The Clean Energy Future Blog
CCEF Executive Director Paul Scharfenberger speaks at Net Zero Summit for mountain towns
By Coalition for Green Capital
Mountain towns are uniquely exposed to the effects of climate change, and are increasingly organizing to safeguard the environment that makes them so distinctive.
With the MT2030 Net Zero Summit, invited leaders from over 40 mountain community governments, NGO’s and climate-oriented businesses from across the US have gathered for three days in support of ambitious action plans to achieve net-zero emissions by 2030.
Green Banks are on the agenda as a way to deploy financial resources towards this critical goal. Paul Scharfenberger, Executive Director of the Colorado Clean Energy Fund (CCEF), spoke last week at a session on the growing opportunities to finance projects that help mountain towns transition to net zero emissions.
CCEF is designed based on the Green Bank model, and is a member of the American Green Bank Consortium. At the event, the discussion aimed to inform municipalities and towns about the opportunities they have to play a role in financing energy efficiency and clean energy. Arranging public private partnerships, providing capital to local and state Green Banks, and creating or supporting local PACE programs are all ways that towns can help to accelerate the clean energy transition through financing.
To learn more about the event, check out the Mountain Towns 2030 website, and local coverage on KPCW. For more on state and local Green Banks and the innovative financial tools they’re developing, see the Annual Industry Report of the American Green Bank Consortium.
Low income, high efficiency: new report highlights role of financing for low-income families
By Coalition for Green Capital
A Berkeley report recently discussed in Utility Dive highlights a widespread problem with money-saving energy efficiency programs: they often exclude the low-income families who could stand to benefit the most. These families are disproportionately likely to suffer from climate change impacts like heat waves and extreme weather, and public health impacts from the burning of fossil fuels. They also pay a larger share of their total income to energy costs.
Residential energy efficiency programs reduce energy consumption and greenhouse gases, and save money for participating households. Over time, they also can provide benefits to all users of the grid, by reducing peak demand and avoiding the need for the construction of new grid infrastructure. The report focuses on California, but its takeaways and case studies for how to bring the benefits of energy efficiency to more families have broader relevance.
Two of the top recommendations from the report are:
Creating a “one-stop shop” to administer all efficiency incentive programs, which would streamline access for low-income residents and owners in particular and reduce the complexity of major projects.
Developing financing mechanisms such as “pay as you save” and third-party “energy budget” arrangements that use utility bills to attract private capital to efficiency investments, a particular challenge for the low-income sector.
These are points that Green Banks are uniquely situated to address. The report highlights the confusion caused by various programs housed under different roofs, and inflexibilities that can make them less effective. Green Banks’ status as dedicated institutions makes them able to play the role of traffic controller between other sources of incentives, and to generate new programs and products and phase out old ones based on changing technology and market conditions.
Green Banks across the country are also coming up with innovative financing mechanisms to help low-income consumers afford efficiency and clean energy improvements. For example, Hawaii’s GEMS program enables renters and low-income customers to install upgrades and tie the repayment to their utility bills. The program is also designed to remove barriers for landlords, by allowing for repayment to be paused during periods that a unit may be vacant.
In Florida, SELF’s My Strong Home Program helps low-income homeowners finance resiliency improvements to their roof, sometimes in combination with other energy efficiency improvements offered by SELF. The loans are repaid through savings on insurance premiums and energy bills, providing a double benefit to these residents.
These are just two examples out of many innovative programs available through the Green Banks of the American Green Bank Consortium.
The Berkeley report discusses a pilot program in California, the California Hub for Energy Efficiency Financing (CHEEF) that will help coordinate between California’s existing programs and explore ways to further support clean energy and energy efficiency financing options. CHEEF is modeled on a bill that CGC cosponsored earlier this year. Increasing coordination of and access to financing is critical for expanding clean energy adoption by low-income consumers, and ultimately benefiting all energy users in the state. The role that CHEEF plays in the market could serve as a potential model for guiding Green Bank activities in other states.
