U.S. Senators Chris Murphy (D-Conn.), Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), Sheldon Whitehouse (D-R.I.), and Ed Markey (D-Mass.) this week introduced the Green Bank Act of 2019. The bill would inject billions of dollars into the U.S. economy to accelerate clean energy deployment, grow clean energy businesses, and deliver affordable clean energy to all Americans. This bill provides a framework for a Congress that wants take a leadership role in the fight against climate change. There is growing consensus that the federal government must directly invest in the clean energy transition, and this bill shows how it can be done.
“Senator Murphy is drawing up a blueprint for winning the battle against climate change,” said Coalition for Green Capital CEO Reed Hundt. “That fight will establish American global leadership and create millions of jobs.”
The United States Green Bank (USGB) formed in this bill would deploy capital through the growing network of state and local Green Banks and related institutions. Those funds would be blended with private, philanthropic and local public funds to finance a range of clean energy, efficiency, and climate change mitigation and adaptation projects. The USGB would be capitalized with up to $50 billion and catalyze multiples of that using the proven Green Bank model.
The members of the global Green Bank Network and the American Green Bank Consortium have already shown that public investment in clean energy deployment drives greater total investment, job growth and lower energy costs.
“The Green Bank model of mobilizing private investment into clean energy and energy efficiency projects has proven successful in states, counties, and cities across the country,” said Bryan Garcia, President and CEO of the Connecticut Green Bank. “In Connecticut, we are seeing lower energy costs for families and businesses, more high-wage jobs, and a reduction in the emissions that cause climate change. Senator Murphy’s proposal to create a United States Green Bank would help replicate and amplify these positive outcomes nationwide.”
The bill creates a new USGB as a wholly owned corporation of the U.S. government, housed within Treasury. It would be capitalized through the issuance of federal Green Bonds. The USGB would then provide capital to qualifying state and local Green Banks, to finance a range of clean energy projects in partnership with private investors. This proposed USGB would not, itself, directly finance projects. Rather, much like the CDFI Fund in the Treasury, it would inject capital into a growing network of purpose-built, mission-oriented clean energy finance institutions around the country.
Green Banks across the US, from Hawaii to Rhode Island, have driven over $3.5 billion of total clean energy already. But all of them face the same constraint – how to expand when capital is in short supply from their local government partners. And many more Green Banks are in the pipeline. The Coalition for Green Capital is in discussion with elected officials across the country who want to implement Green Banks to finance clean energy in their communities, but all struggle to find the vital capital to get started. Under this bill, those leaders could create and designate their own Green Banks to be capitalized by the new USGB.
“The Colorado Clean Energy Fund was just announced by Governor Hickenlooper as the state’s Green Bank in December, and we’re already seeing huge demand for mission-driven Green Bank financing that outstrips our current capital,” said Paul Scharfenberger, Executive Director of the Colorado Clean Energy Fund. “Capital from the USGB would be instrumental in meeting that demand and bringing the benefits of clean energy to Coloradans across the state.”
By using the existing and growing network of market-based lending institutions, the legislation ensures that USGB financing serves local market needs and meet economic, energy and climate conditions specific to every state in the country. State and local Green Banks play a vital role in their clean energy economy, connecting projects and developers to capital. They help structure transactions that meet the parties’ needs and deliver cheaper energy to the end user.
“Michigan Saves commends Sen. Murphy for introducing the United States Green Bank Act of 2019, which, like us, seeks to create a clean energy landscape that everyone can benefit from,” said Mary Templeton, president and CEO of Michigan Saves, Michigan’s Green Bank.
The new legislation enters a growing national policy conversation in Washington and on the campaign trail around Green Banks and related investment structures. Heading into the 2020 election, there is growing recognition that proactive federal investment in the clean energy transition is now essential, and that tax credits and mandates alone will not address the climate crisis quickly enough. Unlike in past policy generations where federal investment was focused on R&D, or applied with strict limitations to commercial technologies, new approaches must be larger and deployment-focused. And, importantly, they must be designed to expand clean energy to all communities by delivering lower energy costs.
The New Consensus, architects of the Green New Deal, advocate for a federal Green Bank. Presidential candidates are calling for “a new dedicated finance authority” to channel $3 trillion of climate investment. At the same time, Green Bank action is spreading across the country at the state and local level, the laboratories of democracy. Legislation to form Green Banks has been introduced in Massachusetts and Maine. A new initiative is underway in Cuyahoga County Ohio to form a new county-level Green Bank. The Nevada Clean Energy Fund is about to commence operations. Local leaders from Hawaii to Florida are creating or expanding their Green Banks.
And existing Green Bank leaders are on the move, as well. Connecticut and New York Green Banks and the New York City Energy Efficiency Corporation (NYCEEC) are all seeking to serve new geographies to bring capital and best practices to new markets. The new American Green Bank Consortium was launched at the start of 2019 to support the growth and effectiveness of the Green Bank field. And the U.S. Climate Alliance, representing 24 state governors, launched a Green Bank initiative to support Green Bank formation in more states.
Today’s legislation marks the beginning of a multi-year effort to ensure that clear and defined Green Bank financing mechanisms are central to federal climate change investment plans. Click here to read CGC’s one-page framework for a federal Green Bank. To learn more about Senator Murphy’s legislation, read Senator Murphy’s statement and read CGC’s bill summary.