The Clean Energy Future Blog
By Coalition for Green Capital
“To win the climate battle, countries around the world must rapidly increase Investment through a systemic effort to drive markets from carbon to clean energy. Green banks have the capacity to bring the international climate finance architecture into alignment with Paris climate goals and drive transition to a clean economy,” said Reed Hundt, CEO of the Coalition for Green Capital, another summit organizer.
“Time and time again, entrepreneurial and commercially minded green banks have accelerated private capital formation in the low-carbon economy in industrialized economies, maximizing the impact of scarce fiscal resources. These institutions hold enormous promise in emerging markets, where every public dollar is even more precious, and the need for low-carbon development is just as pressing,” says Ilmi Granoff of ClimateWorks Foundation, lead sponsor of the Summit.
When 197 nations agreed to the detailed rulebook for the Paris Agreement in December 2018, the world finally turned the page from negotiation to action. The focus is now on ambitious national climate plans, including emerging economies whose emissions are projected to grow fastest. Mobilizing sufficient finance is a lynchpin in this effort.
The Green Bank Design Summit will build on a proven model of public Green Banks in advanced economies and CGCs work with the Development Bank of Southern Africa to form the first new climate finance facility in an emerging economy. More than two dozen developing nations will gather in Paris on March 18-19 to explore the establishment of national green finance institutions. They will be joined by leading private banks and development finance institutions also eager to play a role in the design of a new global climate finance system. The Green Bank Design Summit marks a moment of realignment in which a critical mass of nations is organizing in order to arrange and deliver avenues for finance that enable a profitable, effective, and rapid energy transition while promoting development goals.
The 25 countries attending the Summit come from every major developing region, including Asia (China, India, Vietnam, Malaysia, Mongolia, Indonesia, Cambodia, Kyrgystan), Africa (Nigeria, Rwanda, South Africa, Egypt, Kenya, Angola, Uganda), Latin America (Brazil, Chile, Argentina, Colombia, Mexico, Peru), the Middle East (Jordan), and Eastern Europe (Turkey, Ukraine). Together, they represent approximately 29% of the global population, 27% of global GDP, 69% of developing country GDP, and 44% of global CO2 emissions from fuel consumption as well as 72% of developing country emissions.
“Developing nations are getting serious about decarbonization, but they need to maintain a strong focus on economic growth and broad-based development. Success depends on the ability to inject finance into the right kinds of investments quickly enough. This is why so many of them are exploring green banks as a means to supercharge that process,” said Paul Bodnar, Managing Director at Rocky Mountain Institute, a partner in convening the event.
Also participating are some of the world’s largest infrastructure and banking companies such as Macquarie, HSBC, and Mizuho Bank; development finance institutions and multilateral funds such as Agence Française de Développement, the Green Climate Fund, and the Asian Development Bank; existing green banks representing the Green Bank Network; and philanthropic foundations and allied organizations.
“As these countries know, governments can’t do this work alone. Private investors want and need to be part of the solution, and green banks can bridge those partnerships to increase investment in clean energy and launch this paradigm shift,” said Douglass Sims, a Director and Senior Advisor at the Natural Resources Defense Council, an organizer of the event.
The summit will kick off the design of a new global platform for green bank design and formation supported by governments, philanthropy, and the private sector.
More information on the Green Bank Design Summit can be found here. Interested media will be granted limited access for interviews as available.
About Coalition for Green Capital
The Coalition for Green Capital’s (CGC)’s mission is to drive clean energy investment in the United States and in developing countries with the goal of creating a 100% clean energy platform. CGC incubates local clean energy finance organizations— often called green banks—and structures public, private, and mission-driven capital for investment through those organizations. CGC has created multiple green banks and related entities, which have driven over $2 billion of investment including the first green bank in the United States, the Connecticut Green Bank, and the first green bank in emerging markets, in South Africa. CGC is currently working with local partners on initiatives in the United States, Africa, Asia, and Latin America.
About the Natural Resources Defense Council
The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 3 million members and online activists. Since 1970, our lawyers, scientists, and other environmental specialists have worked to protect the world’s natural resources, public health, and the environment. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Bozeman, MT, and Beijing. Visit us at www.nrdc.org.
About Rocky Mountain Institute
Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewable energy. RMI has offices in Basalt and Boulder, Colorado; New York City; Washington, D.C.; and Beijing. More information on RMI can be found at www.rmi.org or on Twitter @RockyMtnInst.
