“We Have Long Championed The Concept Of A Single, Independent, Non-Profit National Climate Bank That Would Maximize The Leveraging Of Private Capital Investment”
Washington, DC— On September 9, 2022, Senators Edward J. Markey and Chris Van Hollen and Congresswoman Debbie Dingell wrote EPA Administrator Michael Regan to “encourage” the rapid maximum funding of “a single, independent, non-profit national climate bank that would maximize the leveraging of private capital investment, ensure the efficient distribution of funds within a growing green bank network and create opportunities for large scale, transformational investments — particularly in environmental justice communities…” They explained that the Greenhouse Gas Reduction Fund (GHGRF) in the Inflation Reduction Act is “poised to accomplish that goal” and urged EPA ” to rapidly invest maximum funding” in that national climate bank. (The letter is in full below.)
The signatories wrote that the “national climate bank is uniquely structured to meet all of the requirements of the GHGRF” because it “will bring together a comprehensive, diverse, and inclusive network of state and local financing entities in the public and non-profit sectors. These will include “state and local climate banks, minority depository institutions, community development financial institutions (CDFIs), and other nonprofits.”
They explained that by providing maximum funding under the GHGRF to a single entity the EPA will “reduce costs for financial entities, attract private capital investments, and support a more efficient project-financing pipeline.” In addition “the national climate bank will lower costs for all consumers, including low-to-moderate income households, by deploying tested financial instruments that will reduce energy consumption, costs, and emissions for everyday activities.” They noted that the total investment for each dollar of capital can be expected to be at least ten times more than the capital that the EPA deposits.
The Senators and Congresswoman emphasized the important fact that at least 40% of the funds within the GHGRF shall be dedicated in support of environmental justice communities. That would be $8 billion of the total of $20 billion authorized to capitalize the “eligible recipient” that would be the single national climate bank.
The signatories are the long-time Congressional champions of the creation of a single, national, non-profit climate bank.
Here is the timeline of legislative initiatives that have culminated in this success:
- 2009 – The very first national green bank legislation was introduced on March 24, 2009, when Van Hollen drafted the Green Bank Act of 2009 (H.R.1698 in the 111th Congress). The bill had five co-sponsors, including Reps. Blumenauer, Loebsack, Giffords, and Massa and Del. Bordallo, and provided up to a minimum of $10 billion and up to $50 billion in green bank capitalization. At the time of its introduction, Van Hollen said, “By creating the Green Bank, we will accelerate development, deployment and production of clean energy and energy efficiency technologies across the country.” Rep. John Dingell and Rep. Jay Inslee partnered with Van Hollen and then Rep. Ed Markey to turn the legislation into an amendment to the ACES climate bill, with the entity renamed the Clean Energy Deployment Administration. That amendment was adopted in the House Energy and Commerce Committee by a bipartisan 51-6 vote, and went on to pass the full House along with ACES. In the Senate, the provision was included in the comprehensive energy package known as ACELA, and it was passed out of the Senate Energy and Natural Resources Committee with a bipartisan 15-8 vote. The Senate did not vote on ACELA. Despite the lack of federal legislation, the green bank movement began to take hold at the state level under the leadership of the Coalition for Green Capital. Later in 2009, Michigan Saves became the nation’s first nonprofit state green bank. In 2011, The Connecticut Green Bank became the first quasi-public state green bank.
- 2014 – On April 30, 2014, Senator Murphy introduced the Green Bank Act of 2014 (S.2271), which would provide up to $50 billion to a new national green bank. The bill was co-sponsored by Senator Blumenthal. On May 2, 2014, Rep. Van Hollen introduced the House companion bill (H.R.4522, which had 11 co-sponsors, including Reps. Blumenauer, Himes, Esty, Connolly, Slaughter, Langevin, Moran, Cartwright, Courtney, and Scott, and Del. Norton.
