The Clean Energy Future Blog

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.

By Coalition for Green Capital

Policymakers and stakeholders often ask CGC what it takes to create a Green Bank, and whether legislation is required to create a Green Bank. Though legislation is not necessary in all states, it is often used to create a new Green Bank financing entity. Legislation can define the mission of the Green Bank institution, name the source of capitalization, determine Green Bank authorities, and clarify many other critical elements of the Green Bank. Some states have existing entities that already have Green Bank-like authorizations, which can be turned into full-fledged Green Banks through a regulatory or administrative action. CGC has helped many states identify its own path to Green Bank creation. For those seeking more information on legislative options for creating a Green Bank, please read CGC’s detailed briefing on the common components of Green Bank legislation and the options a state can pursue to tailor a Green Bank to its own market conditions.

By Jeffrey Schub

Paul Krugman wrote yesterday that a carbon tax would be an ideal “economics 101” policy solution to correct for the externality of carbon emissions. Krugman argues that, despite a carbon tax being the most efficient solution, “second-best” approaches that are less efficient will be the likely outcome. This need to settle for second best is due to political intransigence in Congress. Krugman’s assessment of the politics sadly may be correct, but his analysis of the policies leaves out important details.

First, Krugman says that policies like fuel economy standards and net-metering are inefficient compared to a clean and clear carbon tax. A fuel standard is inefficient in the pure economics sense because the government dictates the outcome, rather than allowing the market to determine the most efficient level of emissions reductions (as theoretically happens with a carbon tax). But net-metering is not at all like a fuel standard. Net-metering, the policy of mandating utilities to buy solar power generated on rooftops, actually opens up and expands electricity markets. Net-metering can be viewed as an extension of the electricity market deregulation of recent decades. Net-metering allows anybody that can produce power to sell it into the grid. Yes, the price the utility pays for that power is important and is worth debating, But there is no debate on the notion that open access to markets is a good thing and actually increases market efficiency.

Krugman’s second point worth closer examination is his assumption about investment. Krugman says that creating a carbon tax will send a clear signal to investors of where they should now invest, eliminating the need for subsidies or loan guarantees for clean energy. While a carbon tax itself might be clear, the outcomes and new market realities produced by that carbon tax would be incredibly challenging to predict. Yes, a carbon tax will increase the price of carbon-based electricity, but by how much? Is it enough to make clean electricity cheaper than the carbon-based electricity? This change in market prices will play out in an incredibly complex and perhaps unpredictable way in every single power market in the country. This tremendous uncertainty will likely slow investment in carbon-based power, but it will not immediately drive investors to clean energy alternatives. More likely, investors will see looming uncertainty in power prices and hold their money on the sidelines until markets stabilize under the new carbon tax. In the meantime, clean energy alternatives that warrant investment will be left waiting.

A carbon tax is indeed a clear and crisp policy tool that comes straight out of “economics 101.” But the reality of how that tax may play out is far harder to predict. Green Banks, publicly-capitalized financing entities that offer low-cost and long-term capital for clean energy, must be created to fill the clean energy financing gap. Green Banks can ensure that clean energy technology is deployed where it is economically viable, and that uncertainty around subsidies and tax policy does not sink clean energy markets just as they are about to take off.