By Coalition for Green Capital
As the impacts of climate change continue to accelerate, the need for greater investment in clean energy technologies is becoming increasingly apparent. Since public dollars cannot bridge the massive funding gap alone, Green Banks have traditionally used public sector capital to leverage increased private sector investment. The collective capital formation driven by that intersection has been impressive, but the pace of climate change is driving the need to expand the investment capital for Green Banks in the United States. Impact capital represents a natural, “third leg” of the capital stool for driving greater climate investments at Green Banks in the US. This paper seeks to explore the most effective ways that Green Banks and their foundation partners can harness the potential of impact capital.
The emergence of impact investing by philanthropic foundations, in particular their use of PRI, is proving fertile ground for expanding the pool of capital to a host of socially-oriented endeavors. This paper uncovers evidence that these green shoots of investment are starting to take hold within Green Bank activities. This paper aims to highlight potential practices and financial structures that can catalyze greater climate-related investment through Green Banks.
The paper is the result of CGC’s conversations with foundations and its review of selected case studies of existing Green Bank PRIs among GBN members and similar entities in the US. The paper presents these case studies as examples of Green Banks acting as effective and capable intermediaries of PRI capital.
Despite the successful use of Green Banks to deploy PRI capital, the PRI capital deployed to date represents only the beginning of what could be possible. With continued innovation in and collaboration on financial structures, along with maturation in the overall PRI space, Green Banks are well-positioned to scale PRI investments in the future. Such investment will allow both foundations and Green Banks to make important progress towards the investment targets needed to avoid the worst impacts of climate change.
CGC is committed to helping Green Banks scale and develop their investment capabilities. As part of this work, CGC welcomes partners to further develop the opportunity to deploy PRI investments through Green Banks. For more information on partnership opportunities, please contact CGC at cgc@cgcstagingsite.wpengine.com.
Introducing the American Green Bank Consortium
By Coalition for Green Capital
Today marks the launch of the American Green Bank Consortium, a new collaborative effort with partners across the U.S. designed to increase the impact and total clean energy investment made by Green Banks.
Green Banks will form the core membership of the Consortium, with a large cast of supporters also invited to join. Developers, investors, service providers, NGOs, foundations, policymakers and other actors eager to support and participate in Green Bank investment will all be engaged through the Consortium. The Consortium will also play an active role in any federal legislative efforts to combat the climate crisis.
Green Banks are dedicated clean energy finance organizations designed to catalyze greater public, private and mission-driven investment into clean energy markets. Green Banks in the U.S. have caused nearly $3 billion of total investment, expanding access to cost-saving clean energy solutions for businesses and households. The new Consortium is a first-of-its-kind membership organization, bringing together public, quasi-public, and non-profit Green Banks in the U.S. for the express goal of using their combined scale to raise more and new capital, develop and share common knowledge, and build a stronger Green Banking community. The Consortium will serve the needs of its members through representation, advocacy, fundraising, and networking. The collective goal of the Consortium is to add value for its members which will ultimately enable them to increase their investment in clean energy technologies in their local economies.
Founding members of the Consortium include the Baltimore Climate Access Fund, the Connecticut Green Bank, the Florida Solar Energy Loan Fund, the Hawaii GEMS financing program, Inclusive Prosperity Capital, the Maryland Clean Energy Center, Michigan Saves, the Montgomery County Green Bank, the Nevada Clean Energy Fund, the New York City Energy Efficiency Corporation, and the Rhode Island Infrastructure Bank.
The Consortium is being launched with the generous philanthropic support from a number of Foundations. The Energy Foundation, ClimateWorks Foundation, Bay & Paul Foundations, and Bellwether Foundations have all helped seed the new initiative.
The Consortium will lead a number of different activities and events, all focused on creating value for its members. Some of these activities include:
- Annual Green Bank Summit – A multi-day gathering that will address industry-wide topics of interest.
- Industry Working Groups – Consortium working groups will tackle big questions relevant to members, such as “The ITC Phase-out: Opportunities and Challenges for Green Banks”
- American Green Bank Consortium Advocacy – The Consortium will assist with Green Bank advocacy and education efforts on the federal, state, and local level.
- Access to Capital – Members will be afforded opportunities to access capital raised by the Coalition for Green Capital and its partners.
- Members-only Calls – A set of regularly scheduled, off-the-record talks with between members.
- Peer-to-peer Mentoring Network – A Member-to-Member support system for Green Banks.
- Deals for Members – Discounted packages of goods & services.
- Program Creation and Replication Assistance – Consortium will facilitate the transfer and creation of programs between Members across the country.
- Standardized Documents – A library of standardized documents for member use.
The Consortium is actively recruiting more members to join, either as Green Bank members or as supporters who are eager to join the community and scale up clean energy investment activity with Green Banks.