- 2016 – On September 22, 2015, Senator Murphy introduced the Green Bank Act of 2016 (S.3382), which provided $50 billion of capitalization. The bill was co-sponsored by Senators Blumenthal and Whitehouse. Rep. Van Hollen again introduced the companion bill (H.R.5802), which had seven co-sponsors, including Reps. Blumenauer, Himes and Tonko, among others.
- 2017 – On June 22, 2017, Senator Murphy introduced the Green Bank Act of 2017 (S.1406), funding the green bank with $50 billion. The bill was co-sponsored by now-Senator Van Hollen, as well as Senators Blumenthal and Whitehouse. The House companion bill (H.R. 2995), was sponsored by Rep. Elizabeth Esty, and had 28 co-sponsors, including Reps. Blumenauer, Himes, Tonko, Yarmuth, Jayapal, DeLauro, and McGovern, among others.
- 2019 – 2020 – On July 8, 2019 Senators Markey and Van Hollen introduced the National Climate Bank Act (S.2057) that would fund an independent, non-profit national green bank with $35 billion in capital. That bill was co-sponsored by Senators Schatz, Blumenthal, and Harris. On December 12, 2019, Rep. Dingell introduced the companion bill (H.R.5416) in the House. The bill had 10 co-sponsors, including Reps. Tonko, Blunt, Rochester, Axne, Kennedy III, Blumenauer, Doyle, Cartwright, Lowenthal, and Rush. Both bills proposed a $35 billion capitalization for the green bank. The House passed this legislation twice in 2020. On July 1, 2020, as part of the Moving Forward Act infrastructure package the House passed legislation to create the national green bank, and funding it with $20 billion. The House passed the same legislation, also providing $20 billion, on September 25, 2020 as part of the Clean Economy Jobs and Innovation Act energy bill.
In addition, on May 16, 2019, Senator Murphy introduced the National Green Bank Act of 2019, with Senators Van Hollen, Markey, Whitehouse, Blumenthal, Stabenow and Durbin as co-sponsors. Representative Himes introduced the companion bill in the House (H.R.3423) on June 21, 2019, along with 17 co-sponsors, including Reps. Yarmuth, McGovern, Blumenauer, and Tonko. The National Green Bank Act provided up to $50 billion in capitalization.
In a similar initiative, Senator Durbin introduced the America’s Clean Future Fund Act (S.4484) on August 6, 2020, the final bill in the 116th session of Congress to create and fund a central national clean energy finance institution. This bill appropriated up to $22.5 billion to capitalize a single national green bank called “Climate Change Finance Corporation.”
Notably, in 2020, the House Select Committee on the Climate Crisis and the Senate Democrats’ Special Committee on the Climate Crisis both endorsed the proposal to create a national green bank. The House Committee’s final report, which reflects very well their intent, stated:
“Congress should establish a national climate bank to finance targeted deployment of clean energy and other decarbonization technologies and climate-resilient infrastructure. The climate bank should capitalize new and existing state and local green banks and finance its own projects. When financing projects, the national climate bank, as well as the state and local banks it capitalizes, should (1) prioritize environmental justice, frontline, and rural communities and communities most affected by the transition to a clean economy; (2) emphasize support for projects without clear revenue models or lacking significant returns, such as certain energy and climate resilient infrastructure; and (3) focus efforts on using innovative financing techniques and structures and market development to fill financing gaps to drive deployment of already proven, commercialized technologies, rather than trying to finance first-of-a-kind commercial scale deployment. The banks should develop clear metrics for community prioritization, and a substantial portion of investment activity should address projects in priority communities. The banks should maximize creation of public-private partnerships to leverage private funds and avoid competing with private capital. The national climate bank should also focus on larger-scale projects that may be too capital-intensive or require greater regional coordination than any individual state or local green bank can handle.”
