The Clean Energy Future Blog

By Jeffrey Schub

The massive, consolidated bill Congress passed before the new year has a wide range of COVID-19 relief and energy provisions. Included inside is the Energy Act of 2020, authorizing $35 billion of new funds for energy programs, reforming the DOE’s Loan Programs Office (LPO) loan guarantee programs under Title XVII of the Energy Policy Act of 2005, and extending tax credits that the federal government awards to equity investors in and owners of certain kinds of renewable energy projects. This collective set of policies, combined with critical new limitations on the emission of HFCs, is being hailed by some as the most significant energy or climate bill ever passed by Congress.

As important and laudable as these measures are, they mostly add up to a continuation of the status quo when it comes to federal support for clean energy. The spending is directed to research, development and demonstration of a range of innovative, pre-commercial technologies, including advanced nuclear and carbon capture. Reforms to the much maligned and largely dormant Title XVII loan guarantee programs double down on its focus on innovative, pre-commercial technologies. And the tax credit extensions merely press the repeat button on the cycle of tax extenders that has played on loop for over a decade.

What is missing are policies that address all three of the core components of President-Elect Biden’s climate platform:  economic revitalization, deployment and justice.

Nearly 20M Americans are still collecting unemployment benefits. How many jobs will be created through new R&D spending? How much of the $35 billion in new DOE funds for innovative technologies goes to the widespread deployment of commercially ready clean energy technologies that must begin immediately to meet President-Elect Biden’s goals of 100% decarbonization of the power sector by 2035 and economy-wide net zero carbon emissions by 2050? And how much of the new funding can and will be used for targeted investment in underserved communities that suffer disproportionate effects from climate change? The answer to all three questions is the same – none.

That means the incoming Biden Administration has its work cut out for it if it wants to meet its climate and economic commitments. The new funds for innovative clean energy technologies and the reforms to the Title XVII loan guarantee programs may or may not help in meeting these commitments, and whatever help they may provide will be small and not immediate relative to the overall need for large-scale and rapid decarbonization, which will require $2 trillion in combined private and public investment.  Because this $35 billion in new funding cannot meaningfully help the Biden Administration begin to meet its decarbonization goals, it means the Biden Administration will need to seek much larger appropriations for investments in clean energy technologies, likely an amount of at least several hundred billions of dollars to meet its stated goals.

What else is needed to meet Biden’s Climate Goals
The Clean Energy and Sustainability Accelerator (The Accelerator) is the flexible, purpose-built, independent and non-partisan non-profit that the Biden Administration needs to make meaningful progress towards its climate and economic objectives. With a $100B up-front capitalization from Congress, the Accelerator will create 4M jobs within four years. It is heavily deployment-focused, investing across sectors to specifically achieve deep market penetration. And, because it is an independent non-profit, it is uniquely capable of targeting its investment, directly and through state green bank partners, into disadvantaged communities.

In fact, 40% of investment will be required to flow to those communities to deliver jobs, savings, cleaner air, and new businesses. And because that $100B will create nearly half a trillion in total investment due to private sector-leverage, the policy has incredible bang-for-the buck when it comes to meeting the Biden Administration’s $2T investment target.

Here are specific examples of what the Accelerator will do:

• Investments in grid modernization and resilience are desperately needed to enable an electricity system with variable, distributed resources, storage and vehicle-to-grid power flows. And that grid must be able to withstand the growing impacts of climate change. No funding was provided in the Energy Act of 2020 to support such investments. And utilities can no longer be relied upon to be the sole drivers of this investment. In 2018, regulators approved only $2 billion of the $14 billion in grid modernization investments requested by utilities. Utilities are in a bind – they know that these investments are essential to the future of their businesses AND to meeting their social obligation of providing reliable service. But regulators won’t allow them to rate base the investments seen as slightly beyond what is immediately justified. This gap is precisely what the Accelerator will address through investments in transmission and grid resilience measures.
• Any pathway to broad and rapid decarbonization requires rapid electrification of both transportation and building energy use. Electrify America found that households across the country will save money by converting their home and vehicle energy use to electricity, and that the only barrier is the trillions of dollars of upfront capital needed, which is then repaid over time. There is a small pot of money available for R&D related to electric vehicles in the Energy Act of 2020l, but nothing for deployment, nothing for charging infrastructure, and nothing at all for electrification. This is a second area that Accelerator will focus on and invest in. The Accelerator will help create the hundreds of new businesses necessary to serve this market.
• And last but not least, there is no funding at all in the Energy Act of 2020 to support low and moderate-income, disadvantaged or communities of color, or to support a just transition for communities directly harmed by the transition. In fact, if anything the bill doubles down on the existing inequalities with the extension of the investment tax credit. The Accelerator is required to invest 40% of its capital in these communities. This means it will provide capital to start new businesses to serve those communities. It will provide a combination of grants and low cost financing to electrify low and moderate-income households first, not last, in this country. It will help communities prepare for the impacts of climate change with smart surfaces and distributed micro-grids (combining distributed generation with storage). None of this is possible under existing programs or through the Energy Act.

Investment beginning as soon as possible through the Accelerator is how the Biden Administration can achieve its climate and economic commitments. There are more than two dozen specific investment examples, showing precisely how and where the Accelerator will invest to crowd-in private capital investment or otherwise make investments that provide large-scale climate, public health or economic benefits to communities that are economically disadvantaged or at the front-line of the transition from dirty to clean energy (e.g., communities dependent on coal-fired generation for jobs and local tax revenues) . Not one of these investment or programmatic structures can be implemented with an existing federal clean energy program.

Permanent Limitations of the LPO
There is new hope that the Title XVII loan guarantee programs can be revived to play a similar role with regards to innovative, pre-commercial technologies (e.g., advanced batteries, advanced vehicle manufacturing, electrification of industrial combustion processes, CCS, small modular nuclear generation). And there are genuinely worthy and important reforms to the Title XVII loan guarantee programs included in the Energy Act of 2020, including the removal or reduction of some of the applicant fees and moving the obligation of an applicant to pay for DOE’s costs to process an application to financial close. But make no mistake – there is nothing in the Energy Act, Title XVII and DOE’s regulations and practice thereunder that indicates the Title XVII loan guarantee programs can do much, if any, of what the Accelerator is designed to do.

The Title XVII loan guarantee programs are not sitting on $40 billion of cash, as has been reported. DOE has $40 billion in loan guarantee authority, which either Congress will have to appropriate additional funds or a borrower will have to pay in credit subsidy cost to unlock. Only 10% of that loan guarantee authority is for the deployment of renewable energy system and energy efficiency measures – the rest is for nuclear power, advanced fossil fuels and advanced vehicle manufacturing.

The Title XVII loan guarantee programs are limited to providing loan guarantees for pre-commercial technologies – i.e. they cannot be used to spur the broad and rapid deployment of proven commercial technologies. These programs have never provided a loan guarantee for distributed generation or microgrids. DOE has no legal ability to use these programs to direct its financing support to targeted communities. And it hasn’t provided a loan guarantee for a renewable energy project in almost a decade (and the last project approved for a loan guarantee was in 2016 for a CCS project, and this project has yet to reach financial close).

Let’s hope the Title XVII loan guarantee programs can be fixed to do what they are meant to do – spur the development of innovative, pre-commercial technologies. But let’s also hope the new administration does not put misplaced or oversized confidence in the ability of these programs to help meet its climate goals.

There is much that is right and necessary with more federal funding support for basic clean energy R&D and financing support for innovative, pre-commercial clean energy technologies. And there is much that is right and necessary with trying to make the Title XVII loan guarantee programs more accessible and customer-friendly. But we cannot pretend and would be greatly mistaken to presume that these types of policies and programs will actually create the just and rapid clean energy transformation that President-Elect Biden was elected to undertake.

