By Ella Nilsen
In the United States, financing infrastructure and clean energy projects is often contingent on the quirks of partisan dealmaking in Congress. But there may be a better way.
A green bank model has been successful in several other countries. The United Kingdom’s green bank funded much of its offshore wind boom before the government sold it in 2017. (The current UK government is exploring bringing it back.) Through Australia’s green bank, the largest in the world, the country has invested in wind, solar, and hydrogen development in addition to financing the construction of energy-efficient homes.
A green bank isn’t government grants, and it’s not tax credits — which are the primary federal drivers of clean energy development in the United States. Instead, these banks typically take the form of either a government-owned or quasi-public bank that takes a set amount of government money to launch and then leverages private money to fund different projects. And like private banks, green banks expect to be paid back.
There’s no green bank at the federal level in the US, but a handful of states and cities — including Connecticut, New York, and Washington, DC — have been running them for years. In 2020, nearly $2 billion of green bank funds generated $7 billion of investment in projects around the country, without federal investment. But that could soon change. President Joe Biden included $27 billion for a “Clean Energy & Sustainability Accelerator” (a longer name for a green bank) in his $2.25 trillion American Jobs Plan. Biden’s proposal is modeled on a bill from Rep. Debbie Dingell (D-MI) and Sens. Ed Markey (D-MA) and Chris Van Hollen (D-MD) calling for $100 billion of federal investment over 10 years — projecting it could grow to over $800 billion by leveraging additional private funds.
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