- 2021 – Senator Markey and Senator Van Hollen reintroduced the National Climate Bank Act (S.283) on February 8, 2021, co-sponsored by Senators Schatz, Blumenthal, Heinrich, Stabenow, Booker and Warren. Rep. Debbie Dingell introduced the companion bill (H.R.806) on February 4, 2021. Both bills proposed a $100 billion capitalization for the non-profit national green bank. Rep. Dingell’s bill had bipartisan co-sponsorship, with Reps. Fitzpatrick and Young joining Rep Tonko and Pingree as early supporters. On July 1, 2021 as part of the INVEST in America Act infrastructure package, the House passed legislation to create the national green bank for the third time in just 12 months.
In addition, Senator Murphy sponsored the National Green Bank Act of 2021 (S.1208), joined by co-sponsor Senator Blumenthal, and the bill again provided up to $50 billion in capitalization. Rep. Himes again introduced the companion bill in the House (H.R.2656), this time with 8 other co-sponsors.
On March 31, 2021, President Biden announced his American Jobs Plan. At the time, the White House Fact Sheet said that the American Jobs Plan “will establish a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment into distributed energy resources; retrofits of residential, commercial and municipal buildings; and clean transportation. These investments have a particular focus on disadvantaged communities that have not yet benefited from clean energy investments.”
On November 1, 2021, the United States issued a statement at COP26 in Glasgow endorsing this initiative. On November 20, 2021, National Climate Advisor Gina McCarthy stated on her official Twitter account that, “The Build Back Better Act advances environmental justice through a new [National Community Green Bank] that will invest in projects around the country, while delivering 40% of investment benefits to disadvantaged communities.”
During the process to create the Inflation Reduction Act, the White House stated its intention to advance environmental justice through a national green bank that “will invest in projects around the country, while delivering 40% of the benefits of investment to disadvantaged communities, as part of the President’s Justice40 initiative.” Congress fulfilled that promise by appropriating 40% of the funds granted to the eligible recipient to benefit low income and disadvantaged communities – and then built on that commitment by requiring the eligible recipient to use funds appropriated under both provisions to provide financial and technical assistance to entities – including community- and low-income-focused lenders and capital providers – that provide financial assistance to qualified projects within all jurisdictions.
This September 9, 2022 letter follows a statement on August 12, 2022 by Congresswoman Debbie Dingell submitted for the congressional record by Congresswoman Debbie Dingell on the day the House voted for the IRA state that the legislation is intended “capitalize a single independent, non-profit national financing institution — the first ever national green bank.”
Text of Letter from Senators and Congresswoman to EPA
September 9, 2022
The Honorable Michael Regan
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Dear Administrator Regan,
As the lead sponsors of the National Climate Bank Act (S. 283) and the Clean Energy and Sustainability Accelerator Act (H.R. 806) in the Senate and House of Representatives, we worked to include the Greenhouse Gas Reduction Fund (GHGRF) in the Inflation Reduction Act (Pub. L. 117- 169) to provide resources to fulfill the mission of our legislation. Therefore, we write to encourage you to rapidly invest maximum funding from the GHGRF to capitalize a national climate bank that will support an equitable transition to a clean-energy economy and fund a nationwide network of state and local climate banks, which will turn the challenge of climate change into an opportunity for prosperity. As the GHGRF intentionally dedicates $8 billion to the “purposes of providing financial assistance and technical assistance in low-income and disadvantaged communities,” the swift and successful disbursement of this funding will further the Biden administration’s environmental justice goals, which you have been a strong advocate for within the Environmental Protection Agency (EPA). An effective national climate bank program will build generational climate-friendly wealth in communities that have the least access to clean energy capital and are most at risk from environmental harm.
We have long championed the concept of a single, independent, non-profit national climate bank that would maximize the leveraging of private capital investment, ensure the efficient distribution of funds within a growing green bank network, and create opportunities for large scale, transformational investments—particularly in environmental justice communities – and it is critical to the country’s ability to reduce emissions of GHGs at the levels called for by the President.. The GHGRF is poised to accomplish that goal as it intentionally includes as an eligible recipient a nonprofit organization that:
“is designed to provide capital, leverage private capital, and provide other forms of financial assistance for the rapid deployment of low- and zero-emission products, technologies, and services; does not take deposits other than deposits from repayments and other revenue received from financial assistance provided using grant funds under this section; is funded by public or charitable contributions; and invests in or finances projects alone or in conjunction with other investors,”
The provision also instructs eligible recipients to use grant funding to make direct investments which:
“provide financial assistance to qualified projects at the national, regional, state, and local levels; prioritize investment in qualified projects that would otherwise lack access to financing; and retain, manage, recycle, and monetize all repayments and other revenue received from fees, interest, repaid loans, and all other types of financial assistance provided using grant funds under this section to ensure continued operability.”
