Tue, 27 Jul 2010 09:46:46 -0800WeeblyMon, 21 Jun 2010 11:42:47 -0800http://www.coalitionforgreencapital.com/1/post/2010/06/what-were-doing-right-now.htmlHere's the latest piece from the CGC outlining a potential Energy Independence Trust (EIT):

Summary of Energy Independence Trust Legislation

 

Set forth below is a summary of recommendations on the formation of an Energy Independence Trust (“EIT”).

Charter, Purpose and Ownership.  The legislation would authorize the establishment of a federally chartered clean energy financing institution, the EIT.  The purpose of EIT would be to:  (i) create sustainable electricity generation and efficient consumption of electricity by providing financing support for the near-term and wide-scale deployment of commercially ready clean energy technologies; (ii) rebuild, on a sustainable basis, the economy of Gulf states affected by the oil spill, and to extend that effort to the economy of all states; and (iii) catalyze new private sector investment in the Gulf states in the short term, and in the nation over the long term.  It is contemplated that EIT would not have equity owners.

Lending Activity.  The EIT would provide financing support, including direct loans and loan guarantees, to clean energy projects subject to the following criteria:

·        Maximum Financing Support Per Project. The EIT would not provide more than $500 million in financing support to any one project.

·        Clean Energy Projects Defined.  The authorizing legislation would establish which projects are clean energy projects eligible for EIT financing support (e.g., renewable energy, energy efficiency, clean energy job training, and oil consumption reduction projects).

·        State Clean Energy Financing Institutions (“CEFIs”).  In addition to financing clean energy projects, the EIT would also provide direct and indirect financing support to state CEFIs (discussed below), which would in turn finance clean energy projects in accordance with the authorizing legislation for the EIT. 

·        Focus on the Gulf Coast region affected by the oil spill. The authorizing legislation would establish an appropriate minimum allocation of near-term EIT financing support for clean energy projects in the Gulf Coast Region.  For example, the first $__ million or __% of financing support activity taking place within the first __ year(s) of the existence of the EIT could be devoted to economic recovery efforts in the Gulf Coast region through financing support for clean energy projects in the region either directly or through financing support provided to state CEFIs in the region. 

·        Credit Subsidy Cost. In order to remain budget neutral, legislation creating the EIT should be written so that the “credit subsidy cost” associated with the default risk for clean energy project loans provided or guaranteed by EIT are covered by the eventual borrower, rather than the federal government.

Source of Funding.  Potential sources of funding for the EIT may include the following:

·        BP Fines. A percentage of the fines paid by BP should be allocated to capitalize the EIT. These fines would not be drawn from any compensation paid to residents or other compensatory monies.

·        Supplemental Environmental Project. Congress could pass legislation that enables BP to pay its fines mandated by law into a “Supplemental Environmental Project (“SEP”),” with payment by BP of $50 million into the EIT qualifying as an “SEP” payment, satisfying partial requirements of payment of the fines that are meted out to BP by the Department of Justice according to existing statutes.

·         Borrowing from the government. The Department of Treasury may make loans available to the EIT up to an aggregate total amount of $10 billion. The loans would provide for an annual fee to the Treasury in addition to interest payments that would be sufficient to pay any credit costs to the United States under the Federal Credit Reform Act of 1990.

·        Individuals, corporations, and foundations. The EIT may receive charitable gifts, grants, contributions as well as loans from individuals, corporations, and philanthropic foundations.

·        New Markets Tax Credits.  The EIT may raise capital through issuing its own bonds and/or notes, including tax-exempt bond offerings and small denomination “green bonds” that consumers could purchase on a retail basis.  EIT could also borrow from commercial lenders.

·        CDFI Fund.  The EIT would seek to qualify as a community development financial institution (“CDFI”) and to be eligible for funding from the CDFI Fund.  As a CDFI, the EIT would be eligible to receive discount loans from banks seeking to meet their Community Reinvestment Act obligations. The EIT would be treated as a qualified community development entity for purposes of Section 45D and Section 1400N(m) of the Code

·        Loan Paybacks. Once the EIT is capitalized and begins its clean energy financing support activities, the EIT would receive monies for its financing support, such as a return of and on its direct loans, and through partnering with other investors.  For example, the EIT may provide loans to leverage and otherwise catalyze equity investments in clean energy projects. 

·        Carbon Emission Reduction Credits.  In the event that a market for carbon emission credits emerges, EIT could participate as a credit supplier using credits earned from its clean energy financing projects.

The EIT would not be funded initially through federal appropriations (although appropriations to the EIT would not be precluded), and the EIT’s lending activity would not be backed explicitly or implicitly by the full faith and credit of the U.S. Government.  

