New Jersey’s recently announced plan for allocating revenues from the Regional Greenhouse Gas Initiative (RGGI) places a state green bank front and center. The plan allocates funding across four initiatives, including the creation of a New Jersey Green Bank to “help drive improved energy efficiency and renewable energy uses in the industrial, commercial and institutional sectors.” There are considerable gains to be made. The 2018 Statewide Greenhouse Gas Emissions Inventory calculated that greenhouse gas emissions from space heating and other combustion sources in the commercial and industrial sectors alone were nearly equal to emissions from the electricity generation sector.
An estimated $80 million in annual RGGI funding is available, with 15% (or $12 million) allocated for the Green Bank. This meaningful commitment would enable a newly-formed green bank to achieve significant clean energy outcomes and spur economic development in the state. In committing RGGI funds as a capital source for a new green bank, New Jersey is joining the model of its neighbors. Both the Connecticut Green Bank and the New York Green Bank have been given RGGI funding in the past.
The RGGI plan notes that a “substantial focus” of the green bank will be on providing financing to historically underserved populations and projects that “create high-quality jobs for New Jerseyans seeking to benefit from the State’s clean energy transition.” Green banks in other states have been effective at achieving both of these outcomes through their innovative financing programs. Those lessons are more relevant now than ever before as the full impact of the Covid-19 crisis comes into focus. A million or more New Jerseyans may be out of work, many from industries that may not soon bounce back. The green bank can provide New Jerseyans with the new, better jobs of the future with good pay in safe condition. Construction of the state’s clean power platform requires people of all skills. Sales, customer service, marketing, engineering, contracting and other skills are needed, and the green bank can help connect these skill sets to projects.
The announcement of a funding mechanism builds on the steady progress that has been made towards realizing the green bank. As CGC previously wrote, the green bank concept has appeared across multiple reports and plans put forward by the state. Steps have already been taken to operationalize those plans. In March, the New Jersey Economic Development Authority (NJEDA) issued a Request for Information (RFI) seeking input from a wide range of parties to inform the design and formation of a new green financing mechanism. CGC has been active in the green bank conversation in New Jersey from the beginning, starting with a 2018 analysis of the clean energy finance opportunity in New Jersey produced by Environmental Defense Fund and CGC.
CGC applauds this next step in solidifying the green bank plan, and looks forward to continuing to support stakeholders in the state. Laying the green bank’s foundation now also puts New Jersey in prime position to receive funds from a proposed National Climate Bank, that would provide capital to both existing and new green banks.