The Clean Energy Future Blog

By Coalition for Green Capital

Last week, the New York Green Bank announced it will provide $25 million in working capital to Sunrun, one of the nation’s leading residential solar companies. The NY Green Bank estimates this will accelerate the construction of 5,000 solar projects in New York. The deal comes on the heels of the announcement last month that the New York Green Bank will also provide Sunrun with a separate $25 million project financing loan.

By offering a portfolio of solutions, Green Banks are able to tackle multiple market barriers to clean energy growth. In the case of Sunrun, these deals separately address two critical areas for a company that is looking to scale rapidly: the most recent deal provides Sunrun with needed short-term liquidity, while the project financing deal enables Sunrun to ramp up longer-term borrowing as it grows its project pipeline. Together, these two deals will help Sunrun manage its growth, which means more clean energy in New York and elsewhere. Barriers to clean energy growth often vary by company or technology. In energy efficiency, for example, common barriers include limited financing options and limited consumer awareness. As a result, a Green Bank might provide both low-interest loans for residential retrofits and also conduct marketing outreach to contractors and homeowners to stimulate demand for retrofits. The flexibility to offer multiple solutions in the same market is a unique feature of Green Banks compared to more traditional public grants or loan programs.

As is typical with Green Bank transactions, both Sunrun deals included significant participation from the private sector. The New York Green Bank’s $25 million project financing loan, for example, was part of a broader $340 million round led by private lenders. In our conversations with private lenders, we continue to hear a hunger for new investment opportunities, especially as interest rates remain exceptionally low. As a result, private lenders say they are very interested in participating in the kind of high-quality, clean energy deals brought about by Green Banks. This suggests we can continue to expect Green Banks to leverage a significant amount of private sector dollars, increasing overall investment in Green Bank geographies.

By Coalition for Green Capital

The successful state-level Green Banks may be getting a national sibling in 2017. If elected, Secretary Hillary Clinton has pledged to create a $25 billion national infrastructure bank. The bank would fund projects of “regional and national significance” with an emphasis on “projects to modernize our energy, water, broadband, and transportation systems.” Clinton recently vowed to move on her infrastructure plans within the first 100 days of her presidency.

Clinton estimates that the activities of the $25 billion bank would create an additional $225 billion in private investment – a ratio of private to public capital of 9:1. This is in range with the impact on private investment that we’ve seen state and other national Green Banks achieve. Moreover, this impact can be achieved from a self-sustaining pool of capital, rather than one-off grants. In fiscal year 2015, the Connecticut Green Bank sparked $365 million in clean energy investment, more than the total amount of investment generated in 11 years by the prior grant-giving entity. Earlier this spring, Clinton pointed to the Connecticut Green Bank as an example of the type of work the national infrastructure bank would do:

Connecticut is leading the way. You have something called a green bank, a green bank that helps to fund energy efficiency and clean, renewable energy jobs. When I’m president, I want to have a national infrastructure bank that will fund these kinds of projects, that will make us richer and cleaner. – Hillary Clinton, April 24, 2016

Representative Chris Van Hollen first proposed the creation of a national green bank in 2009. Van Hollen reintroduced the legislation in 2014, which garnered 11 co-sponsors: Representatives Blumenauer, Cartwright, Connolly, Courtney, Esty, Himes, Langevin, Moran, Norton, Scott, Slaughter. A companion Senate bill was also introduced in 2014 by Senator Chris Murphy and co-sponsored by Senator Richard Blumenthal.

In creating a national Green Bank, the US would join other advanced economies such as the UK, Australia, and Japan. In each case, the national government seeded a new lending institution with public capital, which then invests in clean energy projects in partnership with the private sector. The public capital drives greater private investment in underserved markets to fill gaps. And because the capital is lent, rather than given away as a subsidy or expended (as is typical for traditional infrastructure like roads), the government actually gets its money back. A new national infrastructure bank in 2017, designed to leverage more private investment in a clean energy platform, would finally bring these proven and powerful financing techniques to the federal level.

By Coalition for Green Capital

Yesterday in San Francisco, global leaders in the field of innovative clean energy finance gathered in advance of the 7th Clean Energy Ministerial. The event brought together policymakers, practitioners and thought leaders on Green Banks and Green Bonds. The forum was hosted by the U.S. Department of Energy, and featured the Organisation for Economic Co-operation and Development (OECD) and the new Green Bank Network (GBN). Meeting participants shared best practices and identified opportunities to advance Green Bank and Green Bond solutions around the world.

