy penetration is low. Major regulatory obstacles exist, including the state’s ban on third-party power purchase agreements. Like Texas, retail power prices are also low, at around 12 cents per KWh.
Private capital is unlikely to fund a more rapid and complete transition to clean energy in these states until the economic factors align. Yet, these are areas where it will be critical to see renewable energy growth in order to displace fossil fuels.
A National Climate Bank would be able to provide low-cost capital, technical assistance, and credit enhancements that could overcome the economic barriers to investment in differing areas and conditions.
In some project types and in some geographic areas, private capital is already driving renewable energy growth based on existing market factors, and little involvement or assistance would be needed from a Climate Bank. But for projects and areas with less favorable conditions, the Climate Bank’s involvement will open up new avenues for private investment that weren’t previously considered viable options. This will enable the rapid growth of renewable energy, which needs to be seen everywhere in order to address the climate crisis.