Energy efficiency saves money. But, as most sustainability practitioners know, there is the perennial challenge of justifying and securing the upfront capital often needed to implement efficiency projects. The green revolving fund (GRF) model is emerging as an effective solution. The model is increasingly common among higher education institutions and state governments, and it is gaining traction with healthcare facilities, municipalities and businesses.
To create a GRF, organizations typically seed it with their own capital, although they may seek outside money such as donations or grants. The fund then invests in sustainability projects within the organization’s operations that generate annual cost savings, a portion of which are repaid back into the fund to recoup the project cost. This creates a sustainable funding cycle in which savings from past projects support future projects while cutting environmental impacts over time.
To learn more, I recently spoke with Joe Indvik, climate and energy consultant at ICF International. Joe was a driving force in establishing Dartmouth College’s $1 million GRF as a student, and he now consults with clients to roll out the model in higher education, local government, healthcare and the private sector.
Georges Dyer: Tell me about your experience advocating for a green revolving fund at Dartmouth.
Joe Indvik: It started in a class aimed at developing practical sustainability solutions on campus. Students, faculty and staff had done some great work in identifying potential energy efficiency projects, but many had not yet come to fruition. We quickly discovered that ease of access to capital was a key barrier. This left many high-payback efficiency projects unfunded, despite the overall wealth of the college and the administration’s commitment to sustainability. The idea of setting aside a fund for these projects, and at the same time recapturing the savings so the fund could grow, made great business sense.
Dyer: Was it an easy sell? How did you go about pitching the idea?
Indvik: The idea was easier than expected to sell. We created a proposal and worked our way up through the administration, eventually to the CFO and SVP of facilities. We focused on building a business case that would be compelling even to those who were not as driven by the social and environmental benefits of efficiency projects.
Surprisingly, the CFO was the loudest voice encouraging us to give greater emphasis to non-financial side of the fund. He saw the benefits a GRF could have in bringing people together to make decisions about investments and in strengthening Dartmouth’s standing as a sustainability leader. We had proposed starting small with a fiscally conservative $10,000 fund, but it was the administrators who put forward the idea of a larger, more ambitious fund of $1 million.
Dyer: Did you encounter any challenges? How long did it take to set up the fund?
Indvik: The big challenge was determining how money would flow between accounts to support the fund. When we were working on this in 2010, there weren’t a lot of resources available to us. We felt like pioneers, and not always in a good way. Now there is a wealth of resources that others can benefit from.
Our proposal took a couple years to be fully implemented, but if we had known then what we know now and had access to today’s GRF resources, I think we could have cut that time in half or more.
Next page: Billion-dollar resources