In this moment of great urgency in the climate crisis, U.S. Senators Ed Markey (D-MA), Chris Van Hollen (D-MD), Brian Schatz (D-HI), and Richard Blumenthal (D-CT) have set the bar for climate policy leadership with their introduction of the National Climate Bank Act of 2019, a proposal to create a federal Green Bank. Policy makers around the world are hungry for viable policy solutions to win the battle against climate change. Green Banks are rising to the top of the conversation. Green Banks are dedicated finance institutions (often public or nonprofit) that work to connect clean energy projects with capital. Green Banks are not banks in the sense that they take deposits; instead, Green Banks ensure that financing, the lifeblood of any clean energy project, is readily available to green initiatives in a Green Bank’s jurisdiction. Often, Green Banks tackle the toughest problems in the industry, serving as the glue that holds together an otherwise unfinanceable project in the eyes of the private sector. Green Banks are not in the business of competing directly with private capital in perfectly liquid markets. Instead, Green Banks are in the business of expanding the pie of the financing market for clean energy projects across the country.
The Green Bank model has been proven out in the states, the laboratories of democracy, over the past decade. In the United States alone, 14 Green Banks from 9 states and the District of Columbia have caused $3.7 billion in investment since 2011, with every public dollar utilized attracting $3.40 of private capital. Now, the U.S. Senators’ National Climate Bank proposal has introduced a concept that matches the scale and ambition needed to make a meaningful dent in the climate crisis. The National Climate Bank Act of 2019 is the first of its kind to create a nonprofit institution independent of government, designed to reduce energy costs, and leave consumers and businesses better off by switching to clean energy. It is also the first bill of its kind to authorize the use of federal funds to accelerate the retirement of coal-fired power plants and to acquire coal assets still in the ground. This institution, the National Climate Bank, will be capitalized with $35 billion in federal funds over five years, and will be capable of driving public and private investment on an unprecedented scale, approaching the level necessary to meaningfully tackle the climate crisis.
The bill has an explicit social and environmental justice mission, with a mandate to specifically prioritize investments in underserved and low-income communities. By providing a framework and a set of financial tools to connect dollars to projects, this bill represents the first substantial legislative plank to support achievement of the climate goals of the Green New Deal. Previous bills establishing a federal Green Bank have also been introduced in the House and Senate, and presidential candidates Jay Inslee and Michael Bennet have come forward with federal Green Bank proposals. The National Climate Bank Act builds on this momentum, with an expanded mission and a larger toolbox that gives those on the front lines of the battle against climate change the tools they need to begin turning the tide in the great challenge of our time.
For more information on the National Climate Bank Act, see Senator Markey’s statement and the Coalition for Green Capital’s Bill Summary. For more information on the track record of existing U.S. Green Banks, see the American Green Bank Consortium’s Annual Industry Report.