By Coalition for Green Capital
New Jersey’s new Governor-elect, Phil Murphy, has pledged to make the state a clean energy leader rivaling California and New York. He wants NJ to have a goal of 100% clean energy and wants the state to re-enter the RGGI regional cap-and-trade program. In addition, he recognizes the tremendous need for increased investment in infrastructure, small businesses, and underserved communities. A new report published by EDF, and co-written by CGC and Quantified Ventures, explains how NJ can address both needs by establishing dedicated clean energy financing capacity that catalyzes private investment in clean energy.
The Market Opportunity
The report finds that NJ has a $40 billion investment opportunity in solar PV alone. In addition, the state has an untapped market for offshore wind and far deeper energy efficiency savings to be realized. These three technologies can support a clean energy economy in NJ. Today, NJ relies on nuclear power for electricity, natural gas for electricity and heating, and oil for transportation. But with nuclear plants preparing to close, base load must quickly be replaced by renewables to avoid greater dependence on natural gas.
Accelerating deployment of clean energy technology requires more investment to pay for the upfront cost. There isn’t enough public capital to pay for the investment, but private capital is not streaming at the scale and ease that is needed. Strategic and innovative use of limited public funds can spark private investment, and support new clean energy infrastructure and economic growth in the state.
New Finance Capacity is Needed
Though NJ has a number of programs and institutions meant to provide clean energy rebates, or financing for related infrastructure markets, there is no dedicated capacity and funding for clean energy project finance. This report outlines three options:
- Create a ring-fenced clean energy unit within the Governor’s proposed State Bank;
- Expand the authority of the state’s Infrastructure Bank (currently the Environmental Infrastructure Trust) to include clean energy; or
- Create a new stand-alone Green Bank, modeled on those used by neighboring states like New York and Connecticut.
The report explores these options and evaluates the pros and cons of each. In addition, the report describes the specific financing mechanisms and innovative tools, like commercial PACE and Environmental Impact Bonds, that could be deployed through a financing institution. New financing programs can also be tailored to address underserved communities that are often unable to access cleaner and cheaper energy.
NJ and Governor-elect Murphy have a perfect opportunity to make clean energy a focal point for a growing economy with modern infrastructure. It can learn from the best practices of Green Banks and related entities from around the country, including from right across the Hudson River. Whether with a new Green Bank or expansion of what already exists, NJ can tap a multi-billion-dollar clean energy market with smart use of public capital and innovative financing.
