Green banks are not a new development but they may finally hit the mainstream thanks to a recent endorsement from New York Governor Andrew Cuomo. His proposition would create a one billion dollar “NY Green Bank,” a semi-autonomous entity that would provide funding to clean energy projects that otherwise may struggle to secure startup money. The bank would use public and private funds to create credit enhancements and low-interest loans for energy efficiency and renewable energy initiatives. Cuomo has expressed his support for the idea in part because it wouldn’t cost New York much money; they would be able to get most of the capital from already existing government funding. He acknowledged that New York is not close to their goal of 30 percent renewable energy by 2015 and stated that creating a green bank would be a good way to boost confidence in the clean energy sector. Wind and solar projects will likely see the biggest gains from the Green Bank initiative because of their relatively strong foothold in the market already.
The idea for green banks has already been tried on a smaller scale in the United States. The most recent example can be found in Connecticut, where the Clean Energy Finance and Investment Authority (CEFIA) was created in 2011. The goal of CEFIA is to help transition state clean energy programs away from grants, rebates and one time subsidies and towards low-cost financing. By partnering with Connecticut’s Department of Energy and other local energy companies, the state was able to repurpose $8.5 million in federal funding towards residential clean energy programs, including solar installations and energy efficiency measures.
The U.K. has also experimented with a green bank, creating the Green Investment Bank (GIB) in 2012. The GIB recently invested in a multitude of projects including offshore wind, waste energy, and landfill gas. Their current funding is up to 3 billion pounds (or about $4.8 billion), making it one of the largest clean energy investment campaigns ever created.
This trio of green investment projects shows that the economy is ready for Clean Energy Victory Bonds. CEVBs would serve essentially the same purpose; to develop the renewable energy market by facilitating strategic investments. But the added benefit of CEVBs is that it’s not just large companies that would see the benefits of a booming clean energy market. By selling clean energy bonds for smaller amounts, average citizens would be able to afford to invest in the same clean energy initiatives supported by the green banks. The global economy sorely needs investments in clean energy and green bank programs in Connecticut and the U.K. have shown that funding clean energy projects is a smart way to go.