The Clean Energy Future Blog
By Coalition for Green Capital
A new case study from Convergence Blended Finance showcases the Climate Finance Facility (CFF), a specialized lending facility designed on the “Green Bank” model, based in South Africa. Green Banks are public, quasi-public, or non-profit entities established specifically to facilitate private investment into low-carbon, climate-resilient infrastructure. Convergence is the global network for blended finance, generating data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence, along with ClimateWorks Foundation, provided critical funding to CGC to support the DBSA with the design and launch of the CFF.
To scope, design, and raise capital for the CFF, the Coalition for Green Capital (CGC) worked closely with the Development Bank of Southern Africa (DBSA). This marks the first time the Green bank model has been applied to an emerging market, and offers significant proof-of-concept value to middle-and low-income countries seeking to scale up the private investment required to meet commitments laid out under the Paris Agreement.
The CFF, with an initial balance sheet of over $100 million USD, will deploy capital to fill market gaps and crowd in private investment, targeting projects that are commercially viable but currently struggle to attract market-rate capital from local commercial banks at scale without credit enhancement. The CFF will use its lending capital to catalyze significant private co-investment at the project level, with the goal that the equivalent of one dollar from the CFF mobilizes five dollars from private investors/banks (a leverage ratio of 1:5).
As the first Green Bank in an emerging market, the structuring of the CFF offers unique insights for other practitioners developing or investing in green banks, including:
- The importance of specialized partners when replicating existing models in new markets,
- Leveraging local institutional infrastructure,
- Early and continuous engagement with target co-investors, and
- Approaches to ensure additionality of financing activities.
Read the case study for more details on CGC’s approach to working with local partners to structure, design and raise capital for the CFF.
By Coalition for Green Capital
Many thanks to all who attended the last week’s first US Green Bank Summit!
At the event, Green Bank leaders built connections and shared ideas with one another, as well as with leaders from the fields of investment, philanthropy, business, and more.
Several highlights came from exciting developments at the federal level. With the National Climate Bank Act just introduced in the Senate, bill co-sponsors Senator Chris Van Hollen and Senator Ed Markey spoke to explain more about the bill and set forth their bold vision for the clean energy transition. They were introduced by Coalition for Green Capital CEO Reed Hundt, who has worked with both Senators on the Green Bank concept for more than a decade.
Following up on the introduction of the bill, CGC Executive Director Jeff Schub discussed the launch of CGC’s comprehensive effort to mobilize stakeholders from across the country in support of the passage of federal Green Bank legislation, and we also heard from Ilmi Granoff at ClimateWorks and Dan Adler of the Energy Foundation as the funders of this new campaign.
We heard from Katherine Hamilton of 38 North Solutions and a representative of the Presidential campaign of Senator Michael Bennet, to discuss the political situation for Green Banks in more detail. Senator Bennet’s support for a federal green bank underscores the broad appeal of this policy framework, framework, and he joins Governor Jay Inslee as the first two candidates (though likely not the last!) to propose a federal Green Bank as a part of the climate policy platform.
Green Bank leaders Mary Templeton, Curtis Probst, Gwen Yamamoto Lau, and CGC Director of Market Development Jill Bunting jumped into a discussion of how Green Banks in the US are finding new and innovative ways of scaling up their impact. In particular, Gwen Yamamoto Lau discussed Hawaii’s innovative new on-bill financing program which is bringing solar to renters and low-income customers, and Mary Templeton highlighted the importance of Michigan Saves’ strong network of local contractors.
Joan Larrea of Convergence Blended Finance moderated a discussion between Green Bank leaders Alfred Griffin, Lynn Heller, and Ken Locklin, offering a deeper look into the innovative new structures for co-investment between the public, private, and philanthropic sectors that have emerged across the US.
In that discussion, she shared an important point about the blended finance model: not every participant in a project or deal has to be investing with the same purpose. Some may be investing primarily for impact, others for return. Together, they enable the project to move forward.
Alfred Griffin of the New York Green Bank was asked if they ever encounter the perception that the NYGB competes with or “crowds out” private finance. He replied that he had never heard from a financier that they’d been crowded out of a specific project they wanted to be involved in. The purpose of the Green Bank is to enable new projects, and if it is possible for private capital to move a project forward, it’s to everyone’s advantage to let that happen in the market on its own.
