The Clean Energy Future Blog

By Coalition for Green Capital

This post originally appeared on the site of CGC’s campaign for a federal Green Bank.

On Wednesday, major ratings firm Moody’s Investors Service downgraded its assessment of the North American coal sector to a “negative” outlook.

This has been rightly cited as a positive sign for the climate, in that it’s an indication of coal’s decline. But it also highlights the ways in which this type of market trend will not be enough to address climate change on its own. The National Climate Bank can play a key role in facilitating the transition away from coal.

Seeking Alpha reports:

“Moody’s says the U.S. coal sector could suffer a substantial volume reduction for the next decade, as a combination of economic, environmental and social factors continue to push utilities towards renewable energy.”

Moody’s is in the business of assessing credit risk, which is important to capital markets. The downgrading of the coal sector means that Moody’s sees coal as a riskier investment, due to factors affecting its future profitability and viability. Many smaller, older, and more expensive coal facilities are closing.

However, many aging and unprofitable coal facilities are effectively subsidized to remain open, due to regulatory frameworks and concerns about grid reliability, jobs, or stranded asset costs. For example, in January Vox reported on studies showing the unprofitability of Colorado’s coal plants, but also noted:

“[C]losing down coal plants before the end of their rated lifespan and simply eating the remaining debt is something utilities can only do if permitted by Colorado legislators and regulators.”

The high-stakes math of the carbon budget means that waiting for these plants to close on their own will have serious climate consequences.

A National Climate Bank could accelerate the pace of the trend that Moody’s is already demonstrating. By helping to securitize the costs of retiring stranded coal assets, or in some cases purchasing coal reserves or facilities, a Climate Bank could remove barriers to coal retirements. The Climate Bank could also help to address reliability and job-related concerns by investing in grid infrastructure including transmission, storage, and new clean generation.

Moody’s can tell that coal is on the way out, but it’s not the business of Moody’s or the markets more generally to make that happen faster: they’re only reporting the trend they see. The Climate Bank could take an active role and help bring about the changes that are necessary.

By Coalition for Green Capital

Press Release: August 21, 2019.

Today’s agreement between the Development Bank of Southern Africa (DBSA) and the Green Climate Fund (GCF) to establish a specialized Climate Finance Facility is a critical and exciting step in a years-long process. The agreement marks the GCF’s commitment of US$56 million to the Climate Finance Facility, which will use financial tools such as credit enhancements to drive investment into projects that mitigate climate change.

The Climate Finance Facility also has capital from the DBSA’s balance sheet, for an initial capitalization of more than US$100 million. With its transactions the Climate Finance Facility will aim to draw in five dollars of private investment for each dollar directly invested.

The Coalition for Green Capital (CGC) applauds this progress and is proud to have partnered with the DBSA on designing the facility and arranging the deal with the Green Climate Fund. This work was funded by Convergence Finance and the ClimateWorks Foundation.

Andrea Colnes, International Director at CGC, said: “We are thrilled to see South Africa’s Climate Finance Facility move forward. The facility is the first of its kind to use the Green Bank model in a developing country, and sets the stage for others to take advantage of this innovative and cost-effective method to drive investment into clean projects and take action against climate change.”

That expansion of the Green Bank model in developing countries is already underway in Rwanda, where CGC has been engaged to develop a new Catalytic Green Investment Fund with the support of the Rwanda office of the United Nations Development Programme (UNDP).

For more information on South Africa’s Climate Finance Facility and CGC’s partnership with the DBSA, see:

• GCF and DBSA partnership to boost climate investments in the Southern Africa region
• New Case Study highlights CGC’s work to create $100M Green Bank in South Africa
• GCF funds first Green Bank, committing $55.6m for Green Bank in Southern Africa
• On the Road to a South African Green Bank

For more on Rwanda’s Catalytic Green Investment Fund, see:

• Rwanda Engages CGC to Develop Catalytic Green Investment Fund

By Coalition for Green Capital

This post originally appeared on the site of CGC’s campaign for a federal Green Bank.

What would our reaction have been during the great recession if the U.S. government did nothing to fix the economy, and even denied the financial collapse existed? Denial of an economic threat on a similar scale is happening today, with respect to the climate crisis.

