What is a Green Bank?



Green Banks are public, quasi-public, or independent private institutions dedicated to financing the deployment of renewable energy, energy efficiency, and other clean energy and green infrastructure projects in partnership with private lenders. Their goal is to accelerate clean energy market growth while making energy cheaper and cleaner for consumers, driving job creation, and preserving public dollars.

Basic Green Bank Model

The central goal of Green Banks is to close gaps in markets for clean energy projects and facilitate financing to increase market penetration using market-oriented approaches. There are a handful of ways a Green Bank can do that. Green Banks can leverage private capital; provide financing to underserved market sectors; increase consumer protection, information transparency, and ease of adoption; remain steadfast in the face of changing political landscape, budget changes, and administrative priorities; and can be a flexible and adaptable institution that reacts quickly to the market.

Green Banks can be capitalized with public funds, philanthropic grants or program-related investments (PRIs), various bond structures, or private funds. Green Banks can use those funds to offer turnkey financial products (such as loans, leases, credit enhancements) and other financing services for clean energy projects. Green Banks can also help clean energy markets in other ways, including organizing demand aggregation efforts, training contractors, administering PACE programs, and serving as a one-stop-shop for clean energy information and resources. These activities, in combination with financing, help create a robust clean energy market place with low barriers to adoption for consumers.

The Coalition for Green Capital describes Green Bank models, activities, and benefits in detail in various deliverables produced for government clients, some of which are available on the Resources Page.

Several organizations, including the United States Department of Energy (DOE) and the Organization for Economic Cooperation and Development (OECD), have recently published papers on the subject of Green Banks, available below.

CGC GB white paper CGC: Green Bank White Paper
OECD GIB paper OECD: Green Investment Banks – Scaling up Private Investment in Low-carbon, Climate-Resilient Infrastructure
Brookings GB paper  

Brookings Institute: State Clean Energy Finance Banks – New Investment Facilities for Clean Energy Deployment

 

DOE EIP paper U.S. DOE: Energy Investment Partnerships – How State and Local Governments Are Engaging Private Capital to Drive Clean Energy Investments