Democratic candidates are building momentum for a National Climate Bank
With the newest flurry of climate policy proposals ahead of CNN’s Climate Crisis Town Halls, half of the top 10 Democratic presidential candidates are now incorporating the Green Bank approach into their plan for the clean energy transition.
Sen. Kamala Harris (D-Calif.) has endorsed a National Climate Bank. South Bend, Ind. Mayor Pete Buttigieg has proposed the creation of a $250 billion Clean Energy Bank. Former HUD Secretary Julian Castro has proposed a $200 billion Green Infrastructure Fund. Former Tex Rep. Beto O’Rourke plans to channel public investment through a “new dedicated finance entity.” Sen. Elizabeth Warren (D-Mass.) calls for the expansion of the Department of Energy’s Loan Program Office.
The common thread between these proposals is the establishment of a dedicated institution empowered to combine public funds with private investment, providing low-cost financing to clean energy projects and accelerating the transition of our energy sector away from fossil fuels.
This is precisely the model pioneered by existing Green Banks at the state and local level. These institutions have driven nearly $4 billion in clean energy investment in the U.S. over the past decade. They’ve proven themselves to be cost-effective yet powerful climate policy tools that also lower customers’ energy bills.
This is also the model that the National Climate Bank Act, introduced in the Senate this summer by Sens. Ed Markey (D-Mass.) and Chris Van Hollen(D-Md.), draws on in establishing a National Climate Bank as an independent non-profit financial institution, and capitalizing it with $35 billion in federal funds. The bill presents the most detailed framework currently available for what such a large-scale Green Bank could look like in the U.S.
The Climate Bank would invest in projects including clean energy, energy efficiency, clean transportation, and the facilitation of the retirement of fossil-fueled power. In directing its investments, it would prioritize environmental justice and would generate economic benefits for communities affected by the transition away from fossil fuels.
A new CGC analysis of the National Climate Bank Act has found that, over its 30-year chartered life, the $35 billion Climate Bank could drive up to $1 trillion in total investment. It could do so using methods already proven by other comparable institutions, including commercial banks, global development banks and existing Green Banks.
The idea of a National Climate Bank has also achieved positive approval with voters across the political spectrum, a rare feat for any form of climate policy. A poll from CGC found that, after reading a brief description of the National Climate Bank, 59 percent of voters were supportive and just 16 percent were not.
The 2020 candidates’ plans are not interchangeable; there are meaningful differences between them on ideas like carbon pricing, support for specific technologies, and more. This makes it all the more noteworthy that the idea of a dedicated institution to mobilize clean energy investment has such broad appeal and can work harmoniously with other policies and programs. In practical terms, policies like carbon pricing, tax credits and renewable portfolio standards all factor into the economics of what makes a renewable energy project workable. These complementary policies raise the price of fossil-fueled power or reduce the cost of developing a clean energy project. A Climate Bank meets those economic conditions wherever they are. It takes projects that are on the edge of profitability and makes them viable, regardless of where that edge exists.
As images from Hurricane Dorian blanket the news, we cannot afford to leave any tool unused that could help us drive the clean energy transition more quickly. Bold plans for public investment can and should be paired with a Climate Bank to harness the power of the private sector on a trillion-dollar scale. If candidates are serious in their calls for an 100 percent clean energy system, it’s time to make the most of each dollar of funds, and it’s past time for delay.
Reed Hundt is the CEO of the Coalition for Green Capital, a nonprofit that has worked to establish and support Green Banks. He is also former chairman of the Federal Communications Commission (FCC) from 1993-97, and is currently principal of REH Advisors.