The Clean Energy Future Blog
C2ES report: national-scale climate bank is a key part of “getting to zero” for US emissions
By Coalition for Green Capital
This post originally appeared on the site of CGC’s campaign for a federal green bank.
The Center for Climate and Energy Solutions (C2ES) recently released a comprehensive new agenda outlining a path to carbon neutrality by 2050, developed with input from leading companies across major economic sectors. As part of its core elements, it recommends the creation of a national climate bank, and the expansion of state and local networks of green banks. These recommendations are consistent with the growing consensus that any climate package needs to include low-cost, long-term financing for clean energy projects. In short, Congress should include a “carrot” to go alongside the “stick” represented by regulatory measures. The green bank model has been proven in the states over the past decade, with fourteen green banks across the US driving billions in public and private investment into clean energy projects.
“Mobilizing finance” is one of the four core elements offered in the report:
“Congress should create a national green bank to leverage private investment in clean energy, energy efficiency, and other activities contributing to decarbonization. More states and localities should also create green banks for use in their own markets.”
Another core element is “ensuring a just transition,” which also cuts across sectors and emphasizes priorities which are well-served by the green bank model. The report recommends:
“Policies that could increase the cost of energy should include mechanisms to minimize any cost burden on low-income populations and small businesses. `A share of climate investment should be dedicated to deploying solutions and infrastructure in historically marginalized communities, including urban tree planting, energy efficiency retrofits, community solar, electric vehicle charging, and low- and zero-carbon public transit.”
The establishment of a national-scale climate bank as proposed in the National Climate Bank Act supports each of the recommendations above. It would mobilize private investment, making cost-effective use of public funds to achieve the greatest possible impact. It would provide capital to state and local green banks and technical assistance to establish new ones across the country. The National Climate Bank would provide financing that would lead to the development of energy projects that are competitive on price. And it contains explicit mandates to prioritize investments in climate-vulnerable communities that have been historically under-served.
The C2ES report contains a wealth of sector-by-sector information as well, which is helpful in pointing towards the types of projects in which a National Climate Bank could invest. To get all the details, see the C2ES release and the full text. Getting to zero emissions is an achievable task, and C2ES sets forth a plausible and practical roadmap. The report underscores the urgency of taking action on these priorities as soon as possible, and a Climate Bank is a key part of the comprehensive approach we need.
By Coalition for Green Capital
This post originally appeared on the site of CGC’s campaign for a federal green bank.
As co-sponsor of the Green New Deal resolution in the Senate, as well a host of other climate and environmental legislation, Senator Ed Markey has staked out a clear position as a climate and environmental justice champion. This week, he appeared in a packed a Stonehill College auditorium to discuss climate change, and emphasized the central role that a National Climate Bank could play in bringing this ambitious agenda into reality.
Mass Live reports:
Markey acknowledged that the Green New Deal does not have “individual prescriptions” on “how to get there,” but calls for a “revolution in every city and town and every campus,” with aggressive targets in “every sector” including automotive, industrial, agricultural and manufacturing.
“I know if we have a climate bank with billions of dollars, it could unleash trillions of dollars in investment to increase efficiency,” said Markey, who also called for raising fuel economy standards and tax incentives for those who buy electric vehicles.
His math checks out based on CGC’s analysis of the National Climate Bank Act that Sen. Markey (along with co-sponsoring Senators Chris Van Hollen, Brian Schatz, and Richard Blumenthal) introduced this summer. Based on proven techniques from existing institutions that mobilize capital, CGC found that the Climate Bank could drive private investment to achieve an impact many times greater than the public funds it starts with: up to $1 trillion if capitalized with $35 billion in public funds.
Experts increasingly underscore the fact that this level of scale and ambition is critical to address the magnitude of the climate crisis. A group of eleven thousand scientists signed on to a report last week stating in plain language that climate change is an emergency and we must transition to clean energy as quickly as possible. At the same time, some estimates suggest it will take $4.5 trillion over the next few decades to fully decarbonize the U.S. economy.