Kerry O’Neill of Inclusive Prosperity Capital moderated a discussion between Bryan Garcia, Duanne Andrade, and Bettina Bergoo on how Green Banks across the US can best expand their growing focus on low to moderate income customers. They discussed how the energy burden is greatest on low to moderate households, meaning it makes sense to help these households first. The low to moderate income market also offers significant opportunity in an area where commercial banks are very cautiously moving forward. Panelists noted that there’s a balancing act in terms of the financial sustainability of an organization: it makes sense for an organization to seek out a diverse portfolio of projects, with low-to-moderate income projects being one important component.
Finally, Alex Kragie shared top takeaways from the first Annual Industry Report of the American Green Bank Consortuim. Across the country, Green Banks have mobilized $3.67 billion in investement since 2011, drawing in more than three private dollars for each dollar they have directly invested. Representatives from each Green Bank responded to share some of their top milestones from the past year, including Bryan Garcia who shared the Connecticut Green Bank’s Impact Report for FY ’18.
In the evening, many participants headed over to the Atlantic Council for a panel discussion introducing Green Banks to a wider audience, now available on video. Participants left the events energized for the growth of Green Banks at both the state and federal level, and inspired to collaborate further across this group of trailblazers in the field.
Dan Adler of the Energy Foundation
Ilmi Granoff of ClimateWorks
Panel: Taking Green Banks to Scale
Panel: Blended Finance & New Catalytic Investments
Alex Kragie, Director of the American Green Bank Consortium
Lynn Heller of the Climate Access Fund
“Green Banks: Financing the Low-Carbon Future” at the Atlantic Council
The Campaign for a Federal Green Bank
By Coalition for Green Capital
With the introduction of recent legislation in Congress, momentum has grown for the implementation of a Green Bank at the federal level. The National Climate Bank Act creates a blueprint for what Congress could accomplish when ready to take meaningful action on climate change.
To help make this policy framework into a reality, CGC is launching a campaign to implement a federal Green Bank, with the ultimate goal of driving investment in clean energy projects on a scale of hundreds of billions of dollars. This amount gets close to the level of investment that experts suggest is needed to avoid dangerous climate change.
As the campaign takes shape in the coming weeks and months, visit the new dedicated micro-site for the latest information and to sign up for email updates. Stay tuned for events, resources, news, and analysis as progress continues towards a clean energy future.
By Coalition for Green Capital
Press Release: July 8, 2019
US Senators Ed Markey (D-MA), Chris Van Hollen (D-MD), Brian Schatz (D-HI), and Richard Blumenthal (D-CT) today introduced the National Climate Bank Act of 2019. The bill is the first of its kind to create a nonprofit institution independent of government, designed to reduce energy costs and leave consumers and businesses better off by switching to clean energy. It is also the first bill of its kind to authorize the use of federal funds to accelerate the retirement of coal-fired power plants and to acquire coal assets still in the ground.
This institution, the National Climate Bank, will be capitalized with $35 billion in federal funds over five years, and will be capable of driving public and private investment on an unprecedented scale, approaching the level necessary to meaningfully tackle the climate crisis.
The bill has an explicit social and environmental justice mission, with a mandate to specifically prioritize investments in underserved and low-income communities. By providing a framework and a set of financial tools to connect dollars to projects, this bill represents the first substantial legislative plank to support achievement of the climate goals of the Green New Deal.
With its focus on connecting clean energy projects with needed capital, the bill uses the proven Green Bank model which the Coalition for Green Capital (CGC) has worked to implement at the state and local level. Existing Green Banks have a successful track record driving capital towards projects that reduce greenhouse gases, and multiplying their impact by drawing in private investment.
Previous bills establishing a federal Green Bank have also been introduced in the House and Senate, and Presidential candidates have come forward with plans based on Green Bank principles. The National Climate Bank Act builds on this momentum, with an expanded mission and a larger toolbox of eligible project types.
As experts in Green Bank creation and operation, CGC has played an instrumental role in setting up many of the Green Banks currently working today, and has been a leading voice on Green Banks since the model was first proposed a decade ago in Congress.
Reed Hundt, CEO of the Coalition for Green Capital said: “Senator Markey’s bill meets the dramatic and urgent nature of the climate change problem with an equally dramatic yet business-friendly solution. By using Green Bank financing, the Climate Bank will tackle the climate crisis while leaving energy consumers better off.”
Bryan Garcia, President and CEO of the Connecticut Green Bank said, “Green Banks are a proven policy tool in the battle against climate change. In Connecticut alone, the Connecticut Green Bank has been able to use $270 million in public funds to drive over $1.67 billion in total investment. With initiatives like the Solar for All program, the Connecticut Green Bank has increased solar adoption by more than 187% in underinvested neighborhoods, showing clean energy investments can drive equity and inclusivity for those that need it most.”
