Governor Cuomo's New York Green Bank: a Triple Crown for the Clean Energy Economy
Today, in his State of the State address, Governor Cuomo announced that New York State will be forming a Green Bank with $1 billion of initial capital. The bank will be spearheaded by Richard Kauffman, a veteran of Washington, Wall Street and the clean tech world who has unparalleled experience, vision and credibility in this area. This is a coup and, more broadly, the bank represents a major step forward in expanding New York’s clean energy economy and decreasing global warming emissions. It solidifies New York’s national leadership position in clean energy.
NRDC stands ready to assist the Governor’s office, NYSERDA, other state agencies, banks, investors and other stakeholders to make the bank a reality and a success.
Simply put, the New York Green Bank (I’ll call it the “NYGB”) will use its funds to advance the clean energy economy, investing alongside private investors to make low cost financing available for renewable energy and energy efficiency technologies.
The NYGB will be the second of its kind in the United States, after that of neighboring Connecticut, which pioneered the concept in 2011. But because of the size of the New York market and New York’s outsized influence as a state, the Empire State’s green bank could stimulate a larger trend, transforming the national clean energy landscape.
In the printed version of his speech, the Governor notes that, “While the effects of climate change are sufficient reason to go forward on this front, the added promise of uniquely beneficial job creation and a diminished reliance on external energy sources make the pursuit of a clean economy a critically important goal.”
With this statement, the Governor perfectly articulates the triple crown of improved energy, economy and environment that the Green Bank opportunity represents.
First, energy. As more clean energy technology gets deployed, it has been getting more cost competitive and efficient and will continue to do so. But there is still a cost gap with fossil energy technologies because they do not pay the costs of their carbon and other pollution. Low cost financing further reduces the cost of clean energy technologies today, accelerating the process of closing that gap. And more clean energy means more energy security, i.e., less exposure to the price volatility and supply insecurity of fossil energy.
Second, environment. The Governor notes in his speech that in spite of the over $1 billion New York spends on subsidies for renewables and energy efficiency annually, its deployment goals aren’t being met. This means that climate change mitigation goals aren’t being met, either. The Governor presciently says in his speech that subsidies are important but not enough. When the NYGB makes low cost financing available to a project that is receiving a subsidy from one of New York’s existing programs, the size of the subsidy can be smaller. This allows New Yorkers to get more clean energy for the same dollar of subsidy, in a classic win-win. And since the NYGB will earn interest and fees and get the principal of any loans paid back, over time it can reinvest its funds into more clean energy projects at no additional cost to the public, and/or send the public dividends.
Third, economy. The Green Bank will increase activity in the clean tech sector in New York State. Increasing the availability of low cost financing means increasing the amount of clean energy projects and their related jobs and capital investments. The NYGB will act as a fulcrum for the maturation and transformation of the clean energy economy in New York State, helping to remove market barriers by collecting data on project performance, driving standardization of contracts and improving the flow of information to market participants. More efficiency and fewer transaction costs also mean more projects at a lower per unit cost.
We congratulate the Governor on his continued leadership and look forward to working with his team on this unprecedented opportunity.