A National Climate Bank can catalyze investment in clean energy solutions that lower energy costs for all Americans, as part of comprehensive and socially-just climate policy.
Core Elements of a
National Climate Bank
A Climate Bank created by the federal government would be an independent, nonprofit insitution using public funds and market-based tools to finance the clean energy transition.
It would be empowered to prioritize investments that benefit underserved and low-income communities, bringing them the jobs and savings associated with clean energy.
It would use financial tools and expertise to draw in private investment, multiplying the institution's overall impact in terms of GHG emissions reductions per public dollar invested.
How will it work?
Green banks use financial tools to address barriers that prevent private capital providers from fully investing in the target market opportunities. They seek to expand markets and create new opportunities for private investment.
If private investors see an investment as risky (perhaps because it is based on an unfamiliar technology, or because it serves a customer base seen as a credit risk) they may be unwilling to offer capital at rates that are feasible for a project to move forward. Green banks can offer credit enhancements, such as loan loss reserves or loan guarantees, that help de-risk investments for private investors.
Small and geographically dispersed projects like residential or small business energy efficiency are often not cost-effective for private investors to underwrite. Green banks can bundle together and projects that are not cost-effective to underwrite on their own. Pooling these loans diversifies risk and achieves scale, making them far more attractive to lenders.
Transactions that have never been done before are more labor-intensive than typical standardized transactions. Green Banks can put in the technical legwork to develop frameworks for new types of transactions. As the new transaction types become more common, processes become more standardized and friction is reduced.
Ultimately, the use of these financial tools enables much greater overall investment than would have otherwise taken place. A green bank's investment impact can be many times that of its initial capitalization funding.
Green Bank or Climate Bank?
"Green bank" refers to a policy framework, but actual green banks can have different names. On the state level, institutions like the Rhode Island Infrastructure Bank and the Florida Solar and Energy Loan Fund are typically classified as green banks despite their name not including those words. The National Climate Bank Act of 2019 creates a new federal green bank in the form of the National Climate Bank.
- National Law Review: House Committee Releases Framework for Comprehensive Climate Legislation
- Forbes: Democrats’ Green New Deal Becomes The CLEAN Future Act
- The Hill: Democrats outline sweeping legislation to make U.S. carbon neutral by 2050
- CleanTechnica: Why you should care about the National Climate Bank
- Utility Dive: House green bank bill aims to leverage $35B in government funding into $1T in private investment
- Smart Cities Dive: House Dems introduce legislation to create National Climate Bank
- E&E News: Dems propose bank to finance decarbonization
- Inside EPA: Dingell seeks to establish National Climate Bank
- PV Magazine: National Climate Bank initiative could be a boon for solar
- Utility Dive: Green banks and green bonds are bringing billions to utilities for the energy transition
- Energy News Network: Northeast green banks inspire national proposal for clean energy financing
- Morning Consult: The Time Is Right for Green Banking
- American Bar Association: The Cavalry Arrives Behind the Green New Deal
- Smart Cities Dive: National Climate Bank Could Mobilize $1T, Report Finds
- The Hill: Democratic Candidates are Building Momentum for a National Climate Bank
- NRDC: Introduction to the National Climate Bank
- PV Magazine: The Case for a US Federal Green Bank
- Federal Financing via Independent Institutions
- Supporting State and Local Green Banks
- Investing Across Sectors to Reduce Emissions
- Mobilizing $1 Trillion for Climate Action
- Guide to 2020 Candidates' Climate Plans
- Legislative Summary of the National Climate Bank Act
- CGC Slide Deck: The National Climate Bank
Green Banks in the US
Still Have More Questions?
- Continue to visit this site to learn more about progress towards a federal green bank, get policy updates, and join the green bank movement.
- Visit the Coalition for Green Capital to learn more about the principles behind green banks and access in-depth resources.
- Visit the American Green Bank Consortium to learn more about what state and local green banks are doing today.
- Reach out and contact us for even more information!