A national climate bank to jumpstart broad investment in green technology is being pitched as a solution to bring down rising carbon emissions.
WASHINGTON (CN) – To spur investment in technology that could potentially give the U.S. a likelier shot at meeting its goal to cleave carbon emissions in half by 2030, senators considered legislation Tuesday to form a national climate bank.
The legislation, known as Senate Bill 283, was introduced in February by Senator Ed Markey, a Massachusetts Democrat who chairs the Senate Environment and Public Works Committee. An initial iteration of the measure was first introduced in 2009 but for years it failed to make headway.
It did, however, make waves in the private market, Reed Hundt, CEO of the Coalition for Green Capital, testified Tuesday.
Since 2009, some 21 “green banks” – institutions that finance technologies aimed at mitigating the impact of climate change and transitioning from fossil fuels to clean energy – have opened in 15 states and the District of Columbia. And there are more coming.
“We are on track to open 22 more,” Hundt said, noting that existing green banks in America still have $20 billion in backlogged projects just waiting for additional funding they need to push their projects from vision to reality.
A national climate bank would be able to facilitate that funding, the bill’s lead sponsors argue. In addition to Markey, they include Democratic Senators Chris Van Hollen of Maryland, Richard Blumenthal of Connecticut, Brian Schatz of Hawaii and Martin Heinrich of New Mexico.
Van Hollen explained Tuesday that the National Academy of Sciences estimates the U.S. would need to mobilize roughly $2 trillion in purely climate-based, federally backed investments to create a “clean energy accelerator.”
Establishing a national climate bank through private-public partnerships could free up the federal purse and produce considerable returns, advocates say.
“It would be a magnet that attracts billions of dollars in private capital to put Americans to work building a cleaner economy, “ Van Hollen said, echoing a key plank of President Joe Biden’s infrastructure and jobs plan. “For every dollar we put in, we will draw at least $3 to $5 from private investment, and even up to $7.”
In Louisiana, Maryland, Ohio, Florida and Hawaii, climate banks have already been stood up with the support of governors from both major political parties.
A national climate bank could generate the type of investment from the federal level in green technology that would not be brought to scale otherwise amid an already crunched timeline to slash emissions.
Forming the bank would mean partnership with private firms investing $400 million over the next four years, Van Hollen said. If they ponied up, analysts estimate some $800 billion could be poured into building the nation’s clean power platform over 10 years.
The task of converting a world reliant on fossil fuels to clean energy is an inescapably tall order. Wind and offshore energy would have to drastically scale up, for one. Experts say that market alone will need to grow to at least six times its current level before the energy created from it could help the U.S. approach its 2030 emissions goal.
Even if proponents of renewable energy made their case for greater investment at the federal level, there’s still the matter of individual states and inevitable dark money interests.
A report from Columbia Law School’s Sabin Center for Climate Change Law found in February that multiple state governments over the past year have issued moratoriums on wind and solar development in their communities either outright or through indirect regulations that amounted to de-facto bans.
Then there are groups like the secretive Protect Our Pocketbooks. The Arkansas-based organization ran intense ad campaigns in communities where wind power was gaining support, the Sabin Center report found.
Protect Our Pocketbooks filed as a tax-exempt 501(c)(4) company which, unlike a nonprofit, or 501(c)(3), meant it would not have to disclose its donors. The group reportedly littered Arkansas airwaves with anti-wind energy messages just as the Wind Catcher Project, proposed to be the nation’s largest wind farm producing 2,000 megawatts, finally garnered approval from an Arkansas state commission.
Bureaucratic red tape there and in neighboring states ultimately squashed the wind farm altogether and Protect our Pocketbooks has since shuttered.
For Republicans on Senate Environment and Public Works Committee, a national climate bank appeared to be a nonstarter. GOP Senator James Inhofe of Iowa was at times curt with Markey during Tuesday’s hearing.
“We simply don’t need it. The bill does not take into account that the Department of Energy’s loan program is flush with cash,” Inhofe said. “Even the president’s $2 trillion slush fund for all things infrastructure devotes less than $30 billion for a carbon bank. That’s less than 2%, so clearly it’s not a real priority.”
The $30 billion Inhofe mentioned refers to a pot of funds left over from President Donald Trump’s administration that was tapped primarily by the former president to shore up farmer income and pricing. Those funds were drawn off the Commodity Credit Corporation, but when Trump departed the White House he left $30 billion unused. The Biden administration is eyeballing that amount for the creation of a carbon bank that would pay farmers to work sustainably and capture carbon in their soil.
Questions over the effectiveness of such a method remain, however, and cooperation is murky.
Duanne Andrade, chief financial officer for the nonprofit Solar Energy and Loan Fund, or SELF, testified Tuesday that a national climate bank would instill more confidence in the renewables industry. Her green financing program has watched countless projects come to the fore that were “shovel-ready,” even during the coronavirus pandemic.
“As people were forced to work, study, play and rest at home, people had to run air conditioners all day – and, be able to afford it. People had to replace roofs to prevent health risks caused by mold caused by leaking roofs. And they had to ensure their homes were safe and sturdy as the hurricane season approached and the pandemic’s death toll continued to rise,” she said.
During the pandemic, SELF saw its lending for green tech jump 84%. The company has already completed 2,000 sustainable home projects and 74% of its loans went to underserved markets. But no matter how hard they work, a single nonprofit alone won’t be able beat back the challenge of rising carbon emissions.
“SELF has just scratched the surface of what can be done,” Andrade said.