Let me start by saying what an amazing opportunity and daunting responsibility is presented by the Greenhouse Gas Reduction Fund (GHGRF).
When I was CEO of the Federal Communications Commission, Congress in three separate statutes asked the agency to create the digital satellite and digital cellular industries and to make the Internet universally available.
From that experience I can say I truly appreciate how hard it is to implement new and large programs. It is especially difficult when you have to see into an unknown future, ensuring enough flexibility to accommodate changing circumstances while also successfully implementing the mandates imposed by the statute.
Despite the degree of difficulty, you can get this right: You can use the GHGRF to create a financial system with the dual mission of simultaneously averting catastrophic climate change and redressing environmental injustice.
The other experience I speak from is 14 years as co-founder and CEO of the Coalition for Green Capital. Our nonprofit has created a consortium of almost two dozen green banks dedicated to the dual mission. That consortium has combined almost $2b in public capital with more than $7 billion in private capital to invest in Florida, Michigan, Louisiana — in short, all over the country.
You now have more than ten times that much public capital to mete out.
I respectfully suggest the threshold question is what sort of nonprofit should you directly capitalize. Should it be tightly focused on the mission of building the clean power platform in the most deserving communities of America? Or should you award your funds directly to entities principally engaged in other missions, governed by other regulations, run by management teams focused mostly on other tasks than the dual mission.
I think we can all agree that in the fullness of time we want hundreds, perhaps thousands, of nonprofits to participate in financing the green goods that compose the clean power platform. But to achieve this goal is it better to capitalize directly a single national green bank that will include all nonprofit lending institutions as indirect recipients of “funding and technical support?” I mean not just those seeking your funds now but all who might be ready to come under a single green tent in the future yet are not prepared at the time you ask for applications.
We can all agree also that the scale of the challenge faced by this agency, government and country is enormous.
The tasks given to the FCC that I mentioned required massive, economy-changing investment. In total the private sector invested more than a trillion dollars in less than ten years to bring more than 90% of Americans into the digital age. The FCC itself spent $50 billion and awarded licenses worth another $100 billion to catalyze the private sector investment that changed completely the communications platform of this country.
Now the United States has to cause investment of at least one and a half trillion dollars in ten years to change completely the power platform that underlies all social and business activity. If this investment is not made fast enough, we will lose the battle against climate change. If not large enough, we will lose.
The tax credit and rebate components of the Inflation Reduction Act go a long way to stimulating the necessary private sector investment. But the GHGRF is the single component of government spending under the Act that is most capable of being leveraged and partnered with private sector investors, just as the statute itself explicitly requires. According to expert analysis and our coalition’s experience, a fully capitalized national green bank will be able to multiply EPA’s grant by 25 times in total public private investment over ten years.
The GHGRF also enables investment to be targeted to disadvantaged communities. Is it not best for this agency to partner with a national green bank to prioritize all investment toward the most deserving and disadvantaged communities?
There should be a national plan for such choice of markets. As circumstances change and needs arise, the Agency and the national green bank can adjust the prioritization as needed.
We must cause households and small businesses in low-income communities to want and to afford heat pumps, distributed and community solar, storage, truck lot charging stations and the other components of the cheaper, clean power platform. To this end, the national green bank will need as partners not only community finance institutions but also small businesses, municipals, community leaders, contractors, installers, distributors, equipment manufacturers, and utilities.
This system – one national green tent directly investing and also investing with partners – may also be the best way for EPA to monitor how the funds are used, to learn what emissions reductions are obtained, to discover best practices and have them shared everywhere, to require the national green bank to guard against waste, fraud and abuse. The agency can impose detailed data gathering and reporting obligations on the national green bank as opposed to itself supervising dozens, hundreds or thousands of local nonprofit lenders.
This historic legislation has been passed just as we are approaching the last months and years before catastrophic climate change is irreversible. We know that if the worst happens it will be worse for low-income communities than for rich ones. That is the reason we have to commit to the dual mission: Build the clean power platform and build it principally in the most disadvantaged communities. There’s not a moment to lose.
The Coalition for Green Capital hopes to be a good partner for this Agency and for all public, private and nonprofit institutions who want to achieve this dual mission.