By Coalition for Green Capital
CGC Executive Director Jeff Schub spoke to Eve Andrews of Grist for a new post on what individual investors can do to be part of the solutions to climate change. The Ask Umbra column is a regular feature that gives readers advice about actions they can personally take, while putting them in context of larger systemic changes.
“Umbra” frames out the problem succinctly, punctuated by this insight from CGC:
“Greening the banking sector is good and divesting from fossil fuels is good, but what you need is money to be directly invested into projects,” says Jeff Schub, executive director of the Coalition for Green Capital. “If we had 100 years, private capital markets might solve this. But we don’t.”
The piece goes on to discuss possible actions including shareholder activism, investing in consumer-facing “green” funds, and of course, supporting Green Banks and using them directly to make personal investments in energy efficiency and distributed renewables. A National Climate Bank would be a way to expand and support this successful model.
Check out the full piece at Grist for a great overview of clean energy investment from the perspective of an individual.
By Coalition for Green Capital
The Green Bank Network had big announcements to make during NYC’s Climate Week!
First, the network announced that its members (Green Banks around the world) have collectively committed a cumulative $14.9 billion towards projects that are expected to mobilize a total $50 billion in public and private capital for green projects.
The Green Bank Network’s report shows that 59% of these investments went towards renewable energy projects, with 15% going towards energy efficiency and 27% towards other projects.
In addition, the Green Bank Network welcomed two new member institutions: Tata Cleantech Capital Limited (TCCL) of India, and the Energy Efficiency and Renewable Sources Fund (EERSF) of Bulgaria.
See the full announcement for more details, including these comments from the new members:
Manish Chourasia, Managing Director, Tata Cleantech Capital Limited said: “We are thrilled to join this group of green banks from around the world, to learn from their experience, and offer our own perspective and experience working to fill gaps and mobilize investment in local clean energy markets in India.”
Pierre Langlois, Leader of the Managing Consortium Econoler-EnEffect-Elana (EEE) of the new GBN member Energy Efficiency and Renewable Sources Fund (EERSF) said: “We are very excited to join the Green Bank Network. Green banks around the globe are demonstrating their ability to mobilize private investment into green infrastructure, and we are happy to join this group and add our significant experience, particularly related to financing energy efficiency and Renewable Energy, where we have been leading for 14 years in Bulgaria and for over 35 years internationally.”
By Coalition for Green Capital
Press Release: Sept. 19, 2019.
The Coalition for Green Capital (CGC) today released two new white papers illustrating how a National Climate Bank could directly invest across economic sectors in large and utility-scale projects, while also providing capital to state and local Green Banks across the country. Taken together, these investments could make significant progress towards economy-wide decarbonization.
The structure of the proposed National Climate Bank is based on the National Climate Bank Act introduced in July by Senators Ed Markey and Chris Van Hollen. The bill establishes an independent nonprofit institution with the goal of maximizing greenhouse gas reductions per public dollar, which would be capitalized with public funds and be chartered to operate for 30 years.
Previous analysis from CGC found that the Climate Bank could mobilize up to $1 trillion in total investment impact if capitalized with $35 billion in public funds, making the Climate Bank a powerful and cost-effective policy tool.
CGC’s latest reports qualitatively explore how the proposed Climate Bank could engage in each economic sector, providing examples drawn from existing trends and efforts. The reports also explore the mechanisms by which the Climate Bank could capitalize state and local Green Banks, and provide technical assistance to establish new sub-national institutions where they don’t currently exist. Existing state and local Green Banks are already making significant progress in mobilizing investment into local clean energy projects, and are particularly mobilizing investment into under-served communities which have in the past been excluded from these benefits.
The reports are part of a series from CGC which will analyze the potential impact of a National Climate Bank, providing details, context, and recommendations on its workings.