A new study from the National Bureau of Economic Research shows that it’s sadly too late to avoid all economic damage from climate change. But we absolutely can and must avoid the severe economic harms that will result if we don’t take meaningful and immediate steps to reduce greenhouse gas emissions.

The study finds that the real US GDP per capita will be 10.52% lower in 2100 if no action is taken to address climate change. This is compared to a drop of only 1.88% if mitigation policies in line with the commitments of the Paris Agreement are implemented.

To put this in context, real GDP per capita in the US fell by 5% during the great recession. This means the projected loss in economic welfare attributable to climate change is twice as acute as that felt during the greatest economic disaster of most of our lives.

During the market crash of 2007 and the great recession that followed, complacency was not a politically and economically viable approach. Across the political spectrum, extreme urgency reigned. Both parties agreed that hundreds of billions of dollars of public money had to be invested. The only debate was on how many hundreds of billions and where it would go.
That same debate has to be repeated today. Our government should be debating how many billions of dollars to invest in the clean energy transition to avoid the economic disaster of climate change, and where that money should go to maximize emissions reductions- while also holding down energy costs.

The National Climate Bank needs to be central to this government mobilization. The proposed $35B non-profit national Green Bank should be a key plank in the government’s effort to combat the harm looming over all Americans. The Climate Bank can spark up to $1 trillion of total investment, drawing in private capital to projects like building solar and wind renewable power plants, deploying electric vehicles, and decarbonizing GHG-heavy industrial processes.

This investment not only will help the US avoid the economic disaster of climate change; it will also spark growth and jobs by stimulating new sectors of the American economy. And because the Climate Bank would prioritize projects that serve low-income, minority and underserved communities, the economic benefits would be enjoyed by all Americans.

If 2019 is the year Americans finally understand the damage of climate change, perhaps this can also be the year we recognize the looming economic disaster and the need to act.

By Coalition for Green Capital

In a new letter to the editor published in Nature, CGC CEO Reed Hundt calls for further study into the Green Bank model, and advocacy from scientists and experts around the need to drive investment in clean energy infrastructure.

“The introduction last month of the US National Climate Bank Act is a boost for ‘green’ banks worldwide… These banks are mobilizing investment around the world to accelerate the transition to clean energy and mitigate climate change.”

Further research could include modeling and attribution studies, and investigations of the potential effects of expanding Green Bank techniques within the US and around the world. See the full letter here.

By Coalition for Green Capital

Press Release: August 9, 2019

The Coalition for Green Capital (CGC) today submitted written comments to the New Jersey Energy Master Plan (EMP) Committee supporting the Committee’s recommendation to create a New Jersey Green Bank. CGC’s Executive Director, Jeffrey Schub, previewed these comments in yesterday’s in-person stakeholder meeting.

CGC’s comments argue that to achieve the state’s proposed ambitious energy and climate goals, it must create a focused finance institution to drive the energy transition. New Jersey can and should take a national leadership role to address climate change and reduce its greenhouse gas emissions, and New Jersey’s new EMP appropriately sets aggressive goals and targets. In order to achieve the EMP’s goals, a significant increase in energy-related investment will be required. A New Jersey Green Bank will be the key tool for driving this investment and implementing the state’s clean energy vision.

CGC Executive Director and New Jersey native Jeff Schub said: “A New Jersey Green Bank can turn the climate crisis into an investment and economic development opportunity. We applaud the Committee’s recommendation and desire to join its neighbors in New York and Connecticut by forming a Green Bank. This can benefit all New Jerseyans by expanding clean energy, lowering energy costs, and creating local jobs.”

New Jersey’s EMP also appropriately calls out the needs of low- and moderate-income communities, as well as environmental justice communities. These communities should be supported in reaping the benefits of the clean energy transition through the creation of new jobs, improvements to public health, and savings on energy bills. A New Jersey Green Bank would use state funds efficiently by mobilizing private investment, increasing its total impact beyond its public capital base. And it would invest in projects that directly lower consumer costs, which would be especially important to low- and moderate-income households.