 

Features of the EIT

Legal Status.  TheEIT would be created under Title 36 of the United States Code as a “patriotic organization” similar to the American Red Cross and would have all the powers of a nonprofit corporation incorporated under the laws of the District of Columbia.  As a patriotic organization, EIT would be an independent legal entity from the U.S. government—it would not be an agency of the U.S. government. Because EIT would not take deposits, EIT would not be a “bank” as defined in the National Bank Act or other federal banking statutes.  All income and property of EIT would be expressly exempt from federal, state and local taxation.  It is contemplated that EIT would apply to the IRS for status as a charitable organization under section 501(c)(3) of the Internal Revenue Code.  As a section 501(c)(3) organization, the EIT would be eligible to receive tax-deductible donations from individuals and grants from foundations.  As a section 501(c)(3) organization incorporated in the District of Columbia, the EIT would also be entitled to issue tax-exempt bonds, for example, through the D.C. Revenue Bond Program.

Powers.  EIT would have customary corporate powers, including without limitation: (i) the power to adopt bylaws, (ii) lease and own real property, (iii) accept gifts or donations of property or services, (iv) obtain grants, (v) make contracts with private and public persons, companies, agencies, organizations and institutions and (vi) partner with other persons, banks or lending institutions in providing financing support for clean energy projects.  EIT would have powers to make loans and provide guarantees and other types of financing support for clean energy projects.  EIT would have the power to conduct business in any state without regard to any state law qualification requirements.

State Clean Energy Financing Institutions (“CEFIs”).  Under the authorizing legislation, states would be entitled to establish or designate their own green financing institutions or state CEFIs which could receive direct and indirect financing support from the EIT.  The legislation would establish criteria for federal certification of state CEFIs, including the scope of clean energy projects eligible for financing support and the state CEFI underwriting requirements.  Preexisting state clean energy financing institutions, including revolving loan programs and clean energy funds, would be eligible for certification as a state CEFI provided that they use the financing support provided by the EIT in accordance with the terms of the authorizing legislation for the EIT.  States would be invited, but not required, to create their own state CEFIs (though a large number of states have existing institutions or programs that potentially could be state CEFIs).

Offices.  EIT would maintain its principal office in the D.C. metropolitan area and would establish other offices in other places as necessary or appropriate for its business.

Board of Directors.  The initial Board of Directors (the “Board”) would be selected by the President.  Thereafter, the Board would be self-perpetuating, electing its succeeding directors.  The Directors would have staggered terms [3/5 years].  The CEO would be a member of the Board and entitled to vote on all matters.  Candidates for the Board would need to meet certain criteria including, but not limited to: U.S. citizenship, specified independence criteria, experience representing diverse industries such as management consulting, law, banking, financial services, energy, manufacturing or transportation sectors, technology assessment, or risk management and representation of consumers.  Additionally, at least one director should be from a nonprofit involved in one of the industries described above, or otherwise be experienced in the management of nonprofit corporations.  The duties and powers of the Board would be consistent with those of a private lending institution.  Directors would be compensated consistent with compensation paid to directors or similarly situated private lending institution.  The Board would develop and comply with appropriate corporate governance policies and practices.

Meetings of the Board shall be open to the public under such terms and exceptions set forth herein.  The Board and any committee may hold closed sessions to consider, among other things, matters relating to individual employees, proprietary information, litigation, and other matters involving confidential advice of counsel, confidential information obtained from others and other matters when disclosure would be premature.

Officers and Employees.  EIT would have a CEO, selected by the President with the advice and consent of the Senate, for a seven year term.  Additional officer positions would be determined and filled by the Board.  Officers would be compensated at prevailing rates for similarly situated entities as determined in the manner established by the Board.  EIT employees would not be federal employees and compensation would be set in the manner determined by the Board.

Advisory Councils/Committees/Advisors.  The Board would have the authority to establish advisory councils, committees and to retain advisors as it deems necessary and useful.

Periodic Reporting and Audits.  EIT would have annual audited financial statements prepared by an independent accounting firm in accordance with generally accepted accounting principles.  The financial transactions of EIT for any fiscal year during which federal funds are available to finance any portion of its operations may be audited by the Governmental Accountability Office, and a report of each such audit shall be made by the Comptroller General to the Congress and furnished to the President, the Secretary of [the Department of Energy/Treasury] and to EIT at the time submitted to Congress.

            Miscellaneous.  EIT may not contribute to or otherwise support any political party or candidates for elected public office.  Equal opportunity in employment shall be afforded to all persons by EIT in accordance with the equal employment opportunity regulations of the Department of Energy.  Nothing contained in the legislation shall authorize any department, agency, officer or employee of the United States to exercise any direction, supervisions, or control over EIT or of its borrowers or guarantors or over the charter or bylaws of EIT.

-Posted by Alex Kragie

]]>Fri, 07 May 2010 13:45:28 -0800http://www.coalitionforgreencapital.com/1/post/2010/05/cgc-tax-policy-paper.htmlAs a supplement to Reed Hundt's testimony before the House Ways and Means Committee, the CGC has prepared a tax paper supplement with detailed recommendations for tax policy in the clean energy and energy efficiency sectors. This document was submitted to the Congressional Record, and can also be found under the 'Downloads' section of our website.