This event could not have occurred at a more critical moment. As the energy ministers of the world’s largest economies gather today in San Francisco, the question they face is no longer “What commitments must we make to halt rising carbon emissions?” The question is now, “How are we going to pay for what we all committed to do last December in Paris?” And yesterday’s meeting on finance covered many of the approaches that will be a critical part of the answer.

Green Bank leaders from Japan, Connecticut, Hawaii, California, and the UAE attended to describe the new methods they are implementing to leverage limited public capital with greater private investment. And pioneers in the field of green bonds from Climate Bonds Initiative and IFC updated the group on the quickly growing industry and global landscape of issuances.

Green Banks and Green Bonds are two sides of the same coin – institutions designed to attract and deploy capital for clean energy projects; and a tried-and-true mechanism to raise capital from public markets for clean energy deployment. Many trillions of dollars must be mobilized to meet the Paris climate commitments. And achieving this goal will not be possible without a network of dedicated institutions around the world, and efficient means for drawing in capital for renewable energy and energy efficiency projects.

Highlights from the meeting include:

• The OECD released a first-of-its-kind publication on “Green Investment Banks”. It provides a comprehensive overview of the Green Bank concept and a survey of existing institutions. CGC was honored to support and provide content to the OECD in its efforts on this paper. This publication builds on years of prior OECD research and conferences on Green Banks.

• Participants were given a detailed update on the progress of the new Green Bank Network. Announced in December in Paris, the GBN will be a central global hub for best practices, data and know-how on Green Banks. Founded by Green Banks in Connecticut, New York, UK, Australia, Japan and Malaysia, CGC and NRDC are spending 2016 standing up the organization and building network capabilities.

•  The OECD and the GBN together were pleased to announce that the next OECD Green Investment Finance Forum will take place in Tokyo on October 13-14. In only its third year, the GIFF has become a premier global event on innovative clean energy finance methods. The first two events in 2014 and 2015 were notably keynoted by Al Gore. This year’s GIFF will be preceded by an event hosted by Japan’s Green Finance Organisation, and will serve as a gathering for the Green Bank Network.

The Green Bank movement is at an inflection point. Only five years ago, the Green Bank concept was a small pilot in policy and financial innovation. Today, Green Banks have animated over $10 billion in clean energy investment. They are increasingly viewed as a critical lever for driving public and private clean energy investment and meeting national and sub-national level goals for clean energy deployment. As the world considers how to finance their new low-carbon futures, Green Banks will play a critical role. Events like yesterday’s and the coming OECD & GBN gatherings in Tokyo are essential, so that leading know-how can rapidly spread to new markets and ensure no nations are left behind in the clean energy transition.

Simon Upton, Environment Director of the OECD laid the problem out clearly: any dollar invested today in infrastructure that is not green is either locking us into climate damage, or locking us into economic damage through stranded assets. This means in order to meet the Paris commitments, all new investments in infrastructure moving forward must be clean, better and cheaper. We must mainstream clean energy investment. This is our challenge.

Green Banks help meet this challenge by entering markets where capital markets are slow to invest, where perceived risk, lack of scale, or lack of history limit private investment. As private bankers at the CEM event reminded us, there is plenty of capital waiting on the sidelines. And smart institutional investors are looking for long-term investments that are green, have cash generating fundamentals, and won’t become stranded. Green Banks help bridge the gap, and help individual projects and portfolios connect with the deep pools of capital necessary to meet our toughest infrastructure challenges.

By Coalition for Green Capital

By Andrea Colnes and Stacy Swann – Coalition for Green Capital & Climate Finance Advisors

We are in the second week of the UN Climate Summit in Paris, and while we wait for the negotiators to finish their hard work, private sector and finance continue to show they are ready and prepared to increase their efforts and do their part to address climate change. Just this weekend, major businesses stepped up their pledges to do more to address climate change, including Unilever, L’Oreal, Virgin Atlantic and Harley Davidson, among others. All very good news.

Yesterday, two new climate finance initiatives were launched at COP 21 that have the potential to significantly scale financing for clean, green and resilient investments. But they also have the possibility to do more. In addition to helping to expanding finance through institutions at local, regional and national levels in countries around the world, these also complement – and directly contribute to – larger efforts to transition to a sustainable financial system.

The first was the launch of the Global Green Bank Network, a group of six green banks and two leading non-profit groups established to help meet the urgent need of increasing and accelerating investment in renewable energy and energy efficiency worldwide.

