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.
Of course voters did not sweep these nine candidates into office because of their green bank advocacy. Indeed, not every state chose to call its green bank by that name. In one state "green" is popular but "bank" is not; in another state the green bank is a division of an infrastructure bank. In New Jersey, the governor, for reasons that may be found in his aspirations for future office, chose to call his version a "resiliency bank." To avoid creating trouble for Gov. Chris Christie, and because he was not on the ballot, I am not counting his proposed bank in our list, but its functions are indistinguishable from those of the other green banks. A green bank by any name is a sweet solution to the problem of addressing climate change.
Despite differences in diction, the concept in each state is generally the same. For all the winning candidates, creating of a state green bank was part of an energy sector agenda based on these principles: moving the economy from a carbon-based to clean energy platform; creating clean-energy jobs and bringing private investors into the market as rapidly and in as large a degree as possible; and having the market produce clean energy solutions that make consumers better off, not worse off.
Ultimately, the Coalition for Green Capital would like to see a green bank created at the federal level, but a fortunate aspect of our federalism is that if one government does not step up to its duties, others can. Indeed, state governments often act as precursors to federal reform. Illinois and New York implemented changes in intrastate communications law that served as blueprints for the bipartisan Telecommunications Act of 1996. Massachusetts was the Petri dish for the Affordable Care Act of 2010. One can hope that the spread of state green banks across the country will continue, and eventually will lead to the creation of a national green bank which will help capitalize state green banks.
Reed Hundt is the chief executive of the Coalition for Green Capital. He was chairman of the Federal Communications Commission under President Clinton from 1993 to 1997.