Furthermore, the GHGRF requires recipients to make indirect investments to promote climate finance efforts throughout the country by:
“provid[ing] funding and technical assistance to establish new or support existing public, quasi-public, not-for-profit, or nonprofit entities that provide financial assistance to qualified projects at the State, local, territorial, or tribal level or in the District of Columbia, including community- and low-income-focused lenders and capital providers.”
A national climate bank is uniquely structured to meet all of the requirements of the GHGRF. It will bring together a comprehensive, diverse, and inclusive network of state and local financing entities in the public and non-profit sectors. We have championed the effectiveness of a standalone national institution that is authorized to capitalize both current and newly formed state and local banks, along with all other entities eligible to receive indirect assistance through our legislation. This approach allows these subnational entities, nonprofits, and lenders to make their own investments tailored to the needs of their communities, with the financial and technical support of the national climate bank. In the aggregate, a national climate bank and its network is expected to produce $10 billion of public-private investment over a decade for every $1 billion in initial capital.
The GHGRF will provide a national climate bank with the funding it needs to immediately begin investing in qualified projects that would otherwise lack access to financing on favorable terms. There are $200 million worth of projects targeting low-and-moderate income communities, nonprofits, public schools, and affordable housing that are shovel-ready, in addition to the $21 billion in clean technology projects that are in the larger pipeline. With so many projects ready to go, it is vital that we establish an organized central entity that is able to fund qualified large-scale projects and coordinate downstream financial entities to implement a system that efficiently reduces emissions and supports disadvantaged communities in those efforts.
As a centralized institution, a national climate bank will reduce costs for financial entities, attract private capital investments, and support a more efficient project-financing pipeline, while also seeding and providing technical support to state and local climate banks, minority depository institutions, community development financial institutions (CDFIs), and other nonprofits. Green banks have already proven successful on the local and state level, and a national bank would support those efforts while providing additional coordination for larger projects at the regional and national level. Green banks have been established or are being considered for development in 37 states and in Washington, DC, and are supported by governors of both parties.3 A national climate bank will optimize our federal investment and provide a unified national approach to climate mitigation, while supporting state and local banks’ abilities to meet their individual needs. A green bank network will be able to rise to the challenge that climate change presents with the leadership and guidance of a national climate bank.
To carry out the requirement that 40 percent of funds within the GHGRF be dedicated in support of environmental justice communities, a national climate bank can use trusted community partners, such as local green banks and CDFIs, to target investments within disadvantaged communities. These partnerships will allow the benefits of clean technologies to reach communities that have been left behind for too long. Moreover, the national climate bank will lower costs for all consumers, including low-to-moderate income households, by deploying tested financial instruments that will reduce energy consumption, costs, and emissions for everyday activities.
Capitalizing a national climate bank will provide long-term, comparatively low-cost solution to reduce our reliance on fossil fuels and greenhouse gas emissions, while decreasing families’ energy bills and creating new clean energy jobs. As authors of the legislation upon which the GHGRF is based, we urge you to maximize the impact of these funds through the capitalization of a national climate bank which will have the capacity to make direct investments in qualified projects at the national and regional levels and provide funding and technical assistance to state and local financing entities. We look forward to working together as EPA establishes the implementation procedures for the GHGRF, per the statute and intent of the Inflation Reduction Act, and thank you for your efforts on this historic project.
Chris Van Hollen
United States Senator
Edward J. Markey
United States Senator
Member of Congress