The Global Green Bank Network is a project of the Coalition for Green Capital and the Natural Resources Defense Council (NRDC), in partnership with the OECD and the Green Banks of the United Kingdom, Australia, Japan, Malaysia, New York and Connecticut in the United States. Green Banks are, in essence, public-private partnerships designed to leverage private capital, expand markets, and maximize the impact of public funds in accelerating clean energy deployment and economic development. Many are capitalized with public funding for specific purposes around scaling up climate-smart private investment. By developing financial partnerships that reduce risk and accelerate market expansion, Green Banks support the capacity of mainstream financial institutions to invest in the transition to a low-carbon economy.

The second was the launch of the Principles for Mainstreaming Climate Action within Financial Institutions. The Principles are supported by 26 financial institutions from around the world, with combined balance sheets worth more than $11 trillion. Unlike Green Banks, many of these institutions have investment mandates that span a wide range of sectors and activities. The Principles provide a set of five areas financial institutions must address in order to integrate climate considerations into the “core” of their investment and advisory operations. Thus, the title “mainstreaming”.

The banks that signed on to the Principles included all of the Multilateral Development Banks (MDBs), many large European and developing country Development Finance Institutions (DFIs), as well as several large private sector banks from both developing countries and Europe.  Notably, many developing country financial institutions are supporters of the Principles, including banks from Turkey, South Africa, Malaysia, and Morocco. India has two influential domestic banks—YES Bank and IDBI—supporting the Principles.

These announcements are important for two reasons: First, they will help all their members—whether Green Banks or financial institutions seeking to integrate climate change into the core of operations—share experience and leverage knowledge in key areas. The demand for this kind of knowledge-sharing is high within both initiatives.

Whether through the platform of the Principles or the Global Green Bank Network, what members seem to really want to learn is, in very practical terms, how to better implement and scale up financing. There are emerging practices that exist within institutions around the world, and members of these initiatives are interested in learning from each other. They want to know what tools have worked? How do peers address risks from climate change? How do they track, monitor and count investments and their impacts? This reflects, we believe, the recognition that many institutions now understand significant potential opportunities to support a net-zero economy. But also the recognition of the risks climate change presents to their business, and thus the speed at which they (and the rest of the financial system) need to orient their financing to address a 2°C-warmer world. Having these types of coalitions to share and leverage knowledge will help more banks do more in this area, and do it better.

The other reason these are important initiatives is the impact they could have on “system change” that economists have argued is required to meet the needs of a 2°C-warmer world. The work of the UN Inquiry on the Design of a Sustainable Financial System, the Risky Business report, and efforts by the Bank of England have raised the question about whether the financial system as a whole is adequately addressing not just opportunities to scale up financing, but also risks that climate change might pose to financial markets.

Any system is but a collection of actors. In this case both the Green Banks, and those banks ensuring climate is more progressively “mainstreamed” are providing a platform that has potential to contribute to the necessary system change highlighted by the likes of UN Inquiry, Bank of England and Risky Business. Green Banks already incorporate climate into the “raison d’etre”—or DNA—of their organizations, and the Principles help move climate more progressively into the DNA of existing financial institutions. Initiatives and coalitions such as these announced yesterday in Paris can also collectively help move climate considerations more fully into the DNA of the larger financial system.