We need more clean energy investment, more quickly. The Green New Deal sets a direction, but more targeted steps are needed to deliver on its promise. Advocates and experts also increasingly recognize that these solutions must prioritize environmental justice and reduce consumer energy costs. Senator Markey’s leadership understands this and puts forward solutions like the National Climate Bank that present a real opportunity to win the war on climate change.
Read more:
By Coalition for Green Capital
Green banks have a long track record financing projects in the power and building sectors to reduce emissions, and some states have even used proceeds from power sector cap and trade programs to support such financing. Now, a group of green bank leaders say the same thing should be done for transportation.
The Transportation and Climate Initiative (TCI) is an ongoing cooperative effort among Northeast and Mid-Atlantic states to reduce transportation emissions, modeled after the established Regional Greenhouse Gas Initiative (RGGI) cap-and-trade program covering the power sector. TCI is still in the planning and program design process, and has solicited comments on its latest Framework Draft for a Regional Policy Proposal.
A group of American Green Bank Consortium members representing Northeast and Mid-Atlantic green banks have submitted joint comments to TCI’s public process. The American Green Bank Consortium is a project of CGC, which convenes green bank leaders to share knowledge and facilitate joint work towards common goals.
The comments to TCI leadership come from the heads of the Connecticut Green Bank, the Climate Access Fund in Maryland, the Montgomery County Green Bank, and the Rhode Island Infrastructure Bank. They underscore the ways that green banks can effectively complement other policies which aim to send a market signal to reduce greenhouse gases.
Green banks have set a relevant precedent in their complementary work with the RGGI cap-and-trade program. Two green banks have received RGGI auction proceeds and used them to mobilize investment into energy efficiency and clean energy projects. These investments reduce demand for fossil-fueled power, save money for consumers, enable faster emissions reductions, and reduce the overall region-wide cost of compliance with RGGI caps.
Because green bank investments mobilize private capital alongside each public dollar invested, they are a highly cost-effective use of program funds. Green banks can also be a route to improving the fairness of program outcomes and address environmental justice needs. They have proven their ability to reach low- and moderate-income communities to provide clean energy and energy efficiency upgrades.
Green banks could play a similar role in support of transportation emissions reductions. The signatory green bank leaders suggest that TCI model the potential impact of green bank investments in the transportation sector, and solicit additional stakeholder feedback on potential transportation projects for green banks investment.
TCI could also facilitate cross-state discussions to share knowledge, which could lead to the creation of new green banks (including a regional transportation infrastructure green bank), and the capitalization of new or existing green banks with TCI proceeds.
Finally, the comments note that these deliberations are occurring in the context of increasing momentum towards the creation of a National Climate Bank which would be capitalized with billions in federal funds. Laying the groundwork now to support green banks in the Northeast could provide a pathway for this capital to flow towards green bank investments in the transportation sector. The growing attention from Congressional leaders towards the green bank model is a testament to the success already achieved by existing green banks at the state and local level.
For more information, including on the American Green Bank Consortium and how it facilitates this work, see:
- Full TCI Comments.
- American Green Bank Consortium website.
- National Climate Bank micro-site with additional resources on federal action.
CGC’s Jeff Schub to speak today at Yale summit
By Coalition for Green Capital
The third biennial Yale Environmental Sustainability Summit takes place today. The theme is “Dispatches from the Future,” which asks “how we might compel the collective, sweeping environmental action that we need in the midst of a time of rapid change and uncertainty.”
CGC Executive Director Jeff Schub will be speaking on a panel discussing the role for a National Climate Bank, along with Connecticut Green Bank President and CEO Bryan Garcia, Greenworks Lending Co-founder and CEO Jessica Bailey, and BBL Commodities CIO Jonathan Goldberg.
These experts and leaders on the clean energy finance are sure to have a robust discussion on the policy tools available to mobilize a much-needed wave of investment into clean energy projects, including the proposed National Climate Bank.
The topic for the session builds on previous comments Schub made in an interview with Yale Insights:
This policy is fundamentally based on market principles. There is no market for energy that is more expensive. This is not about forcing consumers to do something that the government thinks is right for them. This bill is specifically designed to provide solutions that lower energy costs while delivering clean energy.
