BrianAJackson / istock

How a National ‘Green Bank’ Could Help Advance Biden’s Climate Agenda

The concept has roots in other federal financing programs.

Addressing climate change is clearly a top priority for the Biden administration. Besides rejoining the Paris Climate Accords and directing federal agencies to employ “green” considerations in their procurements and strategies, Biden has selected a Cabinet of leaders committed to a “whole of government” approach to the problem, making leadership on climate change a central theme of the president’s earliest initiatives.

A key initiative is creation of a national “green bank” to help drive investment in the renewable energy and technology innovation market. The concept has roots in other federal financing programs that have been created to address gaps in available market funding. Private financial institutions may view the return on investment for new or untested technological innovations as too high risk, regardless of the downstream societal benefits.

In the area of clean energy technology, significant government and private equity grant and award programs exist to fund early phases of research and development activities. Moving beyond this stage, however, becomes problematic, as the journey from pilot or demonstration project to commercialization and market deployment can present substantial hurdles. As private financial institutions require evidence of profitability for funding, promising pilot projects often wither on the vine without the necessary financial backing to demonstrate viability. This early and critical phase is where federal action, through targeted loan offerings, can be impactful.

Congress has an important role to play, too. Lawmakers on the House Energy and Commerce Committee recently introduced The Clean Energy and Sustainability Accelerator Act, which would direct $100 billion to a “clean energy and sustainability accelerator,” a nonprofit entity intended to to fund renewable power, building efficiency, grid infrastructure, industrial decarbonization, clean transportation, reforestation and climate-resilient infrastructure. 

By supporting promising or proven energy innovation initiatives with limited access to capital, government action could attract additional private investment and create millions of new jobs, proponents argue.

Federal, state, and local government programs with similar goals exist today, albeit in smaller models with limited scope and varying financing offerings. Each of these provide important lessons for deployment. Green banks established in New York, Connecticut and California, among others, have collectively invested more than $5 billion in clean energy initiatives, with efforts frequently catalyzing the private sector to invest significantly more.

The Energy Department’s Loan Programs Office, led by newly-appointed clean energy pioneer Jigar Shah, offers several financing programs for market innovators and has issued more than $35 billion in loans and loan guarantees supporting the development of solar, wind, geothermal, and electric vehicle technologies, among others. Beyond offering access to capital and flexible project financing, LPO supports borrowers with an in-house team of financial, technical, legal and environmental experts.

Likewise, the Agriculture Department’s Rural Utilities Service program leverages credit assistance to finance infrastructure improvements in rural communities, including water and waste treatment, electric power and telecommunications services.

Green banks have demonstrated an ability to develop innovative financing instruments to spur private sector activity worldwide. The UK Green Investment Bank was the first publicly funded bank designed to mobilize private finance into the green energy sector. From 2012-2017, it supported financing of more than £12 billion of UK green infrastructure projects before its acquisition by Macquarie Group. Though not exclusively a green bank, the European Investment Bank has financed over €53 billion in clean energy infrastructure since 2015, drawing from a capital base pooled from its 27-member state shareholders and weighted by GDP. In Australia, the government-owned Clean Energy Finance Corporation has deployed $7 billion (Australian dollars) in cleantech innovation, energy storage and other sectors since 2013.

Addressing climate change will require mobilization of agencies well beyond a national green bank, of course. Agencies as diverse as Energy, Treasury, Transportation, Environmental Protection Agency and USDA all need to play new or extended roles. The unprecedented level of cooperation needed could be facilitated through the use of a portfolio budgeting approach that shifts focus away from disparate programs and towards a coherent and coordinated strategy for addressing climate change, cutting across agency boundaries and congressional committee jurisdictions. With coordinated leadership and focus, these agencies could have an exponentially greater impact.

The Biden administration has been clear in its pledge to act boldly and quickly in pursuing a climate agenda. The federal government will play a critical role in covering market funding where needed to advance energy innovation, and the best approach will be to learn from existing models to maximize impact. There is plenty of evidence that a well-designed green bank can unlock innovation and investment toward a cleaner climate.  

Kathleen Sifer, Managing Director, and Phil Kangas, Principal, are with Grant Thornton Public Sector LLC, where they focus on federal financial and regulatory issues. Kyle Reid, Managing Director, is with Grant Thornton LLP, where he focuses on the renewable energy market.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.