For more information on the National Climate Bank Act, see Senator Markey’s statement and CGC’s Bill Summary. For more information on previously proposed Green Bank bills in the House and Senate, see statements from Representative Himes and Senator Murphy.
For more information on the track record of existing US Green Banks, see the American Green Bank Consortium’s Annual Industry Report.
ABOUT CGC
The Coalition for Green Capital (CGC) is a non-profit organization focused on accelerating the growth of clean energy markets 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, and provide on-going consulting and guidance to operating Green Banks. For more information visit coalitionforgreencapital.com/. CONTACTNora Vogel
Director of Communications
646-494-8258
nora@coalitionforgreencapital.
By Coalition for Green Capital
Several Green Bank leaders will be speaking next week at an event hosted by the Atlantic Council, “Green Banks: Financing the Low-Carbon Future.” The event is free and open to the public.
The event will take place Wednesday, July 10, 2019 from 5:30 p.m. to 7:00 p.m. at the Atlantic Council headquarters (1030 15th Street NW, West Tower Elevators, 12th Floor, Washington, DC 20005).
Remarks from CGC’s CEO Reed Hundt will be followed by a conversation with Jeff Diehl (Chief Executive Officer, Rhode Island Infrastructure Bank), Bryan Garcia (President and Chief Executive Officer, Connecticut Green Bank), Mary Templeton (President and Chief Executive Officer, Michigan Saves) and Gwen Yamamoto Lau (Executive Director, Hawaii Green Infrastructure Authority).
Join us for a rich and interesting conversation! To register, please visit the event page.
Also note that the event is on the same day as the annual summit of the American Green Bank Consortium, an invitation-only event earlier in the day.
By Coalition for Green Capital
Press Release: June 26, 2019
The Coalition for Green Capital (CGC) today announced it has been awarded a contract to develop a new fund to expand Rwanda’s climate finance capacity. The fund will be designed to complement existing programs available through the Rwanda Green Fund (FONERWA), with a unique and specific focus on unlocking and expanding private investment in Rwanda’s green sectors. For this reason, the fund is referred to as a Catalytic Green Investment Fund. The catalytic approach uses public investment to attract private investment, by reducing risk and addressing other market barriers.
The Rwanda office of the United Nations Development Programme (UNDP) is supporting this effort, and has awarded the contract to CGC through the Rwanda Green Fund, an agency of the Rwandan Ministry of the Environment. Interest in climate finance solutions is growing throughout Africa, and with this project, Rwanda offers a model relevant to other African countries.
“We are delighted to be working with the Coalition for Green Capital to develop the Catalytic Green Investment Fund, which will boost private sector investment in Rwanda’s green economy. This new mechanism joins a number of financial tools developed by the Rwanda Green Fund to advance green growth and we are confident it will support Rwanda in becoming a developed and low carbon nation,” says Hubert Ruzibiza, CEO of the Rwanda Green Fund.
CGC has a proven track record of planning and implementing similar funds. Last year, CGC partnered with the Development Bank of Southern Africa to launch a new Climate Finance Facility, which included the first-ever Green Climate Fund loan to an institution based on the Green Bank model. In the United States, these funds are commonly referred to as Green Banks, and on average have more than tripled the impact of each dollar of public investment.
To lead the project, CGC has hired Ms. Sidonie Gwet, who is based in Kigali and brings extensive experience in the banking industries of Central Africa, West Africa, and Europe. Her work will include engagement with local stakeholders and experts to design the structure of the fund, identify major market barriers, and characterize a projected project pipeline and the most promising sectors for investment.
Sidonie Gwet, Rwanda Project Lead at CGC, said: “Developing and implementing a fund of this nature requires an in-depth understanding of the local market. I expect to work closely with local market participants to arrive at a design that will be effective at mobilizing the full power of relevant private investors.”
Jeff Schub, Executive Director at CGC, said: “Massive mobilization of capital will be needed to address the challenges of global climate change. CGC is inspired by Rwanda’s leadership and excited to be working with FONERWA to develop innovative financial frameworks for climate investment.”
ABOUT CGC
The Coalition for Green Capital (CGC) is a non-profit organization focused on accelerating the growth of clean energy markets 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, and provide on-going consulting and guidance to operating Green Banks. For more information visit coalitionforgreencapital.com/.
CONTACT
Nora Vogel (United States)
Director of Communications
646-494-8258
nora@cgcstagingsite.wpengine.com
Sidonie Gwet (Rwanda)
Rwanda Project Lead
sidonie@cgcstagingsite.wpengine.com
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