-Posted by Alex Kragie
]]>Thu, 15 Apr 2010 07:45:52 -0800http://www.coalitionforgreencapital.com/1/post/2010/04/testimony-of-cgc-ceo-reed-hundt-april-14th-2010.html                          Testimony of Reed Hundt

                             Chief Executive Officer

                        Coalition for Green Capital

                  Committee on Ways and Means

              United States House of Representatives 

                                     April 14, 2010


Thank you Chairman Levin, Ranking Member Camp, and members of the Committee. Mr. Chairman, I am Reed Hundt, CEO of the Coalition for Green Capital, a non-profit formed for the purpose of developing and advocating tax and finance policies that support the conversion of the American and global economies from carbon emissions-intensive practices to methods that are clean, renewable, and affordable.

I am very honored to testify to this important and learned committee. I want to acknowledge the fine work that this committee has done in the past on renewable tax credits and in the stimulus bill. Your work has led, among other things, to significant job creation in 2009. Indeed, as I suggest to you today certain tax and finance measures, I am standing on the shoulders of the great work this committee has already done in the past. In addition, I want to acknowledge the wisdom of the House in passing ACES, also known as Waxman-Markey, which contains some of the measures that I will suggest today.

I am here to discuss a way to escape the slough of recession and unemployment in which our country finds itself.  If Congress makes a long-term, large-scale, and economically prudent commitment to the right tax and finance policies, then starting immediately and continuing at least through the present decade, private sector investors, utilities, merchant power companies, energy service companies, transmission line builders, contractors, construction companies, and firms with many other skill sets will be able to do the following:

First, over ten years, replace existing building materials with better insulated walls, windows, and roof spaces so as to reduce energy use by at least 20% in up to 80 million buildings – ranging from most owner-occupied homes to virtually every small and big business building.

Second, over the same ten years, replace at least half of carbon emission intensive electricity generation with carbon-light, renewable alternatives, such as onshore and offshore wind, solar, nuclear, biomass, combined cycle natural gas , and carbon capture and sequestration coal generation.

Job Creation and Carbon Abatement: Two birds with one loan (and tax program)

By engaging in these two activities in every region, state, and locality, thousands of private sector firms will create up to seven million new jobs. The energy retrofit and generation initiatives would then contribute more than any other single sector of the economy to achieving a return to full employment.

When the private sector will have reduced our buildings’ electricity consumption by 20 percent or more, and reduced by at least half the carbon emissions from electricity generation, we will have reduced total American carbon dioxide emissions by almost two billion tons annually – a drop of 30 percent from what we produce today. This reduction will show the world that traditional American know-how, entrepreneurial spirit, and innovative skills are alive and active in the energy sector. We know we can transform this sector, because we did it not long ago in a similar sector of the economy: private sector investment of about a trillion dollars in digital networks starting in the early 1990s gave us world leadership in information and communications technology, while creating directly and indirectly one-fifth of the more than 20 million net new jobs that made that decade a great one for American workers.

The path from the valley of the worst unemployment since the Great Depression of the 1930s to the sunny uplands of full employment and rising national income for all income quintiles, as we had in the 1990s, cannot run over the backs of either America’s electricity businesses or electricity consumers. No one wants in the 2010s to drive up the price that people pay for heating, lighting, and air-conditioning, or to mulct shareholders of energy companies of the capability to sustain clean investment. No one intends during an economic downturn to inflict increases in what businesses pay to keep their lights on, do dry cleaning, design software, run computers, or engage in all the myriad activities that our high value-added economy requires to create wealth.

Moreover, every high value-added economy should want the prices of three basic inputs to be as low as economically feasible, so as to be able to achieve the greatest amount of productivity gains in making the goods and services that depend on these key inputs-- communications, capital, and electricity.

Therefore, in order to attract the job-creating and climate-saving investment we need in retrofits and generation, while benefitting electricity consumers, we need to deploy long-term and large scale tax and financing polices. That of course is the province of this committee. In this context we should reflect upon the fact that the United States iseleventh among nations in the amount of investment in renewables relative to gross domestic product . Tax and financing policies are far more favorable for renewables in many other countries, and as a result other nations threaten to gut our capacity to construct a world-leading renewables industry within our own borders.

Retrofitting Investment

If we aim to retrofit tens of millions of residential and commercial buildings, we must overcome the agency problem – that is, the people who pay electricity bills are not necessarily able or willing to invest in retrofits. An owner who occupies his or her own house may not believe that he will stay in the house long enough to recoup in reduced electricity bills the cost of the investment. A renter may bear the cost of electricity but not have the legal right to install insulation. A small business may have a lease that is shorter than the time needed to recapture in savings the outlay for retrofitting the leased building.