For that, the new administration needs the Accelerator.

By Coalition for Green Capital

Maine’s ambitious plan for transitioning to a clean-energy economy can’t happen without lots of money, funding that’s in short supply during a state budget crunch and pandemic-caused economic downturn.

Some lawmakers and business people say a proposed new source of capital could help: a state-chartered “green bank.”

Green bank advocates met Monday for a Zoom webinar sponsored by the Coalition for Green Capital, a nonprofit that seeks to drive investment in clean energy.

Speakers on the call included Henry Beck, Maine’s state treasurer, who said his office receives calls from investors and rating agencies asking about the state’s commitment to fighting climate change. Also present was Catherine Culley, who builds energy-efficient homes and is a principal at Redfern Properties in Portland, as well as David Gibson, a solar design specialist at ReVision Energy, and Rep. Stanley Paige Zeigler, D-Montville, who has proposed legislation around a clean energy fund.

Green banks leverage public funds to attract private investment. They typically help raise money to combat the impacts of climate change, with measures such as building resilient roads and bridges, making homes more energy efficient and less dependent on fossil fuels, and subsidizing electric transportation.

There are 15 green banks in the country today that have steered more than $5 billion into clean energy projects since 2010, when Connecticut created the first one. Efforts to establish a green bank using state bonds haven’t gained traction in the Maine Legislature, although a new bill is being readied for the upcoming session.

Read the full story. 

By Coalition for Green Capital

FOR IMMEDIATE RELEASE
Dec. 4, 2020 
press@cgcstagingsite.wpengine.com

REPORT: MINN. GREEN BANK WOULD CREATE 15K JOBS BY LOWERING ENERGY COSTS FOR HOMEOWNERS, FARMERS 

Unemployment in state continues to be high 

Would make solar power competitive with other sources

WASHINGTON—The creation of a green bank in Minnesota to help finance clean power projects would create more than 15,000 jobs, lower farm operating costs, reduce energy bills for low-income households and accelerate electric bus adoption, according to a new report. 

The analysis—conducted by the Coalition for Green Capital with support from the McKnight Foundation—found that current capital markets and financing tools do not provide adequate support for these types of projects.

“Green banks have been proven to put people to work while beating climate change. Minnesota has a huge opportunity to create thousands of jobs as it looks to get its economy going again after the pandemic,”said Jeff Schub, executive director of the Coalition for Green Capital. 

Green banks leverage public funds to stimulate private capital investments in clean, renewable energy and emission reduction projects. The funds are able to be reused since they are paid back. 

“We need to respond aggressively to climate change to give a livable planet to our children and grandchildren. Financing green projects is a primary obstacle in this work,” said State Rep. Todd Lippert. “I’m excited about the possibility for a Green Bank in Minnesota because this financing will allow us to establish more projects more quickly across the state, helping us meet our emissions goals.”

“Expanding access to low-cost capital would directly expand the capacity of under-resourced communities to stimulate energy efficiency and renewable energy projects,” said Chris Duffrin, president of Center for Energy and Environment (CEE), which in partnership with Minnesota’s state and local governments provides loans to residents and small businesses for energy efficiency, solar, and building improvements. “We’ve done well so far to tap into low-cost, accessible pots of capital, but in the next decade communities will need to push harder for deeper energy efficiency and carbon reduction. To meet the challenge and scale up building improvements, we will need new sources of capital to untap.” 

This report provides a gap analysis of the current state of clean energy finance in Minnesota and presents the role a green bank could play in bridging those gaps to expand clean energy development across the state. Specifically: 

• Finance energy efficiency and renewable energy projects on farms. The USDA reports that at least 15 percent of farm production costs come from energy. 

• Reduce energy costs for low-to-moderate income households: Finance energy efficiency and solar adoption for individuals who need the savings the most. 
• Accelerate adoption of electric buses: Transportation now accounts for the largest share of emission. Providing financing from a green bank will make electric bus adoption in cities more affordable. 