By Coalition for Green Capital

FOR IMMEDIATE RELEASEPress contact: Jeffrey Schub, jeff@cgcstagingsite.wpengine.com First Global Green Bank Network Will Speed Shift to Clean EnergyNew partnership and funding will combine power of green banks to mobilize private investment in renewable energy and energy efficiency PARIS (December 7, 2015) – As world leaders gather to discuss global action on climate change, a group of six Green Banks and two leading non-profit groups today announced they are establishing a Green Bank Network to help meet the urgent need of increasing and accelerating investment in renewable energy and energy efficiency worldwide. Green Banks are public entities created to partner with the private sector to increase investment in clean energy and bring clean energy financing into the mainstream. They are a relatively new phenomenon that has been successful in the United Kingdom, Australia, Japan, Malaysia and several U.S. states. The founding partners of this major clean energy initiative are the UK Green Investment Bank, the Connecticut Green Bank, NY Green Bank, the Green Fund (Japan), Malaysian Green Technology Corporation and Clean Energy Finance Corporation (Australia), and the network plans to expand rapidly.   The banks have appointed the Natural Resources Defense Council (NRDC) and the Coalition for Green Capital (CGC), which are experienced in the development of Green Banks, to spearhead the creation of the network. ClimateWorks Foundation has agreed to provide seed funding.  The Organization for Economic Co-operation and Development (OECD) will use its convening power to facilitate the sharing of experience between green banks and countries interested in creating them, building on the OECD-Bloomberg Philanthropies Green Banks policy guide released today. With nations around the world making new commitments to reducing heat-trapping pollution, more capital than ever will need to be deployed for clean energy solutions. Green Banks can help stimulate the private investments necessary for nations to meet their commitments. The network will increase the global impact of Green Banks by enabling them to collaborate more effectively, share and leverage individual bank experiences, publicize achievements and grow the ranks of Green Banks worldwide. The UK Green Investment Bank is now the most active investor in the UK’s renewable energy and energy efficiency sectors.  Financing initiatives by the Australian Clean Energy Finance Corporation (CEFC) are delivering least-cost emissions reductions, contributing to economic resilience and competitiveness. The Connecticut Green Bank has nearly quadrupled annual clean energy investment and deployment in that state in three years. NY Green Bank, the largest Green Bank in the U.S. and one of the newer green banks, is providing market transformative financing solutions to advance solar, wind, and residential energy efficiency. Green Banks represented at a summit in New York last year said they collectively expected to deploy over $40 billion in capital for investments in clean energy and energy efficiency projects over the next five years. Governor Andrew M. Cuomo of New York said, “Smart and innovative financing is crucial to developing renewable energy resources that allow us to tackle climate change. Here in New York, we have made great progress with NY Green Bank, and we are joining with other leaders to continue spurring the growth of a global clean energy economy. This will help to advance renewable energy around the world and build a sustainable economy both today and in the years ahead –ultimately ensuring a cleaner future for generations to come.” Governor Dannel P. Malloy of Connecticut said, “When it comes to climate change, in Connecticut we’ve been dedicated to tackling this issue, and committed to constant innovation because of the ramifications of inaction.  We are taking aggressive action to combat climate change, with never-before-launched initiatives like our Green Bank.  It’s not just important for the environment – it builds on our efforts to create good-paying jobs and support an advanced energy economy.  That’s why, in addition to the significant steps we’ve already taken, we’ve committed to reducing carbon emissions 80 percent below 2001 levels by 2050.” Reed Hundt, CEO of the Coalition for Green Capital said, “Finance is the foundation of the clean energy platform. Public-private investment partnerships will grow the global economy, and provide affordable sustainable energy to everyone on the planet.” Shelley Poticha, Director of Urban Solutions at NRDC said, “Meeting commitments coming out of Paris will require a profound transformation in global energy investment. The Green Bank Network is a critical tool in this process and NRDC is excited to facilitate the global scale-up of green banking.” Shaun Kingsbury, Chief Executive of the UK Green Investment Bank said, “Billions of dollars of investment must be channeled into renewable energy and energy efficiency projects over the next 15-20 years if the nations of the world are to fulfill their climate pledges. The founding members of the Green Bank Network have impressive track records in drawing private capital to low-carbon infrastructure, but by building the first collaborative global clean energy finance platform we are sending out a signal that more can be achieved by working together.” CEFC Chief Executive Officer Oliver Yates said:  “This network has the potential to help drive the faster roll out of successful business models and clean technologies globally. We are already seeing our organizations playing a significant role in accelerating private sector investment in clean energy and the CEFC looks forward to working closely with similar organizations to share our combined experience in financing renewable energy, energy efficiency and low emission technologies.” Ir. Ahmad Hadri Haris, Chief Executive Officer, GreenTech Malaysia, said, “GreenTech Malaysia is proud to be one of the founding partners of the world’s very first global Green Bank Network. Together with leading green banks, this network will open up access to a pool of financial resources, cross-country expertise and developmental opportunities to green establishments and entrepreneurs across the world to deliver on the aspirations of COP21.” Bryan Garcia, President and CEO of the Connecticut Green Bank, said, “The Connecticut Green Bank looks forward to working with our Green Bank Network colleagues to accelerate the growth of clean energy deployment by leveraging public funds to