CGC recommends that a New Jersey Green Bank be formed as a government-adjacent, independent 501c3 non-profit corporation, with a mandate to operate in alignment with the state’s clean energy and climate policy objectives. This approach would keep New Jersey at the leading edge of innovative trends in the Green Bank and clean energy finance sector. It would also ensure that the Green Bank is fully integrated and overseen by government, while retaining the independence to operate as a market actor free of political influence.

New Jersey’s Green Bank would be well-positioned to work in close coordination with other Green Banks around the country that are now organizing to achieving collective scale. This includes joining the American Green Bank Consortium to engage in capital and product partnerships with its fellow Green Banks. The New Jersey Green Bank could also benefit from momentum at the federal level to establish a National Climate Bank, which would be empowered to provide capital to New Jersey’s Green Bank.

CGC’s full written comments are available here. For additional context, also see the 2017 report “Financing New Jersey’s Clean Energy Economy: Pathways for Leadership” published by EDF and co-written by EDF, CGC, and Quantified Ventures.

ABOUT CGC

The Coalition for Green Capital (CGC) is a non-profit organization focused on accelerating the growth of clean energy through the creation of Green Banks.

CGC offers a unique and proven capacity as the leading creator, advocate, and expert on Green Banks since 2009 and works directly to support the formation of Green Banks with governmental and civil society partners. CGC also provides on-going consulting and guidance to operating Green Banks.

For more information visit coalitionforgreencapital.com/.

CONTACT

Nora Vogel
Director of Communications
646-494-8258
nora@cgcstagingsite.wpengine.com

By Coalition for Green Capital

This post originally appeared on the site of CGC’s campaign for a federal Green Bank.

At the end of July, Ohio House Bill 6 was signed into law by Republican governor Mike DeWine. While HB6 is undeniably a step backwards for renewable energy in Ohio, it shines a new light on the role of the Green Banks movement in lowering consumer costs and increasing clean energy investment across the country. In fact, Ohio may soon be home to one of the newest additions to the Green Bank movement, as Cuyahoga County has begun taking initiative to explore the creation of a Green Bank.

The bill HB6, seen by many as a bailout for a set of non-competitive generation facilities including two nuclear plants and a pair of large coal units, will also reduce Ohio’s renewable energy and energy efficiency standards. The Renewable Portfolio Standard (RPS) in Ohio, previously requiring 12.5% renewable power by 2026, was reduced to require a mere 8.5% renewable power by 2026 without a solar carve-out.

Part of the way RPS policies work to incentivize clean energy at the state level is that they allow renewable energy projects to generate renewable energy credits (RECs) for each unit of power they produce and sell those credits on an established market. The revenue they receive from REC sales helps improve the project economics. In Ohio, the reduction of RPS standards led to the almost immediate collapse of the state’s REC market, which had been recovering steadily over the past year. After the bill’s passage, RECs in the state lost 80% of their value, striking a major blow to the economics of renewable energy projects in Ohio, where many solar, wind, and efficiency projects already struggle to develop.

Green Banks’ role is to improve the economics of renewable energy projects by lowering their cost of capital, a function that takes on even greater importance in markets that experience this type of setback. The financial tools and offerings provided by Green Banks can make the difference that allows private investors to put capital into a project and get it off the ground.

The debate over HB6 also highlights Green Banks’ role in lowering consumer costs. HB6 explicitly raises energy costs, adding surcharges to customer bills which will transfer about $200 million per year directly from ratepayers to the non-competitive generating facilities. Proponents and detractors of the bill have debated whether this cost is offset by the “savings” of slashing the state’s RPS, but in either case the bill uses ratepayer dollars to subsidize non-competitive generation. Green Banks are focused on the exact opposite: investing in competitive projects that can match or undercut grid power on price. Once up and running, these projects save money directly for families and provide low-cost power to the grid.

HB6 is a setback for renewable energy, but the US can’t afford to slow down investment. Fourteen state and local Green Bank institutions across the US have built up a track record of success, mobilizing more than three private dollars for each public dollar invested for a total of over $3.6 billion in investment. The National Climate Bank bill introduced in the Senate would provide an unprecedented new source of funding to state and local institutions, while also directly handling large-scale projects that require a greater scope. Cuyahoga County is just one of the latest to take a decisive step down the path to attracting the benefits of the clean energy economy, and joining a larger movement accelerating the clean energy transition.