Author: Gary Decker

The fight against climate change will need big investments in infrastructure like solar and wind farms, transmission grids and low-carbon industry. But it also needs many more small-scale investments for hundreds of millions of homes and businesses — and that kind of work is best done locally.

So say green-bank proponents like Reed Hundt, the former U.S. Federal Communications Commission chair under the Clinton administration. As co-founder and CEO of the Coalition for Green Capital, Hundt has spent the past 13 years working to expand the role of green banks, entities that use public funds to supply low-cost, long-term financing for projects that would otherwise struggle to get it.

Since the first green bank was launched in Connecticut in 2011, 23 have sprung up across 17 states, drawing in further private-sector lending for carbon-reducing projects such as rooftop solar, efficiency retrofits and electric heat-pump installations. Last week’s passage of the Inflation Reduction Act brought the next step in that campaign: the creation of a $27 billion Greenhouse Gas Reduction Fund, or in other words, a national green bank.

The fund will be set up by the U.S. Environmental Protection Agency as a stand-alone entity; it’s required to begin disbursing funds within 180 days of the law’s passage. It will primarily work through state and local green banks, directing $20 billion to fund ongoing lending, loan-loss reserves and other activities. Of that amount, $8 billion is set aside for low-income and disadvantaged communities. These communities will also be the focus of the fund’s remaining $7 billion in financial assistance available for states, municipalities and tribal governments.

Eli Hopson, CEO of the DC Green Bank in Washington, D.C. — the first city-based entity of its kind in the U.S. — added that green banks can lower the risk profile of relatively novel forms of lending for private-sector banks, as entities like NY Green Bank have done for community-solar projects and affordable-housing efficiency and electrification projects.

“For a commercial banker, these projects take as much work as a $10 million project or a $100 million project,” he said. ​“For them to learn the new market of solar credits, get comfortable with the technology — that’s a big investment of time and resources.”

Jessica Pitts, co-founder and principal of Flywheel Development, a Washington, D.C.–based sustainable development company that’s working with DC Green Bank on installing community solar in the Fairfax Village community, noted that ​“the challenge with financing is the relative newness of the solar market compared to other business ventures, like restaurants or apartment buildings, that traditional banks are comfortable with financing.”

“One of the roles the green bank has served in working with us is legitimizing solar as an asset class or business enterprise that can be financed and should be financed, that it’s viable and makes sense,” she said.

DC Green Bank is also working with PosiGen on its low-income solar programs, which have already landed enough customers to exhaust its existing $7 million loan facility, CEO Hopson said. While these loans are still in their early days, other green banks with longer track records ​“report back to us that they have fewer challenges with loans in low-income communities than they do with more mainline business projects they fund,” he said. One potential reason is that, while businesses may ​“use bankruptcy as a tool that can be deployed from time to time,” low-income community residents and groups ​“are just committed to making it work.”

DC Green Bank is seeking additional funding from the national green bank to double the size of its low-income solar program to $15 million, Hopson said. That’s one of a host of projects that are part of the Coalition for Green Capital’s $21 billion backlog estimate.

“From a national perspective, $27 billion invested in sustainable finance goes a long way toward drawing in the leverage from private institutions to say, ​‘This is a real commitment,’” he said.

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(Washington, D.C.) – Today, President Joseph R. Biden signed the historic Inflation Reduction Act. This legislation is a landmark achievement on the road to a cleaner, more equitable, and more prosperous future for all. The Act is a downpayment towards meeting the necessary emissions reductions to avoid the worst impacts of climate change. Included in the bill is $20 billion for the creation of a national green bank. The Environmental Protection Agency now has the ability to create a single non-profit national clean power financing institution charged with deploying public dollars and unlocking private investment to accelerate the development of a 21^st Century clean economy, supporting millions of good, green jobs, and providing a secure and livable environment for generations to come – a concept supported in the Congressional record by Rep. Debbie Dingell. In an important statement on who should benefit from this investment, of the $20 billion, 40% is earmarked for historically disadvantaged communities that have been left behind for decades. Lastly, an additional $7 billion will be made available through this Act for state, local, and tribal governments to provide even more financial support for low income and disadvantaged communities to benefit from clean energy and energy efficiency financing across the nation.

Eli Hopson, CEO of DC Green Bank, said of the Inflation Reduction Act, “We now have an incredible toolkit to accelerate our fight against climate change and surging climate impacts. The Inflation Reduction Act provides a strong financial foundation on which we can build a clean future for all. We call on the Environmental Protection Agency to swiftly deploy the capital to create a national green bank that will invest directly in clean energy, energy efficiency, and climate friendly projects, as well as deliver indirect financial support to existing state and local green banks and community serving financial institutions. We are in communities every day, building the relationships and green project pipelines necessary to scale impact and show what a clean future can mean for all. I applaud the efforts of climate Champions like Senators Chris Van Hollen and Ed Markey, Congresswoman Debbie Dingell, and the countless activists, environmental justice advocates and climate champions that have worked so hard to see this day come to fruition. If we are going to address climate change and give future generations a fighting chance, we can’t afford to waste any time before we get to work.”

Brandi Colander, Chair of the DC Green Bank Board of Directors, said of the groundbreaking legislation, “The Inflation Reduction Act is the single largest climate investment in our nation’s history. We have an opportunity to get it right this time – for too long our patterns of investment have not prioritized minority-, low-income, and frontline communities on the road to our climate, energy, and public health goals. A significant portion of these dollars must support these communities, and DC Green Bank – and green banks across the country – must now demonstrate that sustainability is for everyone and that we are all in this together. The Board of Directors is excited to continue supporting the Green Bank team as we chart a strategic path forward that maximizes the climate and equity impacts of these federal funds and elevates community stories that bring the promise of a clean and bright future to all.”

By Kazi Stastna, CBC News

You’ve heard of the gold rush? Get ready for the green rush. With close to $370 billion US ($475 billion Cdn) on the table, the race will soon be on south of the border to secure some of the clean-energy cash expected to flow out of the Inflation Reduction Act which Democrats hope to pass this coming week.

“Green banks” are one way that the Biden administration intends to distribute the billions of dollars that are meant to accelerate the adoption of solar, wind, geothermal and other forms of renewable energy.

They are quasi-public entities that aim to attract private investment to small-scale green energy projects, such as residential solar installations, energy-efficient building retrofits and various forms of electrification.

Part of what green banks say they bring to the table is staff with the technical know-how to assess the viability of projects. That was something that attracted the D.C. solar contractor Flywheel Development when it went through D.C. Green Bank to finance a solar roof on a rental building in a low-income neighbourhood in the city’s northwest.

“Their base level of knowledge is just so much higher,” said Flywheel’s co-founder Jessica Pitts. “Lenders that we’ve approached have had much less institutional knowledge in terms of the basics of how do you even fund solar … what are your sources of income and how does it even work?”

The project cost about $132,500, with the green bank kicking in $80,000, the company $26,000 and a city renewable energy program providing the rest. A private lender and the green bank will co-finance the long-term loan that enables Flywheel to oversee the project for the length of the 15-year contract it has with the city and the property owner.

The roof will produce an average of 25,000 kilowatt hours per year, enough to supply six households. In this case, the households it’s supplying are not actually in the building. The electricity generated is fed into the city’s grid and allocated to low- and moderate-income residents through a program called Solar for All that covers half their utility bill.

Flywheel makes its money back by selling the electricity to the city and through solar energy credits, which sell for about $365 to $435 per megawatt hour in D.C., where utilities have to generate 10 per cent of their power from local solar sources by 2041.

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