The House has enacted a bipartisan bill to fund a national Clean Energy Accelerator with $100 billion. The Senate has at least three bills on file to accomplish this goal and the President has called for $27 billion of funding.
The Clean Energy Accelerator was included in the budget resolution language released August 9, 2021.
What is the Clean Energy Accelerator?
The Clean Energy Accelerator is a nonpartisan, government-funded, financial nonprofit that resembles other long-standing institutions such as the Corporation for Public Broadcasting and the World Bank. The Clean Energy Accelerator has been designed to catalyze public-private investment in clean power infrastructure by funding green banks in every state that will invest in local projects, create jobs, and lower energy costs. The Clean Energy Accelerator will position the U.S. to lead in clean energy across the world.
All green banks operate at the frontier of private sector investing, using flexible forms of public finance to attract private sector funding to clean power projects that are not commercially supported at scale for reasons such as size or novelty. In addition, green banks address problems of collective action (providing an anchor tenant to multi-player transactions) or regulatory obstacles (securitizing commitments to carbon power facilities).
There are currently green banks in 16 states and Washington, D.C., and in 21 more states are interested in creating one. The Accelerator would be the first national climate bank in the United States. Similar banks already exist in various countries, including the United Kingdom, Rwanda, South Africa, and others.
A Just Transition
The proposed legislation in the House and Senate addresses the imperative of achieving a just transition, meaning a switch from carbon to clean power that improves health, increases job opportunity, and delivers tangible benefits for lower to middle income households. At least 40% of all investments by the Accelerator and its green bank network would have to go toward these equitable ends.
The Legislation’s Impact
If funded, the Clean Energy Accelerator would capitalize green banks in every state. At the national level it would conduct securitizations, pursue standardization of forms and processes for financing clean power projects, and address projects at a regional or national scale. Both the national and state green banks would focus on problems that slow or make inequitable the transition from carbon to clean power as the fundamental energy platform for the United States.
In the last decade state and local green banks have successfully attracted private funds into whole home electrification, renewable power generation, grid upgrades, and resiliency measures. Their investments have created jobs, enhanced energy independence, lowered the cost of energy for consumers and local businesses, and earned money for private investors. In New York and Connecticut, green banks have aggregated and sold their investments to attract new funds for re-investment. These states’ green banks have shown that the Accelerator’s investments are profitable.
For this reason, it is predicted that a one-time deposit of federal money will lead over a decade to an eightfold increase in private sector investment into components of the clean power platform that otherwise would not have been funded so quickly, or perhaps at all.