|By Heather Clancy|
Quick, what do Alaska, Maine and South Carolina have in common?
All three U.S. states are seriously evaluating the creation of green banks — financing institutions created with the explicit mission of combining public and private funds to invest in climate solutions and green infrastructure. They would join roughly 20 other U.S. jurisdictions that have used this mechanism to drive more than $5 billion in clean energy investments as of the end of 2019, including Connecticut, Florida, Michigan and Washington, D.C.
Alaska is so invested in the idea that Rep. Don Young, a Republican who championed Deb Haaland’s nomination as Interior Secretary, last week stepped across the aisle again to become a co-sponsor of the latest legislation to create a national-level green bank. The bill would make $100 billion of public funds available for a nonprofit organization that would provide financing and other support to regional, state and local green banks — an amount the sponsors say could catalyze $884 billion in green infrastructure investments over the next decade and help create 4 million clean economy jobs within the next four years.
The proposed focus of that public-private money: renewables, energy storage, transportation, resiliency measures, efficiency, reforestation, agriculture and industrial decarbonization.
“By building on the proven success of state-level green banks, the Clean Energy and Sustainability Accelerator will transform our fight against climate change and intentionally incentivize investments in environmental justice communities,” said co-sponsor Debbie Dingell, who represents Michigan, home to one of the longest-standing nonprofit green banks, Michigan Saves. “This accelerator can bridge partisan divides and unite the public and private sector around our shared goal of decarbonizing our country, creating jobs and leaving this world better than we found it.”
Even before the latest national green bank proposal — and despite the economic pause precipitated by the COVID-19 pandemic — U.S. and international interest in green banks was on the rise. The model works by leveraging public money to help drive private sector investments, such as through loan loss reserves, credit guarantees or bundling arrangements. Among other things, it makes smaller projects more attractive to commercial banks, leasing companies, credit unions and other traditional lenders. The ratio of investment varies widely. According to RMI research, anywhere from $2 of private-sector money is invested for every public dollar invested — all the way up to a 30-to-1 ratio of private to public sector funding. (The nonprofit’s latest report tracks activity through the middle of 2020.)
“We’re very excited to see over 20 countries interested in this model,” said Angela Whitney, manager and co-director of the green bank design platform for RMI. “We see it as an institutional solution for helping companies achieve their climate ambition. It turns policy ambitions into projects on the ground.”
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