attract more private capital investment to create jobs and confront climate change.” Alfred Griffin, President of NY Green Bank, said “Today’s announcement recognizes that green banks around the world have all made tremendous progress in catalyzing private sector capital in clean energy markets, and this is the next step towards a more seamless network of institutions that will benefit from learning from each other’s experiences. We are proud that NY Green Bank – along with our Green Bank Network colleagues – will be able to more effectively utilize each other’s resources and experiences to bring clean energy investments into the mainstream.” Angel Gurría, OECD Secretary-General, said, “To achieve zero net greenhouse emissions globally by the end of this century, governments need to make full use of their capacity to leverage and unlock much larger flows of private investment in low-carbon infrastructure. Public green investment banks can help accelerate the shift to low-carbon investment at the national and sub-national levels.”  For more information: About the UK Green Investment BankUK Green Investment Bank plc (GIB) was launched in November 2012. With £3.8bn of funding from the UK Government, it is the first bank of its kind in the world. It is a “for profit” bank, whose mission is to accelerate the UK’s transition to a greener economy, and to create an enduring institution, operating independently of Government. GIB is wholly owned by HM Government. The Company is not authorized or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. A wholly owned subsidiary UK Green Investment Bank Financial Services Limited, is authorized and regulated by the Financial Conduct Authority. www.greeninvestmentbank.com About Connecticut Green BankThe Connecticut Green Bank (formerly the Clean Energy Finance and Investment Authority) was established by the Connecticut General Assembly on July 1, 2011 as a part of Public Act 11-80. As the nation’s first full-scale green bank, it is leading the clean energy finance movement by leveraging public and private funds to scale-up renewable energy deployment and energy efficiency projects across Connecticut. The Green Bank’s success in accelerating private investment in clean energy is helping Connecticut create jobs, increase economic prosperity, promote energy security and address climate change. For more information about the Connecticut Green Bank, please visit  www.ctgreenbank.com About NY Green BankNY Green Bank is a $1 billion State-sponsored specialized financial entity working in partnership with the private sector to identify, address, and alleviate market barriers preventing the widespread deployment of clean energy across New York State. NY Green Bank uses demonstrated financing tools to promote self-sustaining markets, while enabling private sector capital providers to expand the frontiers of current commercial clean energy investment opportunities.  http://greenbank.ny.gov/ About Clean Energy Finance CorporationThe Clean Energy Finance Corporation (CEFC) invests using a commercial approach to overcome market barriers and mobilize investment in renewable energy, energy efficiency and low emissions technologies. Since its inception, the CEFC has committed over $1.4 billion in finance to investments in clean energy projects valued at over $3.5 billion. The CEFC invests for a positive financial return, with more than 55 direct investments. These projects help to improve energy productivity for businesses across Australia, develop local industries and generate new employment opportunities. The CEFC operates under the Clean Energy Finance Corporation Act 2012. More information is available on our website www.cleanenergyfinancecorp.com.au About GreenTech MalaysiaMalaysian Green Technology Corporation (GreenTechMalaysia) is an organization under the purview of the Ministry of Energy, Green Technology and Water Malaysia, charged with the development and promotion of green technology as one of Malaysia’s strategic engines for socio-economic growth. About the Coalition for Green CapitalThe Coalition for Green Capital is a non-profit organization, helps states and nation-states to create and run financing institutions aimed at increasing public-private investment in the new clean power platform. Founded by Reed Hundt and Ken Berlin in 2009, CGC now has the support of major environmental foundations and is working in more than a dozen states in the United States as well as at the international level. For more information, contact Executive Director Jeffrey Schub, at jeff@cgcstagingsite.wpengine.com About the Natural Resources Defense Council.The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 2 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.organd follow us on Twitter @NRDC. About the Organization for Economic Co-operation and DevelopmentWorking with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

By Coalition for Green Capital

The White House has announced a broad set of executive actions to further the deployment of clean energy that directly benefits state Green Banks. President Obama is using all the tools at his disposable within the federal government to support the financing and adoption of clean energy at the state and local level. This week’s announcement includes new guidance from the Department of Energy’s Loan Program Office that it will now offer loans and loan guarantees in partnership with state Green Banks to finance clean energy projects. This exciting announcement is the result of CGC’s focused engagement with the LPO, as well as the multi-state Green Bank meeting at the White House earlier this summer that CGC helped facilitate. The LPO announcement also included a new $1 billion loan guarantee fund to support distributed energy project portfolios. Previously, the LPO program was primarily designed to support construction of single, large scale projects. CGC worked with the White House and the LPO to illuminate the need to expand support the portfolios of smaller projects, which can be difficult to finance through private investors. In combination, the two elements of this guidance meet that any state Green Bank can now access low-cost capital from the federal government to finance large portfolios of clean energy projects, including solar-plus-battery-storage, micro-grids, and innovative efficiency installations.

For further details on the announcement, read the White House Fact Sheet. And for a deeper dive on the new distributed energy component of the LPO program, check out this article from Greentech Media.