Prior to the COVID-19 pandemic, Minnesota was behind on its climate goals and with state-wide shut downs, it is unlikely to be on track after it has recovered.

Throughout the spring of 2020, the Coalition for Green Capital (CGC) met with over 35 stakeholders including developers, financiers, and clean energy experts in Minnesota to discuss gaps that prevent the state from realizing its full clean energy and energy efficiency potential.

Since March, there have been 782,000 filings for unemployment in Minnesota. Out of the 782,000 people who have filed for unemployment in Minnesota, approximately 12% are within the clean energy workforce.

At the federal level, the U.S. twice passed funding for a Clean Energy Accelerator that would help fund state green banks like the one outlined in today’s report. President-elect Joe Biden included the Accelerator in his climate plan and Vice-President Elect Kamala Harris backed the Senate effort. 

Green banks currently exist in over 14 cities and states across the country and have supported nearly $4 billion in investment. View a list of projects that have been supported by green banks.

Read the full report. 

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By Coalition for Green Capital

With elections concluded, policymakers can look forward and refocus on laying the groundwork for policy solutions to improve lives and tackle big challenges. Obviously, the top priority of Gov. Janet Mills and the Legislature remains a successful public health and economic recovery response to the COVID-19 pandemic. As this work continues, I also urge policymakers and state government to position ourselves for enhanced and more centralized strategies to finance renewable energy and its high-paying jobs, provide opportunities for consumers to save money and energy, and fund all other climate mitigation efforts.

Climate change poses a significant risk to Maine’s economy and financial position. Within the lobster and fishing economy alone, “Some $600 million in annual revenue from fisheries and aquaculture are also at risk from warming and acidifying ocean waters,” according to a draft report from the Maine Climate Council released in November.  Further, “Changing climate conditions create significant stress in Maine’s forests, which cover 89% of the state and supports an important forest industry sector that has $8-10 billion in direct economic impact.”

We now finally see leadership at the federal level on combating climate change. President-elect Joe Biden’s Clean Energy Jobs Plan calls for “developing innovative financing mechanisms that leverage private sector dollars to maximize investment in the clean energy revolution.” In the past six months, the House has passed legislation calling for national green bank known as the Clean Energy and Sustainability Accelerator that would provide $20 billion in funding to state and local green banks or equivalent entities across the country. Vice President-elect Kamala Harris co-sponsored partner legislation in the Senate.

For the last decade, more than a dozen states have experimented and perfected standalone green banks with impressive results, even with small amounts of funding. Here’s how a green bank works: The bank receives seed money that it then uses to leverage funding from the private sector, usually $2 in private money for every public dollar. This concept should not be confused with frequent proposals made in Maine to start a so-called state bank that is seeded with the state’s cash pool. Instead, seed money could be a mix of state funds, private investments, and most realistically, funds made available by the incoming Biden administration.

These combined funds are loaned to renewable power, building efficiency, grid infrastructure like transmission, industrial decarbonization, clean transportation, reforestation and climate-resilient infrastructure. Because the dollars are repaid over time, they can be recycled to make additional investments in the future.

Maine is not Connecticut, but our New England neighbor’s experience with a green bank is illustrative. Connecticut established a green bank in 2011. Since then, the green bank has used $260 million in public funds to generate $1.68 billion in overall investment in the state’s clean energy economy.

There may not be a need to reinvent the wheel. For decades, the Finance Authority of Maine has been supporting Maine businesses and ventures that need credit enhancements to grow and retain payroll and operations. The Maine State Housing Authority provides weatherization services and Maine people have long utilized funding opportunities from Efficiency Maine. These entities can all play a role and benefit from possibly incoming federal dollars.

Maine people pay federal income taxes, and Maine routinely prepares to accept and then utilizes federal dollars for health care, public safety and transportation. This situation should be no different.

At the very least, Maine’s business community and state government should complete an accounting of lending and investment needs and potential in our local green industries.

