Last week, Canadian Prime Minister Justin Trudeau announced a new stimulus plan that invests heavily in climate-related infrastructure to address the on-going economic crisis created by COVID-19. The plan calls for CAN$6 billion of new investment through the nation’s recently-created Canada Infrastructure Bank (CIB). The investment will flow into renewable generation, storage, building retrofits, zero-emission buses, and vehicle charging infrastructure.
This is precisely the strategy and institutional framework the US should implement through the National Climate Bank (NCB). Adjusting for currency and the size of the economy, the equivalent public investment in the U.S. would be approximately $45 billion. And then further adjusted for the fact that this new CIB clean infrastructure investment only covers roughly half of the sectors the NCB is meant to cover, the true equivalent capitalization of the NCB would be approximately $100 billion.
Michael Sabia, Chair of the CIB said, “One of the defining features of the Canada Infrastructure Bank is attracting private investment to new infrastructure. Every dollar of public investment in these initiatives is intended to attract additional dollars from private and institutional investors. In that way, the CIB can have bigger impacts that benefit Canadians and Canada’s economy.”
American policymakers need to look at stimulus in the U.S. through the exact same lens. The U.S. needs genuine stimulus, not only economic relief, to bring back the millions of jobs that have been permanently lost. But that public investment should be strategic and efficient. This means the jobs created should be in industries with a social benefit, and the public funds should catalyze as much private investment as possible.
That is the model proven out by green banks around the U.S. and proposed by the NCB. Third-party analysis found that the NCB can drive up to $500B of total investment in its first five years, and create over 5 million jobs. This is based on the extensive experience of green banks, that have driven roughly 3 dollars of private investment at the project level for each green bank dollar deployed.
Legislation to fund the NCB has now passed the House of Representatives twice in the last few months. It is endorsed and co-sponsored by VP-candidate Kamala Harris. And it is supported by strong margins by voters of all parties.
U.S. emissions per capita are higher than in Canada. And the U.S. economy shrank nearly 3 times more than Canada’s in Q2 2020. If Canada is aggressively moving forward with climate-focused stimulus through a dedicated public-private investment structure, surely the U.S follow their lead.