See the full interview for more on what the National Climate Bank could achieve, and how existing institutions like the Connecticut Green Bank have proved the concept in the real world.
Florida Green Bank Wins Major Grant to Deliver Affordable Clean Energy and Resilient Housing in Florida
By Coalition for Green Capital
The Florida-based Solar and Energy Loan Fund (SELF) has provided innovative and affordable financing for sustainable home and business improvements in 90 jurisdictions in Florida. Now, SELF, through the South Florida Housing Link Collaborative, will be able to reach an even wider base of customers as part of a $5 million affordable housing initiative financed by the J.P. Morgan Chase PRO Neighborhoods Competition.
The “South Florida Housing Link Collaborative” was one of seven selected this year out of 75 applications across 49 U.S. cities in JPMorgan Chase’s annual Pro Neighborhoods competition. The collaborative partners will support the Coastal Housing Link Plan developed by the South Florida Community Land Trust.
This ambitious plan is aimed at creating and preserving sustainable and affordable multi-family housing near commuter rail stations in South Florida. SELF’s role as the lead recipient of the grant funds will include launching a new multifamily debt product for solar, energy efficiency, and storm protection, as well as expanding their flagship single-family lending programs to help more low- and moderate-income (LMI) homeowners.
By strategically offering these loans in key areas and project types, the initiative’s $5 million investment is projected to leverage as much as $75 million of external capital from investors, lenders and government sources.
SELF’s Chief Strategic and Financial Officer Duanne Andrade explained the green bank model in more detail to the Miami Herald, including how it helps low and moderate-income people afford upgrades like hurricane-resistant roofs, solar panels, or efficient air-conditioning systems.
“Those are all expensive items that typically working-class people couldn’t afford easily,” she said. “It’s not fair for only the wealthy to be able to access those home improvements that would serve the low income the most and the best.”
Such improvements require a big upfront investment, but they save homeowners money over time in the form of lower electricity bills and cheaper home insurance.
The key to accessing these technologies, Andrade said, is affordable financing. Higher-income people can pay with cash or get a loan from a bank — an option often unavailable to those with lower income.
“Because they may not have great credit scores or high incomes, they’re going to be hit with high-interest rates,” she said. “Low-income populations pay much more, proportionally speaking, for housing costs and operating costs for their homes.”
SELF lends to low and moderate-income homeowners and structures the loan around what the customer can afford to pay, rather than what would generate the most profit. With this award, SELF will also be creating a new SELF Housing and Community Impact Fund (HCIF) for affordable housing and multifamily rehabs.
While customers may be thinking mostly about their savings, these efforts reduce greenhouse gas emissions, which contribute to climate change threatening South Florida residents. The new initiative’s focus on areas near rail transit provides an added layer of emissions reduction benefit, since residents of the new developments will be able to use low-emissions trains as an alternative to driving. This makes the initiative a perfect fit for South Florida as it faces down both rising housing costs and rising seas.
Learn more about the new initiative:
Forbes: JP Morgan Chase Launches $5 million Affordable Housing Initiative In South Florida
Miami Herald: This new plan will create affordable housing along South Florida’s rail path
The Real Deal: JP Morgan to invest $5M to build 150 new affordable rentals in South Florida
By Coalition for Green Capital
The following piece by CGC CEO Reed Hundt originally appeared in Morning Consult.
A huge majority of Americans now understand that climate change is real, ominous and imminent. Extreme weather, threats to food supply, climate refugee migration, risks to beachfront cities and overwhelming scientific consensus have all combined to compel Congress to push the economy onto a clean power platform while at the same time protecting consumers and vulnerable communities from taking on an unfair share of the cost of change.
As described in a book I wrote, a decade ago Congress made a major effort to win the battle against climate change. The lessons of 2009-10 teach us that the winning idea is to couple a forcing function that sends a market signal with public financing to accelerate and lower the cost of the shift from carbon to clean.
The focus of the 111th Congress and the incoming Obama Presidency was a cap-and-trade bill. Based on a successful program to reduce acid rain from sulfur dioxide emissions, this proposal licensed emissions and created a market for buying and selling the licenses.