In addition, to cause hundreds of thousands of workers to engage in retrofits in millions of buildings, tax and finance policies have to attract to this activity not only small firms and individuals, but also large enterprises that can invest in worker training and provide high quality customer care to building owners and occupants.

The solution is to offer utilities, energy service companies, and building owners a combination of tax benefits and long-term, low cost loans that will create adequate incentives to engage in retrofits at a reasonable profit. Because savings must be and should be realized in monetary terms, both the tax benefits and loans can be recouped in whole or in part over time. Liens on buildings and delayed tax payments can both be used as the form of recoupment. The retrofit program known as Homestar should be attractive to homeowners because they will receive a rebate on the purchase of retrofit products, such as better insulated building materials. But that program’s success depends on creating incentives for private firms to market the retrofitting. Similarly, in order to scale out retrofitting to tens of millions of homes it will be necessary to use tax benefits and loans so as to provide various kinds of firms the financial incentives that can attract their investment in this endeavor.

Implementing this combination of tax and finance policy ideally would be the task of a small, specialized institution modeled after the Ex-Im Bank. This Clean Energy Bank should be patterned after the wholesale, nonprofit Green Bank proposed by Congressman Chris Van Hollen in H.R. 1698, introduced in March of 2009. The Clean Energy Bank would have, like Ex-Im, a few hundred employees, and would stay in existence for a decade, or until its mission was fulfilled, whichever comes sooner. A version of such a bank under the name Clean Energy Deployment Administration was inserted, by a bipartisan vote of 51 to 6, in ACES.

The Clean Energy Bank would guarantee retail loans made to energy service companies or utilities so as to provide below-market capital that created an incentive for those firms to enter the retrofitting business at a large scale and on a long term basis. We need the jobs and we need the carbon emissions abatement; creating private sector profit opportunities is the appealing way to achieve these goals. Moreover, because real savings would be achieved, the Clean Energy Bank would always aim to have its loan guarantees discharged in the fullness of time, as such savings are monetized.

Our goal needs to be large: let us catalyze at least $3,000 to $10,000 of investment in 80 million buildings over as short a time as practical. That would amount, then, to $240 billion to $800 billion of investment. Household net worth, which very heavily is dependent on real estate ownership, exceeds $50 trillion, even after the tremendous drop from 2007 to 2009. Therefore, to invest $25 billion a year for ten years in long-term wealth enhancement through energy savings represents increased investment of a rate of only one half of one tenth of a percent of aggregate net worth per year. In a society that consumes more than it invests, this plan may not work; in the new investment-oriented America we want to construct for this new century, this goal is not just achievable, but is virtually mandatory.

Electricity Generation Investment

If we aim to replace half the carbon emissions-intensive electricity generation of the United States with renewable and carbon-light alternatives, then we need to cause the private sector to invest $200 to $300 billion in creating up to 200 gigawatts of carbon-free or carbon-light electricity generation capacity. Absent tax and financing policies adopted by Congress, this investment is not likely to occur in the 2010s for at least three reasons:

(1)     A corollary of the recession’s dramatic drop in total output relative to total potential supply is that the United States now has ample generation capacity at least until 2016 (except for in a few states, such as California and Colorado). Therefore, we cannot depend solely, as China can, on new demand for electricity to attract new investment in generation. Instead, we need to create incentives for retirement, modification, and replacement of existing facilities.

(2)     Regulation in the form of a carbon cap, a renewable electricity standard or other catalysts to switching from carbon-intensive to carbon-light generation does not appear likely to be sufficiently stringent in the near future in and of itself to cause firms to replace or convert up to 200 gigawatts of capacity in the 2010s. Therefore, we cannot depend solely on a purely regulatory solution – even though internalizing emissions costs will make renewables relatively more attractive than non-renewable energy sources -- to cause firms to achieve our investment goals for the present decade.

(3)     Prices for carbon-intensive electricity are not likely to rise enough, even if environmental costs are internalized over time, and costs of renewable electricity generation are not likely to fall enough in the near future, to cause firms to have an adequate profit motive to replace or convert up to 200 gigawatts of capacity in the 2010s. Therefore, we cannot depend solely upon profit margins in regulated or unregulated electricity markets to attract the desired investment at the scale we want to see.

On the other hand, a silver lining to the global recession is that the unit costs of creating renewable electricity generation are extremely favorable at this time. For example, a firm should have to spend about $1750 to $1900 to create a kilowatt of wind capacity at this time. (Prices are higher in difficult terrain or where the wind is less available.) Turbine prices constitute about 70% of the cost, and turbine prices are down to about $1350 per kilowatt of capacity for immediate delivery, according to industry sources. Costs of other material and construction have also dropped. Innovation will continuously contribute to falling costs for renewables.

