Green Bank Act gets a second chance
Green Bank Act gets a second chance
The Green Bank Act of 2014 has been introduced in the House and Senate again. In 2009, it passed in the House but not the Senate. Rep. Chris Van Hollen (D-Md.) has introduced it once more, this time with a companion Senate bill sponsored by Chris Murphy (D-Conn.).
It would create permanent, reliable, low-cost financing for clean energy and energy efficiency projects across the United States and provide seed funding for state Green Banks. President Obama included this in one of this budgets, and the United Kingdom has a national Green Investment Bank.
In the absence of federal legislation, four states since have launched Green Banks: Connecticut, New York — capitalized at $1 billion -— Vermont and Hawaii, and 10 others are actively considering it, recently attending the first Green Bank Academy.
The federal legislation is modeled on Connecticut's Green Bank, called the Clean Energy Finance and Investment Authority. Connecticut was the first state to pass a green bank bill.
Like state green banks, the federal one would focus on "financing gaps," that is, creditworthy projects that can't get to scale for lack of reasonably priced financing in private capital markets. Not only would it spur private sector investment, it would cut the cost of clean energy and accelerate deployment. It also would catalyze development of more state green banks by offering low-interest loans of up to $500 million.
- Mission: advance vital national objectives of achieving energy independence, abating climate change, reducing the delivered cost of clean energy to consumers, and stimulating job creation through the manufacture, construction and operation of credit-worthy clean energy and energy efficiency projects.
- Initially capitalized with $10 billion in Green Bonds issued by the Treasury, it could acquire $40 billion more in Green Bonds
- Fully paid for by eliminating a tax loophole that encourages companies to invest borrowed money abroad rather than in the U.S.
- Authorized to engage in a comprehensive range of financing support — loans, loan guarantees, debt securitization, insurance and other forms of risk management.
- Explicitly permitted to partner with, and be a source of low-cost capital for, the growing number of state clean energy financing entities being established across the U.S.
- Chartered for 20 years under independent governance by a Board of Directors comprised of five Cabinet Secretaries and six presidentially appointed members with relevant expertise.
- Robust spending safeguards and public disclosure requirements to ensure the highest levels of efficacy, accountability and transparency.
"Through public-private partnerships, Connecticut's Green Bank supports important clean energy efforts such as Property Assessed Clean Energy (PACE) loans to help businesses improve their energy efficiency and competitiveness; crowdsources residential solar projects, and clean energy initiatives for schools, YMCAs, Boys and Girls Clubs such as the Campus Efficiency Now (CEN) program. We have a great opportunity to share the innovative model that's working here in Connecticut to help people around the country improve our economy and our environment," says cosponsor Rep. Elizabeth Esty.
Connecticut's Green Bank has attracted private capital by leveraging public funds by 10 to 1, says Gov. Dannel Malloy. If it passed on the national level, Connecticut would receive up to $500 million of federal funds which could be leveraged to attract about $5 billion of private capital for our growing clean energy economy, he says.
The legislation is co-sponsored by: Jim Himes (D-Conn.); Elizabeth Esty (D-Conn.); Jim Langevin (D-R.I.); Louise Slaughter (D-N.Y.); Eleanor Holmes Norton (D-D.C.); Gerry Connolly (D-Va.); and Earl Blumenauer (D-Ore.).
New Jersey's energy resilience bank
Gov. Chris Christie wants to use $210 million in Sandy relief funds to set up the New Jersey Energy Resiliency Bank that would bolster infrastructure to withstand extreme weather events. Like the Green Bank, it would attract private investment by leveraging public funds.
Low-cost loans and other kinds of financing would be used to build-out on-site, distributed energy for critical facilities such as hospitals, schools, water and wastewater plants, communications and transportation. The application says energy sources would fuel cells, combined heat and power, and solar with energy storage to form microgrids.
More than 800 requests for energy resiliency projects have been submitted by 425 towns, counties and other government entities.
These initiatives long have been recommended and money has been allocated in the state's Clean Energy Fund. But Christie raided the fund to the tune of $1 billion to close the state budget.
Interestingly, to receive federal assistance the federal government now requires acknowledgment of climate change and sea level rise, Jeff Tittel, director of the New Jersey Sierra Club, told NJ Spotlight.
Top image of bank by Denis Roger via Shutterstock