Fortunately, advocates in the State Legislature stand ready, and much work has been done by the Governor’s Climate Council. Rep. Stanley Paige Zeigler of Montville previously introduced ambitious legislation for a standalone green bank. Rep. Victoria Morales of Portland has led community efforts in her community and Portland and this session, Senator-elect Anne Carney of Cape Elizabeth will introduce legislation to improve green financing for homeowners, small landlords and small businesses.

Fighting COVID-19 and climate change and improving our economic position are all daunting challenges. We must be thoughtful and brave. Maine people, businesses and policymakers simply need to rise to the occasion.

Knowing Maine and its people, I know it is possible.

Henry E.M. Beck is Maine’s state treasurer.

By Jeffrey Schub

The jobs situation in America remains grim. This week saw a rise in the number of initial claims for jobless benefits, just as the virus is surging. And the number of “long-term” unemployed ticked up over 3 million. There are still 10 million fewer jobs prior to the pandemic. And the true number of those in need of work is far higher, with approximately 20 million collecting unemployment, and millions more out of the labor force entirely.

The measures put in place by Congress back in the spring have proven woefully inadequate to address the situation. One-off checks to families were spent long ago. PPP loans made to businesses in the hopes they kept employees on payroll were not large enough to sustain many. Bailouts to large corporations like airlines only delayed massive layoffs. And the Fed’s liquidity programs for mid-sized businesses were never used in the first place.

The strategy of putting the economy “into the economic equivalent of a medically induced coma” seemed sensible back in the spring. But this has lasted far longer than those short-term measures were designed for. Realistically we are not close to a return to normal, so we have to consider how to put people back to work safely so families can sustain themselves.

There are workers who cannot and should not work until there is vaccination due to health risks. This is where new, but sustained, relief spending is needed. But for others, we need genuine job-creating stimulus to put people back to work where it is possible to do so safely. The prior jobs in tourism, dining, and travel simply don’t exist anymore, though. So jobs in new sectors have to be created.

It turns out construction and clean energy are ideal places to put Americans back to work. Job creation in the construction industry writ large has been steady throughout the year, adding nearly 800,000 jobs back in the last 6 months. And even without a shred of federal support, nearly 200,000 clean energy jobs have been created in the last 5 months.

This is part of a larger global trend. Global renewable electricity installations will hit record levels in 2020. Ninety percent of all newly installed power generation capacity in the world will be renewable this year.

How is this possible during Covid? It turns out that outdoor construction work is relatively safe during the pandemic. And office buildings sit empty across the country, creating an ideal opportunity for safe building upgrades for efficiency and clean energy. And in OSHA’s categorization of risky tasks per occupation, it deems no construction-related tasks have a “very high” risk of Covid.

This all matches perfectly with the cornerstone pledge of President-Elect Biden’s campaign. Perhaps his most salient policy commitment was to invest federal funds in the construction of clean energy infrastructure to create jobs.

The Clean Energy Accelerator is the critical, flexible tool that Congress and President-Elect Biden must adopt to take advantage of this job-creating opportunity. The formation of this national green bank would create millions of jobs, mobilize private investment, create small businesses, and drive targeted investment to frontline and disadvantaged communities. The Accelerator has passed the House 2x this year, and is endorsed and co-sponsored by VP-Elect Harris.

Flexibility is key. The Accelerator can direct its investments into specific sectors, project-types and geographies to create jobs where and when its possible. The Fed’s liquidity programs are a perfect example of what happens when Congress appropriates hundreds of billions of dollars to a static program that misses the mark because the economic situation is fluid. So flexibility is essential. And because the Accelerator leverages 3 private dollars for each public one, job creation is also multiplied by 3x.

It’s no longer viable for federal spending to focus purely on pandemic disaster relief. This has gone on too long to ignore the task of job creation where it is safe and viable to do so. Nothing fits this need than construction of clean energy infrastructure, and no policy is more fit-for-purpose than the Accelerator.