However, falling costs for constructing renewable generation facilities have been to a degree offset by the impact of falling prices for natural gas and coal. The relative cost of producing electricity from these sources also is therefore much lower than it was as recently as 2008. Currently, the cost of producing electricity from wind can be 15% higher than comparable coal or gas. In some geographical regions the comparison is less favorable for wind.  Nuclear power will reflect a still higher cost; so will solar. Nevertheless, wind and other alternatives are now close enough to carbon-intensive generation in true economic cost (usually discussed in terms of Levelized Cost of Electricity (LCOE)) that it is quite possible to use tax and finance policy to provide clean electricity to consumers at prices competitive with existing, carbon-intensive electricity prices. In other words, even if we choose to delay until the 2020s the full impact of internalizing of emissions costs in electricity prices, we still can attract significant private investment in clean alternatives now by lowering the effective cost of clean generation through tax and financing policies.

An example is found in Texas, which began to adopt various policies in support of wind investment policies at least ten years ago. For the country as a whole, according to the wind trade association AWEA, investment in wind produced in 2009 the addition of about 10 Gigawatts in wind capacity, increasing the national total from about 25 Gigawatts in 2008 to about 35 Gigawatts by the end of 2009 (about four percent of the national generation capacity). About a quarter of the new wind capacity in 2009 was added to the Texas markets alone. Now, windy days in that large state produce notable benefits to consumers. Prices are down as much as 25% in some parts of Texas since 2001.

Behind this price drop lie various factors, especially including the techniques by which distribution firms buy electricity. But tax policies and availability of capital are critical to investment in Texas wind or any renewables in any state. The Coalition for Green Capital has developed with supporting participants from the financial sector a business model that shows that with existing tax policies, including especially the Section 1603 cash grant in lieu of investment tax credits, and long-term, low cost financing provided by a loan guarantee from the Clean Energy Bank, a renewable project can lower the price of electricity it sells by as much as 40% in comparison to the price necessary to attract investment with standard commercial financing, and still create an attractive opportunity for private sector investment in the new generation facility.

We also believe that Section 142 of the Code should be amended to permit the use of tax exempt bonds by state Clean Energy Banks to finance renewable energy resource facilities, conservation and efficiency facilities, and other specified greenhouse gas emission technologies, as well as related facilities such as transmission lines necessary for development of renewable energy facilities. This provision should be structured so that it could be used in conjunction with existing federal tax incentives for renewable energy projects, such as the Production Tax Credit, the Investment Tax Credit, and the accelerated cost recovery permitted under the Modified Accelerated Cost Recovery System, and should be exempt from volume caps in the same way that tax exempt private activity bonds for nonprofit organizations are exempt from volume caps.

Summary: Adopt long-term tax and financing policies

Our Coalition therefore believes that in order to attract investment that would create up to 200 gigawatts of clean electricity generation in the 2010s, while at the same time either holding flat or lowering electricity prices to consumers as most forecasters predict will be the market trend in the near future, it is necessary for Congress to enhance and make constant for at least a decade existing tax policy for renewable electricity generation and to capitalize the Clean Energy Bank in an amount ranging from $10 billion to $20 billion. The Clean Energy Bank should be allowed to permit borrowers to finance credit subsidy costs over the life of the loan, and to extend explicitly full faith and credit guarantees up to a defined amount, perhaps 10 to 20 times capital, with rigorous underwriting standards to protect the taxpayer. Under these circumstances, firms will make the necessary investments in retrofits and clean generation, and the great conversion to a clean economy will continue.

It would make a great deal of sense to have Clean Energy Bank administer both retrofit and generation financing, particularly because utilities and other firms should be able to choose between these complementary efforts, as particular circumstances suggest.

Job creation will follow investment. Our studies suggest that each $10 billion invested in retrofits and generation will produce at least 100,000 jobs. Therefore, retrofitting 80 million buildings at $5,000 for each on average should lead to $400 billion in investment, or about 4 million jobs.  Investing $300 billion in creating 200 Gigawatts of clean generation should lead, by the same mathematics, to about 3 million jobs.  By contrast, comparatively few of these jobs will be created in the early 2010s by the markets as they now exist or by regulations that are as of now contemplated by Congress or by states. Exactly how many jobs could be created in any particular year by dint of the tax and financing policies we recommend no one can precisely predict. But, plainly, large scale, long term tax and financing policies can produce a hugely beneficial transformation in the American economy, and innovations in the 2020s and beyond will only make the route to sustainable growth even more attractive for our country.

-Posted by Alex Kragie
]]>Mon, 29 Mar 2010 19:38:50 -0800http://www.coalitionforgreencapital.com/1/post/2010/03/huffington-post.htmlThe Coalition for Green Capital was featured in a post by Arianna Huffington on the Huffington Post. You can read about us here.

