American Banker
By: Reed E. Hundt
November 11, 2014
Please insert this fact in the thin file of good election news for climate change battlers: candidates supporting the creation of state green banks won in nine out of nine states.
Green bank-friendly governors will be inaugurated in Rhode Island, Connecticut, Vermont, New York, Colorado, California, Minnesota and Hawaii. The highest ranking statewide candidate running in Maryland who endorsed the creation of a green bank, Brian Frosh, was elected attorney general.
No one supporting green banks lost an election in any state at any level.
What, some may ask, is a green bank? It is a state-charted nonprofit lender that helps to finance clean energy projects. The money is loaned at commercial rates and, for deals to move, commercial lenders are nearly always involved in the financing. The nonprofit that I lead, the Coalition for Green Capital, provides free consulting services to states that want to create green banks.
The energy projects in every state usually involve rooftop solar panels, building efficiency, and fuel oil replacement. There are a few commercial lenders that have experience in these markets, but most are concerned that the individual loans are often too small to be worth their cost of capital. Yet America has more than 120 million buildings, and the total potential net present value investment in clean energy solutions is at least $1 trillion. Green banks can help stimulate investment in these projects in a variety of ways, from lending directly to consumers and developers and packaging the loans for sale to banks to providing loan guarantees. They can also partner with banks on larger loans.
The Connecticut Green Bank, for instance, already has joined its loans with commercial lenders to total more than $100 million of investment in the last year — no small number in a state of only 3 million people. The goal, eventually, is to have commercial lenders push the state green banks into minor roles, as the private sector gains familiarity with these markets. For full article…