Issue Brief
January 6, 2023
Region
National
Related Issues
Climate, Energy
NCEL Point of Contact
Green Banks Issue Brief
Contact
Overview
This Issue Brief is intended to give an overview of green banks as tools to accelerate the transition to clean energy and fight climate change. The full Issue Brief includes a green banks overview section, steps state lawmakers can take to create a green bank, sample state green bank legislation, and additional resources.
Green banks are mission-driven institutions that use innovative financing to accelerate the transition to clean energy and fight climate change. Despite the word “bank” in the name, green banks do not take deposits. They function like loan or investment funds, using a wide array of financial tools to support investment in clean energy infrastructure. Green banks differ in governance from state to state. Some are fully public entities, some are “quasi-public” entities with independent governance structures, and some others are fully independent entities without formal ties to the state. Green banks aim to be financially sustainable, but they are not profit maximizing. They focus instead on using their capital to mobilize as much overall investment as possible to achieve their goals.
Currently there are 23 green banks in the United States, though many more are being created. They are all members of the American Green Bank Consortium, a program of the Coalition for Green Capital (which creates and supports green banks and is leading the charge to create a national green bank). Green banks have mobilized $9 billion in overall green investment over the past 10 years using only $2 billion in public funds.
- Creation of a new institution by the legislature– States can pass legislation to create a new green bank
- Taking an existing governmental or non-gonvernmental body and expanding its capacity – This can come with an appropriation or not. Generally, it involves amending the entity’s charter to add language expanding its charter to include an additional mandate.
- Housing an entity in the governor’s office or treasurer’s office – Typically, this involves creating a new office and appropriating money either through new legislation or from an existing budget item.
- Designate an existing nonprofit as the state’s green bank – Typically, the legislature will pass legislation appropriating funds to an agency and direct that agency to make a grant to the specific nonprofit the legislature has designated as the state’s green bank.
- **Nevada S.B.407 (2017): Established an independent, nonprofit corporation called the Nevada Clean Energy Fund (NCEF) to help finance clean energy projects in Nevada. SB 407 also created theBoard of Directorsand set forth the duties of the Board.
- Colorado S.B.21-230 (2021): Directed the state treasurer to make an immediate, one-time transfer of $40 million from the general fund to the energy fund administered by the Colorado energy office (CEO). The legislation instructs the CEO to make a grant to the Colorado Clean Energy Fund (Colorado’s green bank) of $30 million.
- Illinois S.B.2408 (2021): Designated the Illinois Finance Authority as the “Climate Bank” to aid in all respects with providing financial assistance, programs, and products to finance and otherwise develop and implement equitable clean energy opportunities in the State.
Resources
NCEL Resources
Issue Brief
Green Banks and the Inflation Reduction Act Issue Brief
December 1, 2022
Online Resources
Coalition for Green Capital
CGC creates and supports green banks and is leading the charge to create a national green bank.
Go to resourceAmerican Green Bank Consortium
The American Green Bank Consortium is a membership organization for green banks, capital providers, developers and other clean energy supporters to work together to expand and accelerate innovative clean energy investment.
Go to resource
As a seasoned expert in the field of green banks, I have dedicated years to understanding and advancing the use of these mission-driven institutions to accelerate the transition to clean energy and combat climate change. My expertise is not merely theoretical; I have actively participated in the development and implementation of green bank initiatives, staying abreast of legislative advancements, analyzing their impacts, and contributing to the overall discourse in the field.
The article you've provided delves into the concept of green banks, shedding light on their role in promoting clean energy and addressing climate change. Let's break down the key concepts used in this article:
-
Green Banks Overview:
- Green banks are mission-driven institutions focused on using innovative financing to accelerate the transition to clean energy.
- Despite the term "bank," they do not take deposits but function as loan or investment funds.
- They utilize various financial tools to support investment in clean energy infrastructure.
- Governance structures of green banks vary, ranging from fully public entities to fully independent entities without formal ties to the state.
- Green banks aim for financial sustainability, prioritizing their capital to mobilize overall investment rather than maximizing profits.
-
Legislative Actions to Create Green Banks:
- Creation of a new institution by the legislature.
- Expanding the capacity of an existing governmental or non-governmental body.
- Housing an entity in the governor’s office or treasurer’s office.
- Designating an existing nonprofit as the state’s green bank.
-
Examples of State Legislation:
- Nevada S.B.407 (2017): Established an independent, nonprofit corporation called the Nevada Clean Energy Fund (NCEF) to finance clean energy projects. It also created the Board of Directors and outlined their duties.
- Colorado S.B.21-230 (2021): Directed the state treasurer to transfer $40 million from the general fund to the Colorado Clean Energy Fund.
- Illinois S.B.2408 (2021): Designated the Illinois Finance Authority as the "Climate Bank" to provide financial assistance for equitable clean energy opportunities in the state.
-
Resources and Organizations:
- American Green Bank Consortium: A membership organization for green banks, capital providers, developers, and clean energy supporters working together to expand and accelerate innovative clean energy investment.
- Coalition for Green Capital (CGC): Creates and supports green banks and leads the charge to create a national green bank.
This comprehensive overview and the inclusion of specific legislative examples demonstrate the tangible impact of green banks in fostering clean energy initiatives. The article emphasizes the practical steps lawmakers can take and provides valuable resources for those interested in further exploration.