As a complementary measure to lower the cost of renewable power and increase economic growth, then-Rep. Chris Van Hollen (D-Md.) introduced the Green Bank Act of 2009. Renamed the Clean Energy Deployment Administration (CEDA), Reps. John Dingell (D-Mich.) and Jay Inslee (D-Wash.) introduced the measure as an amendment and the Energy and Commerce Committee adopted it by a huge 51 to 6 bipartisan vote. It was also incorporated in the Senate Energy and Natural Resources Committee companion bill by a bipartisan vote.
With a heroic effort by Speaker Nancy Pelosi (D-Calif.), Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), and President Obama, the cap-and-trade bill passed the House by only 7 votes. But in the Senate the bill ran into partisan gridlock, and never reached the Senate floor. CEDA died with it. The Democrats lost the House in November 2010, and no energy bill could be passed for the rest of the Obama Administration.
Meanwhile, the idea of CEDA had a rebirth at the state and local level. As manifested in the American Green Bank Consortium, many state and local jurisdictions have capitalized green banks. In Connecticut, Colorado, Hawaii, Maryland, Michigan, New York, Rhode Island, Nevada, Washington, D.C. and Florida, state and local green banks have already caused more than $3.6 billion in public-private investment in clean power solutions with a ratio of private to public investments of 3.4 to 1. The idea has spread around the world, catalyzing new clean power investment in South Africa, Rwanda, Australia and elsewhere.
Fast-forwarding to the present: Several Congressional Committees are considering legislative proposals to address what has now become a crisis. Congress may choose to adopt a tax or cap-plus-dividend mechanism or it may encourage revivified Environmental Protection Agency action. But regardless of the push that is chosen, it is well understood that the burden of paying for the move from carbon to clean must not fall unfairly on workers and consumers in states or regions that have been historically more dependent on coal and gas than others. Ten states account for about half of U.S. emissions. These areas need a guarantee that the few do not pay for the benefits enjoyed by the many.
To this end, Markey and Van Hollen, now in the Senate, updated and expanded their 2009 green bank idea by introducing on July 8 the National Climate Bank Act. It was co-sponsored by Sens. Richard Blumenthal (D-Conn.) and Brian Schatz (D-Hawaii), who are from states with successful green banks. Connecticut’s Sen. Chris Murphy and Rep. Jim Himes have also introduced a similar bill.
This National Climate Bank would be a more powerful and faster-acting version of CEDA.
- Like CEDA it would join public money with private capital, using $35 billion of public money deposited over five years to mobilize $1 trillion in private investor funds all dedicated to the new clean power platform. Over its 30-year life, the bank would aim to return all its public money to the Treasury.
- To move faster than government typically does, the bank would be a nonpartisan nonprofit operating with complete public transparency.
- The bank must maximize rapid emissions reduction per public dollar invested. This focus leaves other important tasks, like stimulating innovation or addressing nuclear power, to other agencies, such as the Department of Energy.
- The bank can only invest in projects that provide clean power at prices the same as or lower than the prices paid for carbon-based power. Consumers should benefit from advances in renewable power technology over the last decade.
- Vulnerable communities must be prioritized: where the carbon-to-clean shift costs jobs, the bank would fund new job creation.
- The bank can buy coal at auction to keep it in the ground, or pay owners of coal-fired boilers to close their facilities, if these moves will maximize emissions reductions in a hurry. Atmospheric carbon dioxide concentrations are skyrocketing above historical norms, with a 12 percent increase in the past decade alone. There’s not a moment to lose in the fight to keep greenhouse gases out of the atmosphere.
- The bank would bring private investment into electricity generation, transmission, distribution and storage, as well as into decarbonizing industrial processes, transportation, agriculture and forestry. It would help fund improved insulation, windows and other energy use reduction measures in buildings as well as paying for protecting cities and towns from devastating weather.
This broad range of activities reflects the scope of the battle against climate change, and the range of markets the private sector is clamoring for some help to open the door to investing in the new economy.
The National Climate Bank is the new and improved version of CEDA. The commitment to public-private investment is an essential weapon for the present crisis.
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