Contributed Article by Paul Schuster
As the economy recovers from the COVID-19 pandemic, small businesses will be at the forefront of any economic recovery. And while the Biden Administration contemplates ways to support small businesses in their recovery, they should consider the opportunity to align these recovery efforts with the broader imperative of reducing the nation’s impact on climate change. With 30.7 million small businesses located in the U.S., any efforts toward reducing emissions are going to need to include this market.
The current administration has promoted a massive investment into climate change initiatives, including shifting the entire federal fleet to electric vehicles, accelerating research into battery technology and domestic production, and negotiating ambitious fuel economy standards. Harnessing this clean energy ambition to help small businesses emerge healthier from the pandemic should be a top priority.
Some efforts have already taken place. Included in the pandemic relief bill passed late in 2020 are extensions to the federal tax credits for solar and wind. In fact, the bill went further and introduced a new production tax credit for offshore wind. These efforts will help to continue the momentum around renewable energy and continue to drive down costs. Small businesses able to access clean energy tariffs and Power Purchase Agreements will find opportunities to shave costs from their electricity supply bills.
Future policy, though, needs to go further. About a month ago, Democrats in Congress introduced the Clean Energy and Sustainability Accelerator Act which would, among other thing, create a $100 billion financing institution to invest behind clean energy and decarbonization projects. This federal institution would assume the role of a National Green Bank and accelerate the country’s transition to cleaner energy.
Green investment banks have become a useful tool to mobilize private capital on behalf of environmental programs. States and other countries have harnessed the power of these organizations to address some of the major obstacles that keep clean energy from being equitably distributed across the economy. The green banks do this by providing loans, credit enhancement, or any number of other levers.
The Connecticut Green Bank, for instance, supports renewable energy and energy efficiency products for low and moderate income (LMI) households by providing a credit backstop. These LMI customers are then able to participate in clean energy projects from which they would have otherwise been excluded due to poor individual credit.