-Posted by Alex Kragie
]]>Fri, 12 Mar 2010 06:12:57 -0800http://www.coalitionforgreencapital.com/1/post/2010/03/rep-markey-and-reed-hundt-clean-energyjobs.htmlReed Hundt co-authored a piece with Rep. Ed Markey (D-MA) comparing the investment and job creation opportunities in clean energy to the telecommunications revolution in the late 90's:

Jobs and Change, Communications and Energy
By Ed Markey and Reed Hundt - March 9, 2010, 9:34AM

Jobs are the chief concerns of most Americans right now. Those with them are scared they might lose them. Those without them want to find one. What we need to do is clear: pass laws that open new industries to job opportunities for millions of Americans - and in a hurry. Predictions that we will not return to full employment for five or more years should drive us to act as we did in the early 1990s, when we faced a similar, although far less, serious economic slump.

When Congress enacted the spectrum auction authority in 1993 and the market-opening Telecommunications Act of 1996, we intended to create new opportunities for high-paid work in the communications industry. As a legislator and a regulator, we partnered to create policies that did that, and we would freely admit that what happened exceeded our wildest dreams.

In the ten years that followed the spectrum auctions that created competition in digital cellular and the regulatory framework that opened Internet access to competition and the telephone network to innovation - 1997 to 2007 - investors, according to McKinsey and Company, poured more than $850 billion in new capital into mobile, data, and expanded cable networks in the United States.

This investment drove job creation beyond any economist's prediction. Unemployment fell to 4 percent by the end of 1990s, and nearly 65 percent of the population was employed. That's a remarkable contrast to the numbers today: 9.7 percent of Americans are unemployed and only 58 percent of people are employed. The job growth led to national income growth and increased tax revenue, so that the federal budget, contrary to every estimate at the beginning of the 90s, was balanced by 1998.

We can get the same upside surprises if we pass a law that retools the carbon-based energy sector of the last century and encourages private investment in a 21st century energy economy built on alternatives such as wind, sun, biomass and geothermal. That's the purpose of the Waxman-Markey bill, which passed the House of Representatives last June.

Reform in communications stimulated creative destruction. For example, the old long distance industry charged ten cents a minute for a call when we passed the Telecommunications Act. Now people are not even aware that there used to be a long distance charge when they use their phones to call anywhere.

The replacement of the old networks with the new led to waves of innovation. Our reforms permitted everyone to unplug the phone line from the back of the telephone and stick it into the back of the computer. That connection was the first pathway to the World Wide Web - in large part because we did not permit the telephone company to charge extra money for all that extra and unpredicted use. The new demand for data connections drove telephone companies to buy routers and switches, to build data centers, and to upgrade lines. Cable companies were driven to respond by switching some of their capacity from one-way video programs to high speed two-way internet access, giving rise to broadband. In response, the phone companies are now installing fiber, taking broadband to new levels of speed and lower price per bit.

Similarly, in the energy sector we need to retool the existing generation and distribution networks with cleaner forms of generation, open markets to innovators who will build power lines that lose fewer electrons and connect new sources of clean power to users, and reward investors for installing more efficient ways of using electricity. Creating the right framework for our communications networks led investors to commit about $850 billion to rebuild those networks. With the right set of policies, it is reasonable expect a similar explosion of private sector investment in the energy sector. This will result in consumers paying less for heating, cooling and lighting, and America's energy sector will be firmly based on abundant, cheap and clean fuels. Nothing will pull innovation into the energy sector more than wind farms demanding better storage technology, solar farms demanding better ways of capturing and converting sunlight into electricity, and appliances and electric vehicles that can talk to the grid if it is smart enough.

There are other areas of the economy where Americans can and should find new jobs. In the energy sector we not only will need millions of employees, but we also know that those millions will help us achieve independence from foreign oil and an end to the pollution of the environment from carbon emissions. The trifecta of huge employment, national security, and protection of the environment is a winning ticket for America. We have found that winning formula before in hard times that proved to be the dawn of economic growth; we can turn the dark days of the present into sunny optimism about our future once again.


Rep. Edward J. Markey (D-Mass.) is the chairman of the Select Committee on Energy Independence and Global Warming.

Reed Hundt was chairman of the Federal Communications Commission from 1993-1997.


-Posted by Alex Kragie
]]>Fri, 12 Feb 2010 08:06:55 -0800http://www.coalitionforgreencapital.com/1/post/2010/02/reeds-blog.htmlOur co-chairman Reed Hundt has been regularly blogging on issues relating to the Green Bank on TPM Cafe at Talkingpointsmemo.com. Here are some of his latest posts:

How to create millions of jobs By Reed Hundt - January 31, 2010, 11:50PM The White House estimates that the jobs bill could cost 100 billion dollars. Roughly that amount will create about a million jobs. That is eight million less than the goal of full employment by end of 2012. The gap is to be closed by private sector investment. The key to catalyzing rapid private sector investment is action, both by way of regulation and modest financing.