Jeffrey Schub, Executive Director at CGC, said: “Transitioning to a fully clean energy economy will require investments in many sectors, and the flexibility of the Climate Bank to engage in a wide range of project types is one of its great strengths as a policy tool. Support for state and local Green Banks will also provide important value, as these institutions bring deep knowledge of local markets and conditions. They are rooted in local communities and their investments can give an economic boost to vulnerable residents.”
The full white papers are available here:
For more information:
By Coalition for Green Capital
This post originally appeared on the site of CGC’s campaign for a federal Green Bank.
The investment model used by Green Banks around the world provides renewable energy projects with access to low-cost capital. The principle behind this approach is that reducing these projects’ cost of capital will help lower the cost of the energy they produce. Cheaper renewable energy will be competitive in a wider range of market conditions and geographic locations. This ultimately leads to faster adoption of renewable energy in more places.
In other words, to address climate change, the cost of renewable energy must come down to the point where it competes with fossil fuels everywhere. A new paper in Nature Sustainability uses the language of academia to state this very thing:
“To realize the sustainable energy transition in time to meet the Paris targets and SDG 13, key scenarios show that it is necessary that RE are deployed rapidly, displacing FF-based electricity in the mid- to long-term, and eventually stranding FF-assets. For this to happen, investments in subsidy-free new RE capacity (relying on income from the wholesale market) need to remain attractive. To this end, the LCOE of new RE plants need to be lower or equal to the short-run marginal costs of the price-setting plants in wholesale markets.”
The paper goes on to underscore exactly why and how the Green Bank approach works. It examines the opposite question: What would happen if interest rates in Europe were to rise, effectively increasing the cost of capital for these projects? The researchers find that the levelized cost of energy (LCOE) from those projects would increase significantly, up to 11% for solar projects and 25% for wind projects. This could pose a major hinderance to the expansion of renewable energy.
The researchers further discuss the role of capital costs in the rapid decline of renewable energy costs in recent years. This cost decline is commonly attributed to improvements in renewable energy technology, and while this is part of the reason, it’s far from the full story. The researchers write:
“New data for Germany show that the past RE cost reductions not only stem from technological innovation but also, to a substantial extent, arise from improved financing conditions for RE power plants, particularly lowered long-term interest rates (IRs). Lower IRs translate directly into lower cost of debt and equity, which lowers the LCOE of capital-intensive RE investments.”
These findings have important implications for policies designed to increase the growth of renewable energy. Effective climate and energy policies should consider all the factors that can help or hinder a renewable energy project. That can include research and development funding to improve the efficiency of the technology, and carbon pricing to ensure that the environmental harms of competing fossil fuels are priced into the energy they produce. But the policy platform would be incomplete without an institution like a Green Bank that can focus on making low-cost capital available to clean energy projects.
The one area the paper could be developed further is in its assessment of what it refers to as “subsidized loans.” The researchers raise the concern that subsidized loans may “crowd out” private capital; in other words, replace investments that private finance would have made if not for the availability of low-cost public capital. The design of existing Green Banks actually already takes this concern into account. Green Banks’ activities are focused on creating entirely new opportunities for private investment, expanding the market rather than merely replacing private investment. For example, the New York Green Bank specifies in their Business Plan that they consider “additionality” as part of their investment criteria, meaning that Green Bank’s involvement adds value additional to what would otherwise have happened given the state of the private market.
A National Climate Bank built around this model could be a major source of capital to U.S. state and local Green Banks, while also mobilizing investment directly into large and complex clean energy projects. These flows of capital would benefit private investors, by expanding the number of economically viable projects which can yield their desired returns. Most importantly, they would accelerate the clean energy transition to the pace required to meaningfully address climate change. In a world where little will exists to impose higher energy prices on consumers through regulatory means, the low costs made possible by Green Banks will be key to deploying renewable energy.
The full Nature Sustainability paper is paywalled, but check out the abstract here, as well as coverage of the piece in Tech Xplore.
Update: Free read-only link generously provided by the study authors, here!
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