National Climate Bank Act Would Combine Private and Public Funding to Combat Climate Change

Senator Edward J. Markey (D-MA) introduced a bill earlier this month called the National Climate Bank Act, co-sponsored by Sens. Chris Van Hollen (D-MD), Brian Schatz (D-HI), and Richard Blumenthal (D-CT). If enacted, the bill would establish an independent National Climate Bank which would use both public and private funds to invest in clean energy technology and infrastructure. The bank would also provide financing to state and local green banks across the country.

The bill was referred to the Senate Committee on Environment and Public Works on July 8, 2019, and currently has a 50 percent chance of being signed into law according to Skopos Labs. It is important to note that the Skopos Labs estimation is based largely on the text of the bill and the status of the Members of Congress who sponsored it. Bipartisan agreement on the employment of market-based strategies to address climate change could also help this bill’s chances.

The National Climate Bank Act starts off by acknowledging that climate change is a real and manmade threat to human life. It details how green banks have already been created in Washington, D.C., Colorado, Connecticut, Florida, Hawaii, Maryland, Michigan, Nevada, New York, and Rhode Island with “a demonstrated track record of increasing jobs while lowering the cost of new renewable energy investments.” According to the bill, financing methods that leverage market forces can not only incentivize clean energy development and reduce greenhouse gas emissions, but also “unlock private investment” and “open new markets.”

Sen. Markey hopes to use the National Climate Bank Act to establish the United States as a global leader in fighting climate change through technology development. According to the bill, a National Climate Bank would demonstrate this leadership by lowering the cost of clean energy technologies and making federal investments available to low- and moderate-income communities. To do this, the bank would be set up as a nonprofit, separate from the federal government, but would be capitalized with $10 billion from the Treasury upon its inception and $5 billion each year for five years.

Previous bills sought to create a National Green Bank in May and June of this year. However, according to the Coalition for Green Capital (CGC), the National Climate Bank builds on these earlier Green Bank proposals “with an expanded mission and a larger toolbox of eligible project types.” Existing state-level climate banks provide precedent for a federal model and serve as examples for successful investment. According to Bryan Garcia, President and CEO of the Connecticut Green Bank, “the Connecticut Green Bank has been able to use $270 million in public funds to drive over $1.67 billion in total investment.” In addition, their solar programs have generated a 187 percent increase in solar presence in underinvested neighborhoods.

Sens. Markey and Van Hollen estimate that “investing just $35 billion of public funds into a national climate bank could generate between $213 and $700 billion in total investment.” If that money were to be invested in renewable energy installations, it “could mean more than 70 percent of U.S. homes powered by clean energy.” The Climate Bank initiative and its expected results complement other bills Sen. Markey has sponsored, including one that would create a Green New Deal.

The bill is supported by numerous organizations, including the Coalition for Green Capital (CGC), the American Green Bank Consortium (AGBC), the ClimateWorks Foundation, the Natural Resources Defense Council (NRDC), the Rocky Mountain Institute, the Environmental Defense Fund, and the Alliance to Save Energy. Democratic presidential candidates Sen. Michael Bennet (D-CO) and Washington Governor Jay Inslee have included the establishment of green banks in their policy platforms.

For more information on green banks, consult AGBC’s annual industry report or EESI’s coverage of a previous piece of green bank legislation.

Author: Marco de Laforcade