Agencies can open closed markets and create new markets that call for new investment. In the communications sector that would occur if the FCC added certain new spectrum to the pool of commercially available airwaves, or changed universal service to match broadband investment. In the energy sector a national renewables standard plus a very modestly funded Green Bank would cause utilities to invest in retrofits and clean electricity generation. The Green Bank would need capital in an amount equal to about five percent of the desired lending, as long as the target projects are not technologically risky and can couple with a power purchasing agreement that assures the clean electricity will be purchased. Thus capitalization of $10b would produce about $200 billion in lending, which is matched up with $200 billion in equity investing would total $400 billion, and create about four million jobs, as well as replace about a fourth of the carbon-intensive electricity generation of the United States with cleaner alternatives, ranging from wind, solar, biomass and natural gas in the short term to nuclear and geothermal in the longer run.

With current tax treatment and low cost financing, all the alternatives can be brought on to the grid at or below existing electricity prices for at least the next three years. It's reasonable to believe that a million new jobs could be created over three years from this effort, which of course would also guarantee that America would lead the world in carbon abatement.


Congress will not, and should not, buy services or hire people in enough volume to create full employment. Therefore, the executive branch has to choose between a regulatory program for job creation or trust in the natural resilience of the American economy. Surely the unreconstructed and still shaky pillars of the economy ought to give the White House a healthy fear of excessively modest action, especially when the useful regulatory interventions are in any case pro-competitive, pro-climate, pro-productivity.




President Clinton By Reed Hundt - January 29, 2010, 9:36AM President Clinton has been endorsing a Green Bank. See as follows:


A million green jobs, cheap!

Obama's green-collar economy dream may wilt in his deficit freeze. But Bill Clinton says he knows how to save it

BY JOE CONASON

...At least one substantive answer was provided to the Obama White House by former President Bill Clinton. For several months, Clinton has been lobbying administration officials, notably including Vice President Joe Biden, to create a new energy efficiency loan guarantee program that he says could result in well over a hundred billion dollars in new investment -- and employ more than a million workers to install green retrofits on commercial, institutional and residential buildings.

Last fall, Clinton directed staff at the Clinton Climate Initiative -- one of his foundation's programs -- to prepare a lengthy memo on the problems and potential of a Federal Energy Efficiency Loan Guarantee Program. According to their analysis, such an initiative could require as little as $9 billion in commitments by the U.S. Treasury to leverage $$67 billion in bank financing, because the savings on energy retrofits are both substantial and reliable. In a late October 2009 memo to Biden, White House energy advisor Carol Browner and Obama economic advisor Larry Summers, Clinton said he believed that the loan to guarantee ratio actually could be as high as 10-to-1. Under that scenario, banks would lend building owners as much as $150 billion if the Treasury put up $15 billion -- and every billion dollars would create between 7,000 and 9,000 jobs in the construction, architecture and manufacturing industries.

The Clinton memo recommended further that the program be structured so that loan applications would lead to construction starts within five months. Promoting this idea among Democrats in Congress as well as administration officials, Clinton has noted that if the loan program could be implemented swiftly and successfully, a million new jobs would become available before the November midterm elections.

While there are many reasons why building owners and lenders have failed to capitalize on the savings available from energy retrofits, there is little disagreement on their benefits for both markets and society. Other countries, notably including Germany and Sweden, have made great progress toward their own carbon-emission objectives by deploying such "unsexy" measures...





A Bank by Any Name By Reed Hundt - January 23, 2010, 12:16PM Senator Jeff Bingaman (D-NM) has joined Congressman Van Hollen (D-Md) in calling for a Green Bank to be created as part of the prospective jobs bill. They are both to be praised, and listened to.

Here are some basic reasons they are right:

First, there is a crisis in lending to all alternative energy technologies. In the absence of reliable demand for clean electricity, continued anxiety about all loans from commercial banks still burdened by troubled assets, and worries about technological risk, the reality is that even conventional clean energy projects are not attracting financing that is adequate to assure returns to equity above modest hurdle rates, without raising prices for the resulting electricity to levels that are unacceptable to regulators or customers in unregulated markets. For less conventional projects, the situation is worse.

Second, to create millions of jobs in this sector starting right away and extending for at least the next three years there are no ways to proceed other than a combination of:

-- financing immediately deployable wind and solar and biomass projects,
--financing natural gas,
--financing efficiency gains implemented by utilities and energy service companies,
--giving tax credits and grants in lieu of credits to all financed projects (extending the stimulus, in effect),
--extending department of energy support of innovative breakthrough technologies,
-- and giving tax credits to home owners for efficiency gains.

There is no way to achieve the Van Hollen goal of several million new jobs by 2012 without all these steps. And there is no way that this goal is impractical in execution or undesirable as a policy matter.

