Coalition for Green Capital

U.S. National Green Bank

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CGC Briefs Congressional Staffers on the National Climate Bank

Last week CGC was invited to Capitol Hill to brief the members of the Clean Energy and Technology Staff Association (CETSA) about the proposed National Climate Bank and the track record of success established by the green bank model.

CETSA is a bipartisan congressional staff organization dedicated to promoting the education and adoption of clean energy technologies. Executive Director Jeffrey Schub, American Green Bank Consortium Director Alex Kragie, DC Green Bank Program Manager Jay Wilson, and Chair of 38 North Solutions Katherine Hamilton all spoke at the well-attended event.

Below follows a lightly edited account of CGC Executive Director Jeffrey Schub’s remarks.

My name is Jeffrey Schub, I’m the Executive Director of the Coalition for Green Capital, or CGC. We are a 501c3 and the leading expert on Green Banks. For a decade we have worked with federal, state and local government, with clean energy market participants and now with national governments and development banks in emerging economies to form and operate Green Bank finance institutions that invest to win the war on climate.

Over the past decades, the global collective efforts to fight climate change – from tax credits and subsidies to technical innovation – have amounted to very little. 30 years ago, fossil fuels accounted for 81% of all global energy consumption. Today, fossil fuels still account for 81% of global energy consumption.

If time were not a factor, markets left to their devices would likely solve this problem. With the declining cost of renewable power generation and explosion of investment in electric vehicle technology, over the course of decades the long-lived fossil fuel-based infrastructure would be replaced by clean alternatives. But time does matter and we don’t have decades.

Recent estimates show that building a 100% clean power platform in the US will require $4.5 trillion of investment. Investment is needed to build and deploy technologies across many sectors from power to transportation to industry. And we need trillions with a T, not billions with a B. It is unlikely the public sector alone will put forward the capital, and it’s not the private sector’s job to solve this problem, though they clearly recognize there is money to be made. That means government must use limited public capital in ways that drive the necessary investment. AND it also must do so in ways that ensure consumers, especially those in emissions-heavy states, do not carry on their backs the cost of this transition. Equity, fairness and low cost to consumers are prerequisites, not “nice to haves.”

This is the job of Green Banks. Green Banks are mission driven institutions that use innovative financing to accelerate the transition to clean energy and fight climate change. They invest public capital into clean energy and emissions reductions projects, and do so using methods that ensure two vital outcomes:

  • That the price of clean energy delivered to the customer stays the same or lower than what is paid today, and
  • That private capital comes in alongside the Green Bank to co-invest in projects, opening up new profitable investment opportunity for private capital providers.

The Green Bank model is already proven in the US and around the world. 14 state and local Green Banks across the U.S. have already driven nearly $4 billion of GHG-reducing clean energy investment. And the majority of that capital is private – for every Green Bank dollar deployed, more than 3 dollars of private capital is leveraged. Globally, Green Banks have driven over $50 billion of total investment. My colleague Alex Kragie, the Director of the American Green Bank Consortium, will tell you more about the activity of Green Banks around the U.S. And my friend Jay Wilson from the DC government will tell you specifically about the new Green Bank just being launched right here in our capital.

Though the Green Bank activity in the U.S. is all at the state or local level, the Green Bank story began here in Congress in 2009. That year Representatives Van Hollen, Inslee and Dingell introduced Green Bank legislation, which became CEDA, the Clean Energy Deployment Administration. CEDA was passed as an amendment to the Waxman-Markey ACES cap-and-trade bill with a bipartisan 5-16 vote in E&C – I believe the only bipartisan amendment to that bill – and then passed the whole house. CEDA also passed with a 15-8 bipartisan vote out of the Senate ENR Committee. But because no cap and trade bill reached the Senate floor, no Green Bank was created. The federal government’s loss was the states’ gain, as the growth of Green Banks around the U.S. followed.

But the idea of a national Green Bank has been revived this year in earnest. Green Bank bills have been introduced with the leadership of the Connecticut delegation (the home of the first Green Bank) in 2014, 2016 and 2017. But the new legislative effort is broader, more ambitious and has more momentum. In July Senators Markey and Van Hollen continued their decade-long leadership by introducing the National Climate Bank Act of 2019. They were joined by Senators Blumenthal and Schatz, whose states both have Green Banks.

I’ll summarize the bill for you:

  • The Act creates the National Climate Bank as a nonpartisan, independent non-profit governed by a board of directors to act as the national green bank.
  • It is capitalized with $35 billion of federal funds, parsed out over 5 years.
  • Its objective is to maximize emissions reductions per public dollar deployed – the first program or institution of its kind to have such a mandate.
  • It is required to only finance projects that deliver clean energy to end users with the same or lower prices than today.
  • It also must prioritize investments in climate vulnerable communities, within includes environmental justice communities, front line communities, low-and-moderate income areas, and in communities negatively effected by the transition away from fossil-fuels.
  • It is authorized to directly finance projects across a range of sectors. This includes renewable power generation, clean transportation, transmission, storage, industrial decarbonization, building efficiency, forestry and agriculture.
  • In addition to directly financing projects, it can also invest through state and local Green Banks. It will do this in two ways. First it will provide technical assistance and start-up funds to create new Green Banks where they are desired and don’t already exist. And then it will provide capital to the new and existing Green Banks, as we have found they are better positioned to address markets like distributed generation and efficiency.
  • Last but not least, the Climate Bank is authorized to create a Cash for Carbon program which has two central components. The first is that the Bank can use its capital to accelerate the retirement of fossil fuel-intensive facilities like power plants and coal mines. And the second is the Bank can then deliver investment and technical assistance to those communities negatively impacted by the closures to ensure a just transition with job creation and training.

This bill is broader and larger than previous Green Bank bills, because that is what the situation calls for today. There is another Green Bank bill introduced by Senator Murphy and Representative Himes that contains a subset of the tools I’ve described.

The Climate Bank should be an integral part of a comprehensive policy approach to push the economy towards clean energy. Policies like carbon pricing, tax credits and renewable portfolio standards all factor into the economics of what makes a renewable energy project workable. And a Climate Bank meets those economic conditions wherever they are to avoid cost impacts on consumers, targeting affected communities with additional needs, and accelerating the speed of the clean energy transition as a whole by mobilizing private capital.