Those of you have met Sarah or have read her previous blogs know she get pretty excited about green banks. Well, this week Senators Markey, Van Hollen and Schatz introduced an game-changing bill to turbo charge the green bank model. And, now Ann is getting excited about green banks, too.
The legislation would create a National Climate Bank to leverage public and private funds to invest in clean technologies and infrastructure. The Bank would provide financing to eligible regional, state and local green banks, make investments directly into projects that reduce carbon emission, and provide technical assistance for the creation of new green banks.
Green banks in the United States have been state and local institutions using public money to scale and speed up private investment in clean technologies, largely focused on the energy sector. According to a new report released by the Green Bank Consortium at an event last week, US green banks have mobilized $3.67 billion in clean energy investment through 2018, including $3.4 of private investment for every $1 of public money. But, to address the global climate crisis we need to invest many billions more. At the same event both Senator Markey and Senator Van Hollen spoke about the essential step of including private investment as well as the need for federal leadership to reach the necessary scale in time: enter the new National Climate Bank Act of 2019.
This bill takes many of the exciting victories of existing green banks from the energy sector and expands them to include our country’s largest sources of emissions, including transportation and agriculture, and new solutions like reforestation, building electrification, and financing coal plant closures. Federal capital will allow existing local green banks to scale up their successes and make investments in innovative technologies that are too risky for most private investors. And, as Senator Markey pointed out, do it quickly and cost effectively.
Additionally important is the focus on low-income, minority and distressed neighborhoods to, “ensure that projects provide access to low- carbon infrastructure, including clean power, clean water, and reliable, high-quality transportation, at affordable rates,” language directly from the bill. Making sure that the new clean economy includes underserved communities, creating financing to allow families from all segments of the US economy to access the benefits of cleaner technologies without breaking the bank.
The National Climate Bank will prioritize and incentivize investments in projects that significantly reduce carbon emissions across the entire economy. That means solutions like transit-oriented-development (TOD), including equitable, dense housing near reliable trains and buses will be eligible for green bank tools that can help drive down the cost of financing and increase the length of loans; and, helping low-income families and renters access the benefits of solar, even if they don’t own a roof.
With transportation as the highest emitting sector at 29% of total US emissions, and cars and light-duty trucks making up 59% of transportation emissions, we need to find solutions that decrease vehicle trips, such as TOD. Research has shown that preserving or creating affordable housing near transit can reduce driving dramatically. Reductions can be 25-30% for families living within 1/2 mile of transit, and almost 50% when they are a 1/4 mile from transit. These kinds of projects haven’t typically qualified for existing federal transportation loan programs like TIFIA or RRIF because they don’t fit traditional definitions of transit projects.
Helping underserved markets access rooftop solar and energy efficiency retrofits can reduce power sector emissions; it will also reduce the onerous energy burden, energy costs relative to annual income, for low-income homeowners. Existing green banks in Connecticut and New York have created programs to help reduce hurdles like low credit scores or for renters that do not own a roof to put solar on. Right now, not all Americans have access to programs like these, but the new National Climate Bank could change that.
All this is to say, we are really excited about this National Climate Bank bill. If passed, this bank would be a catalyst for exciting, innovative climate solutions. It would build up local climate leadership and implement equitable solutions around the country. And, it could leverage unprecedented trillions of private dollars and expertise. All of that combined would mean an accelerated transition to the clean, equitable economy our country and the world needs.