By Coalition for Green Capital
Green Banks, Green Funds and fellow green finance practitioners from around the globe gathered in Shanghai, China on November 29 for the sixth annual Green Bank Congress. Representatives from Clean Energy Finance Corporation (Australia), Green Investment Group, Connecticut Green Bank, Green Finance Organization Japan, Rhode Island Infrastructure Bank, Green Tech Malaysia and many more gathered for the annual event to discuss their latest deals, innovative financing techniques and various approaches to mobilizing private investment in green infrastructure.
Founding members of the Green Bank Network announced that they have collectively closed transactions of over US$11 billion that are expected to mobilize a total of US$41 billion in public and private capital for green infrastructure projects around the globe, effectively meeting their goal of US$40 billion by 2019 ahead of schedule.
The event included a number of emerging market representatives exploring Green Bank creation (through new or existing institutions) including speakers from China, South Africa, Indonesia, Chile, Mexico, India and Mongolia.
It was announced that a new Climate Finance Facility (CFF) has been formed in Southern Africa demonstrating a first-of-its kind, path-breaking application of the Green Bank model, adapted for emerging market conditions. The CFF received approval for capitalization from the Green Climate Fund in October 2018, and the Shanghai Congress was the first international forum to showcase the CFF since its successful approval.
Discussion themes at the Shanghai Green Bank Congress covered a wide range including Green Bank design, creation and successful on-going operation. A plenary session of major Development Finance Institutions (DFIs) discussed new ways to move “from lender to catalyzer” and mobilize private sector investment in green projects. One theme that emerged in the DFI discussion was partnering with local, country-level green intermediaries (such as Green Banks, Climate Finance Facilities, Strategic Green Investment Funds or similar) that carry mandates to crowd in private investment.
Rocky Mountain Institute, CGC, NRDC, Climate Policy Initiative and partners announced a new event for the coming year. In March 2019 a consortium of partners will organize the “Green Bank Design Summit” a hands-on, invitation-only workshop focused on designing, capitalizing and operating Green Banks in emerging markets. The event will be sponsored by AFD, ClimateWorks Foundation, the Green Climate Fund and others.
Additional panel sessions focused on Green Bank “tools of the trade” and successful techniques of existing Green Banks for mobilizing private co-investors, particularly in projects that may be first-of-a-kind, or under new regulatory structures. Speakers highlighted successful interventions in markets including energy efficiency, biogas, wind and solar, as well as emerging sectors such as electric mobility, adaptation, water, energy storage, or co-located clean energy projects with merchant or other kinds of offtaker risks.
The 2018 Green Bank Congress in Shanghai was an excellent opportunity for Green Banks and other green finance practitioners to gather and discuss new and existing models from mobilizing investment into green projects. Heading into the discussions of COP24, the investment gap to meet a 2 degree target is clearer than ever. While commitments made under the Paris Agreement are made by governments, there is widespread agreement that it will take a massive injection of private sector capital to deliver on those commitments. National Green Banks, empowered with patient capital and blended finance tools focused on mobilizing the private se ctor, will be a key part of achieving those goals.
Colorado Announces Green Bank
By Coalition for Green Capital
On Saturday, Governor John Hickenlooper announced the creation of a Colorado green bank. The green bank will be an independent, nonprofit entity called the “Colorado Clean Energy Fund” (CCEF). The objective of CCEF will be to drive private investment into clean energy projects and support the deployment of clean energy technologies in the state. To achieve this goal, CCEF will offer a variety of financial tools and services.
The creation of a Colorado green bank can build on the enormous growth of clean energy in Colorado. Colorado already has nearly 58,000 clean energy jobs across the state. With over 300 days of sunshine a year and one of the first renewable energy portfolio standards in the country, the Colorado clean energy market is developing at a breakneck pace. The price of renewables is becoming so cheap in Colorado, Xcel, one of Colorado’s major utilities, in on track to procure 55% of its portfolio from renewables by 2023. A green bank will be a powerful tool to build upon this growth and drive further investment in clean energy.
CGC’s Work
The Governor’s announcement is the culmination of a multi-year partnership between CGC and Colorado. Most recently, CGC has been working with the Colorado Energy Office (CEO) on a grant from the US Department of Energy to explore green bank creation options. During our work in Colorado, CGC has met with dozens of developers, nonprofits, advocates, and policy makers to discuss the green bank opportunity, and seen the enthusiasm for the concept first hand. Energy efficiency, distributed and community solar, and PACE are some of the focus areas for green bank activity that have surfaced through these conversations.
Now that CCEF has been created, next steps include finalizing the board and identifying potential projects for a first round of financing. CGC looks forward to our continuing engagement with Colorado and assisting in-state partners to launch the new institution.