By Reed Hundt

Hope or heartbreak is at hand for everyone who believes America should show how to stop destroying the climate by burning coal to make electricity. On the side of hope, solar panel installers now offer homeowners a deal not to be refused: pay no money down, and buy about three-quarters of your electricity off your own roof at a lower price than the utility is selling it to you. A half of all roofs are technically suitable for solar panels – enough roof space that solar can take the place of coal in the nation’s generation fleet. On the heartbreak side, because rooftop solar has less than one percent share of the generation market, its growth rate of around 40-50% is too slow to curtail greenhouse gas emissions as quickly as needed to save the world.[2] The solution is to repeat for rooftop solar what the United States did for the Internet in the 1990s. When the Clinton Administration took office in 1993, Internet access in homes was non-existent. But about one-fourth of American homes had personal computers.[3] Virtually all had telephone lines. So, with the encouragement of the White House, the FCC ordered (among other things) that everyone could connect their home computer to the telephone line – without paying anything extra to the telephone company. Internet access providers marketed this sweet deal to consumers. AOL rose to the top of the heap in providing what became known later as narrowband Internet access.[4] By the end of the 1990s Internet penetration in homes approached 50%.[5] To keep alive hope for averting climate catastrophe, solar panels need to cover half of American rooftops in the same amount of time it took the Internet to reach that mark – seven years. That’s about twice the current solar installation rate. As Paul Krugman acknowledged in a recent opinion piece in the New York Times, “the science [behind solar energy] is solid; the technology is there; the economics look far more favorable than anyone expected.” All that stands in the way of solar adoption: “a combination of ignorance, prejudice and vested interests.”[6] The key is to let solar rooftop installers use the electric grid in the same way that the FCC let the Internet access companies “borrow” the telephone lines. The telephone companies did not like the FCC’s actions. They knew the Internet would force sweeping change to their businesses, destroying many companies (like the entire long distance industry, for example) in the process. In an effort to protect their carbon-related business interests, the Koch brothers, who are always setting new lows in obstinate opposition to progress, are pouring money into campaigns to fight any and all incentives for solar energy.[7] Utilities, with the exception of a few that have joined in the race to the rooftops, do not like the prospect of solar supplanting their own supply of electricity.[8] But like computer owners taking up the Internet, rooftop solar installers should pay nothing for connecting to the electric grid. In fact, if they make more electricity off rooftops than the occupants use, the utility should buy that surplus at a price that gives credit for reducing carbon emissions. Solar installers should be unregulated. They should pay no new taxes. Homeowners should not be charged anything extra by utilities for using less grid-supplied electricity. Existing tax credits for rooftop solar should be maintained until the market is fully saturated. Most utilities are opposing all these measures in almost all states, as are the Koch brothers.[9] Unlike the FCC in the 1990s, no federal agency has yet tried to set a national policy of giving the electric grid to rooftop solar. Nor has Congress conveyed to an energy agency greater legal authority for imposing change as it did with respect to the FCC in the bipartisan 1996 Telecommunications Act. Until the country gets a more visionary Congress, states need to pass law and issue regulations welcoming rooftop solar’s use of the utility’s lines. In this way, the rapid spread of distributed, cleaner, and cheaper power will change the world, just in the nick of time. State green banks can enable any town or city to go all green, and to sell their surplus clean electrons back to the grid.[10]

[1]The author was the FCC chairman in 1993-97 and is now the CEO of the Coalition for Green Capital.

[2] http://thinkprogress.org/climate/2014/01/02/3110731/california-rooftop-solar-2013/

[3] https://www.census.gov/prod/99pubs/p20-522.pdf

[4] http://www.nytimes.com/2003/02/03/business/as-broadband-gains-the-internet-s-snails-like-aol-fall-back.html

[5] http://en.wikipedia.org/wiki/Internet_in_the_United_States#Schools_and_Libraries_Program_.28E-Rate.29

[6] http://www.nytimes.com/2014/04/18/opinion/krugman-salvation-gets-cheap.html?ref=paulkrugman

[7] http://www.nytimes.com/2014/04/27/opinion/sunday/the-koch-attack-on-solar-energy.html

[8] http://e360.yale.edu/feature/with_rooftop_solar_on_rise_us_utilities_are_striking_back/2687/

[9] http://www.nytimes.com/2014/04/27/opinion/sunday/the-koch-attack-on-solar-energy.html

[10] http://www.nytimes.com/2014/05/01/business/energy-environment/a-ghost-town-going-green.html?emc=eta1&_r=0

By Coalition for Green Capital

After reading about the recently introduced Green Bank Act of 2014, one of your first questions might be, “Why $50 billion?”

In short, $50 billion leveraged through a federal Green Bank just might be enough to finance the renovation of America’s power platform.

The Connecticut Green Bank has achieved a leverage ratio of 10:1 meaning that for every single dollar of public capital deployed by the Green Bank, 10 dollars have been invested by the private sector. The Green Bank Act of 2014 stipulates that the federal Green Bank has the authority to offer low-interest loans of up to $500 million to any state Green Bank that operates under similar principles and has its own matching funds. So, in a state such as Connecticut, the $500 million from the federal Green Bank, matched with the state-funded $500 million, would provide access to $10 billion of public-private capital invested in clean energy.

Extending this math to the federal Green Bank, if all $50 billion of federal funds were matched by state funds (totaling $100 billion) and the bank were to achieve a 10:1 leverage ratio, Green Banks could produce $1 trillion of investment in clean energy and energy efficiency!

Roughly $1 trillion of public-private investment transformed the telecommunications platform in the 1990s. A similarly sized investment could catalyze a similar transformation of America’s outdated power platform. And Green Banks can help us get that $1 trillion.

Read the factsheet on the Green Bank Act of 2014.
Read the full text of the Green Bank Act of 2014.