A group of 16 states and Puerto Rico have started an effort to create “green” banks to finance, underwrite, and develop clean energy technologies.
The U.S. Climate Alliance is an initiative led by the governors of California, Washington and New York to counter President Trump’s decision to leave the Paris climate deal. But it’s not a coalition that’s exclusively Democratic.
The alliance also includes the governors of Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Minnesota, New Jersey, North Carolina, Oregon, Puerto Rico, Rhode Island, Vermont, Virginia, and Washington.
Govs. Larry Hogan of Maryland, Charlie Baker of Massachusetts, and Phil Scott of Vermont are all Republicans. Only a handful of states in the country have green banks, but most of those that do are represented by the alliance.
The group’s green bank initiative, started June 1, is aimed at creating the institutions first in member states, and then moving on to include non-members.
New York Democratic Gov. Andrew Cuomo is leading the initiative through the state’s own New York Green Bank, which is seeking to raise $1 billion of private capital to mobilize investment beginning in the Empire State. But that’s only the opening act.
In this year alone, the Green Bank is looking to make a $200 million investment in grid energy storage to help smooth the transition to more renewables such as solar, while investing $15 million to train new energy workers.
Third-party capital will enable NY Green Bank to invest in projects in the alliance states “and beyond,” as well as provide credit and operational support to help new green banks, said Victoria Harmon, senior adviser to New York’s energy authority that houses the green bank.
The idea of green finance banks has been catching on in states with Republican administrations, too. One of the newest was signed into law by Maryland’s Hogan last summer, creating the Maryland Energy Innovation Institute.
“The Hogan administration supports innovative financing and clean energy partnerships, tailored to the specific needs of each state and region,” said Jay Apperson, a spokesman for the Maryland Department of the Environment.
“That’s why the governor championed Maryland’s Energy Innovation legislation in 2017, which will develop and attract private investment and commercialize clean energy innovation in our state, ensuring that Maryland continues to lead the charge when it comes to protecting our environment,” he said.
Maryland has two green energy banks. The first was established by the Montgomery County government, which is a densely populated suburb directly north of Washington.
“Green banks currently exist in a number of different states and municipalities — Connecticut, New York, Montgomery County (MD), Washington, D.C., and have also succeeded outside the United States including in the United Kingdom,” Harmon said.
She said each institution is unique, yet “all share overarching ambitions to help commercially viable and proven clean energy technologies and business models access needed financing to achieve broader scale in the market.”
The green bank is one idea where the states have moved ahead of the federal government, although that isn’t stopping lawmakers on Capitol Hill from trying.
Congressional Democrats introduced “The Green Bank Act” last year to create a national green bank to help finance regional and state clean energy banks.
The national version would provide loans, loan guarantees, debt securitization, insurance, and other forms of risk management to eligible institutions.
“Ultimately, these financing tools would generate returns that would allow green banks to become self-sustaining in the long term,” according to a bill summary. “This bill calls for an initial capitalization of $10 billion, with a maximum capitalization of $50 billion.”
Harmon noted that New York’s bank has already become self-sustaining.
The bank “began to generate positive net income a year ahead of schedule,” she said. The bank brought in $32.6 million in total revenue by the end of March, with reductions in greenhouse gas emissions from its investments totaling between 6.3 and 8.1 million metric tons.