By Coalition for Green Capital

The Clean Energy Accelerator, as envisioned in legislation introduced earlier this year and late last year, pairs each public dollar with multiple private dollars to expand clean energy’s reach in the US.

NOVEMBER 11, 2020 JEAN HAGGERTY

The likelihood that a federal Clean Energy Accelerator will be introduced by the Biden administration as a stimulus solution is growing. The solar and storage industries should be paying attention because the arrival of this type of financing mechanism could provide a massive boost.

Ushering in a Clean Energy Accelerator through the infrastructure bill, which is likely to arrive in January, also would set the incoming administration on a path towards meeting one of its key goals – achieving a carbon pollution-free power sector by 2035.

“A [Clean Energy Accelerator] could be a massive stimulus for the solar industry. If you do some rough back of the envelope math that means that solar and wind are going to have to grow from a 12% market share to a 75% market share in 15 years,” said Jeffrey Schub, executive director of the Coalition for Green Capital, a nonprofit that incubates and supports local green banks.
In addition to accelerating financing, green banks can help create jobs, build sustainable affordable housing, lower energy costs and adapt communities to withstand impacts from climate change.

Clean Energy Accelerator
A Clean Energy Accelerator lines up with what the Biden administration is trying to achieve – job creation, reduced emissions and equity, Schub said, pointing out that economic recovery, racial justice and climate change are three of the four topics highlighted on the Biden/Harris transition website. Confronting the Covid-19 pandemic is the incoming administration’s other top priority.

In its World Energy Outlook, released last month, the International Energy Association noted that solar PV is now consistently cheaper than new coal- or gas-fired power plants in most countries and that solar projects now offer some of the lowest cost electricity ever seen.

“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” Dr. Fatih Birol, the International Energy Association’s executive director said. “[And] if governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge,” she added.

According to Schub, from a purely practical point of view, the Clean Energy Accelerator is a tool for dispatching aid to small businesses that can benefit from a transition to clean energy. House and Senate Republicans might be less likely to resist the idea because of its jobs and small business focus, he noted.

The Clean Energy Accelerator, as envisioned in legislation introduced earlier this year and late last year, pairs each public dollar with multiple private dollars to expand clean energy’s reach in the US.

Green banks
Using this model, a state-chartered green bank could receive federal dollars and pair them with private capital to fund state and local initiatives that involve supporting renewable power, building efficiency, grid infrastructure, industrial decarbonization, clean transportation, climate-resilient infrastructure, etc… Because the public money invested is repaid over time, it can be redeployed.

“The leverage piece and running through non-governmental non-profit is important, but jobs and businesses are number one [priority],” Schub said.

Currently, 15 state and local green banks exist in the U.S. and about a dozen other states and cities are actively exploring launching one.

Against this backdrop, the Green Finance Institute, the Natural Resources Defense Council (NRDC) and the Rocky Mountain Institute are publishing a State of Green Banks Report later this month. Through the report, which will include a review of green banks worldwide, the partners aim to inform the development of a Green Bank Design Platform that they hope entities will be able to use to establish green banks.

“As an organization, we are working furiously right now to try to engage [state and local entities] to get them ready,” Schub said. It would be unacceptable if states that already have active green banks, like Connecticut, are ready to go and receive Clean Energy Accelerator money, while other state and local entities are not, he added.

Earlier this year, nearly 100 organizations voiced support for the Clean Energy Jobs Fund, which included a Clean Energy Accelerator in both its House and Senate versions. Letters of support for the Accelerator came from state green banks, start-ups, clean tech investors, utilities, energy industry trade groups, including the Solar Energy Industries Association and Energy Storage Association, and several environmental organizations, including the NRDC, the Sierra Club, Environmental Defense Fund, the Union of Concerned Scientists and Appalachian Voices.

ClimateWorks Foundation is providing the funding for the Green Bank Design Platform’s development and for the partners’ green banks review.