CCEF Capitalizes on Benefits of Nonprofit Green Bank Structure
The Colorado Clean Energy Fund joins a growing number of nonprofit green banks, including the recently formed Nevada Clean Energy Fund. The growth of the nonprofit model is enabled by the emergence of alternative sources of capital and practitioner networks for green banks. As philanthropies and foundations increasingly express interest in supporting clean energy finance through grants and program related investments, nonprofit green banks are ideally positioned to deploy capital on their behalf.
As CCEF works to tap into these new networks, it will have access to the newly formed American Green Bank Consortium. The Consortium is a CGC initiative which will act as a hub to facilitate shared expertise, best practices, and capitalization strategies among green banks and green bank supporters. The consortium will also offer ad hoc consulting services and technical assistance to existing green banks and parties interested in creating green banks. CCEF will be able to tap into this robust network to learn directly from successful green banks across the country while meeting potential partners for future projects and capital raising.
By Coalition for Green Capital
Last week, the Green Bank world hit an exciting and crucial milestone. The Green Climate Fund (GCF) became the first multilateral institution in the world to capitalize and fund a local Green Bank in a developing nation. The GCF approved a $55 million loan to the Development Bank of Southern Africa’s (DBSA) new Climate Finance Facility (CFF), and also provided $600,000 for an operating grant. Once launched, the CFF will likely be the first operational Green Bank in the developing world, utilizing the models implemented by Green Banks in places like the U.K, Australia and the United States.
This is noteworthy for several reasons. The first is the obvious one – as made plainly clear by the Intergovernmental Panel on Climate Change, we are losing the climate battle and have little time left to save the planet. Driving as much capital as possible into all corners of the globe is vital, especially carbon-laden places like Southern Africa. Using capital sources like the GCF to support Green Banks, which themselves aim to catalyze further investment, shows a new way to aim for scale.
Second, it is an important precedent because it shows other development-focused institutions, like multilateral development banks (MDBs), ways to deploy their capital. Locally-led initiatives like Green Banks are aimed at crowding-in more private investment. MDBs need to wring every dollar of leverage they can out of their investments in climate, and place-based Green Banks are a perfect vehicle for that objective.
And perhaps most importantly, the GCF funding loudly announces to the world that the Green Bank model is evolving. No longer is the Green Bank story one where the only pools of capital are “public and private.” Green Banks historically have been solely capitalized by the governments that created them, which then use those public dollars to support private investment. This bimodal structure needs a refresh.
Public funds, in both developed and developing world, are far too scarce and new sources of capital are now available that Green Banks can deploy. Blending different sources of capital to raise large pools of funds is what is needed for Green Banks to be scalable and innovative drivers of climate investment. The work of securing public capital at scale in countries like the U.S. can be arduously slow. And public capital can be even scarcer in developing countries, so new sources – like the GCF – are a valuable addition to the traditional model.
CGC pivoted to executing this new approach in 2017. And Green Bank partners are leading the way, too. The Climate Access Fund (CAF), a non-governmental non-profit Green Bank in Maryland, quickly secured $2 million from local foundation and impact investments to pilot a low-income focused community solar project. CGC helped incubate CAF, structuring products and raising the seed capital. And by identifying market gaps and structuring innovative financial solutions, CAF attracted the interest of the state government, which then provided $1 million in matching guarantees.
NY Green Bank is raising $1 billion of private capital to expand its footprint outside New York State. The Connecticut Green Bank created a non-profit spin-off, Inclusive Prosperity Capital, to work in other states, and is securing a foundation guarantee which it can use as credit protection to raise funds from a range of capital providers. Both saw an opportunity to use the infrastructure they already built to bring in new, diverse sources of funding, rather than waiting and relying purely on their own governments to fund them. The New York City Energy Efficiency Corporation (NYCEEC) has used diverse sources of capital since its founding, leading the way on many innovative program related investment (PRI) structures.
Green Banks continue to create and deploy innovative methods for financing clean energy and driving more total investment into the market. But the vital evolution, that we are now seeing play out, is a move to take advantage of the full suite of capital sources available. Green Banks can and should have balance sheets with public, private, mission, impact, development and foundation dollars.
This is CGC’s new approach – working with Green Banks of all forms to raise money from all of these sources. The GCF and DBSA should be congratulated for supporting the new generation of Green Banks. ClimateWorks Foundation and Convergence Blended Finance deserve credit for being the first foundations to see this opportunity and funding CGC and the CFF formation. Now it is time for established and new Green Banks around the world to continue raising large diverse pools of capital to drive maximum investment to all corners of the globe.
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