Third, it is long past time to stop saying "it would take too long" to get a lending authority up and running. I have myself started a half dozen companies that commenced operations in less than a month after incorporation. Starting is not the same as total completion of a full range of activities, but starting is progress and also is job creation. The success stories of the Haitian relief effort (and there are some), the recovery of the cellular networks after various natural disasters, numerous military responses -- many other examples teach that in a couple of weeks productive and complex efforts of all kinds can achieve measurable and meaningful outcomes. The entire Obama transition was start to finish a 90 day story of business creation and completion, going from zero to a massive output of very good -- in my opinion -- thought and research. The Nixon Wage and Price Administration was created in 17 days and by 30 days had preliminarily impacted all businesses in America. I could go on. As FCC chairman and CEO, I was responsible for a team that reorganized the 2,000 person agency, hired 400 people, laid off hundreds, closed dozens of offices, put the agency on the Internet, and overhauled regulation in virtually every sector of the communications and media parts of the economy at the behest of Congress. All delays were a function not of the limits of human endeavor -- the great people at the FCC knocked themselves out and the industries gave great input on infinitely complex issues. Delays such as they were came from the regulations of the administrative process, the oversight of OMB, the regulations relating to government contracting, and judicial review. Anyone at the Department of Energy today could tell you that the same problems slow sometimes to a maddening pace their efforts to create jobs in conventional and in breakthrough technological areas. Hardly any words are needed in a jobs bill to speed activity, without sacrificing transparency, integrity of thinking, or any of the virtues of good governance. I have been fortunate to run or co-run companies, coalitions, commissions, cases, an agency, and various campaigns for causes. I am absolutely convinced that honest and wise disbursement of other people's money --- taxpayers' or investors' or contributors'-- is not guaranteed by complex, time-insensitive and redundant reviews of action. It is guaranteed by transparency, accountability, hard work, good culture, clear governance -- and simple straightforward and expeditious decision-making. Time, by contrast, will kill all deals, and thwart all efforts to any goal.

Fourth, venture capital and private equity and utilities and home contractors and manufacturers and all interested investors all have to be given the boost of low cost long term financing if we want both large scale immediate job growth and also a steady path from a carbon intense to a clean platform for our economy. I see brilliant technologists -- such as Bill Gates just this week -- extolling the virtues of cutting edge breakthrough inventions; others are sure that nuclear power is the right future for America; some are convinced that just funding single deployments of difficult technologies will prove or disprove everything we need to know; and some believe a third or more of all needed energy can come from wind and sun in conventional existing form factors. This reminds me, with a blinding flash of recognition, of the debates about the new thing called the Internet that occurred in dozens, probably hundreds in fact, of meetings that as FCC chair I attended or called in 1993-97. Everything said in total proved to be right and almost no specific idea turned out to be exactly right. But here is what I learned: only when the big, conventional, incumbent proprietors of the existing fixed line and cable networks decided to participate in the great conversion to mobility and data did we see the future really unfold. So there is no bright line between conventional and breakthrough, and no clear demarcation between an invention and a deployment of something conventional. Much learning in fact comes from repeated practice as opposed to laboratory experiment or single field tests of any scale.
What is important is to have entrepreneurs push incumbents and have incumbents respond by adopting conventional changes now and more innovative changes just a little later. That way progress is made, and fascinatingly it turns out that the conventional deployments -- wind and sun and biomass and gas in the case of energy, and narrowband internet in the case of the salad days of the Internet -- create the demand for more innovative approaches. As an example, if we finance 30 gigawatts of wind projects starting now (all possible), that will be a huge demand market for all the storage technologies that venture capitalists and energy department researchers can come up with. So too narrowband internet created demand markets for Cisco and a platform for Yahoo!, only to give way in time to broadband. I need hardly add, but will, that the million more new jobs and 2.1 trillion dollars of net stock sales that came from the Internet driven investments were well received by the country and the otherwise hard to please tax authorities of government at every level.

What's the therefore? It is that I hope the proponents of financing breakthrough technologies that will pay off in distant years (which we surely need) and those desirous of financing wind, sun, biomass and gas right away could agree -- and agree with the efficiency mavens too -- that the right answer is ALL, and not all of one and none of the others.

Fifth and last, we have to aim for cheap and abundant clean energy that replaces carbon intensive energy, and we have to achieve that replacement much sooner than 2020 and thereafter for two huge reasons: we need the jobs now and we need to stop climate change now. I say "cheap" because no new technology has ever conquered the world by coming in as an expensive but identical version of an existing good or service. The problem is that clean and "dirty" electricity consist of identical electromagnetic waves. If clean costs more than dirty, why would we think everyone will buy it? There are only two solutions: raise the price of "dirty" or lower the price of clean. In politics as in many other walks of life, "both" is often a great answer and "both" is the right response to the "identical wave" problem. We want the price of "dirty" to go up and the price of "clean" to go down. As it happens, by the inexorable mathematics of capital formation, the lower the cost of capital, the lower the necessary price for the product produced by that capital. In other words, use a long term low interest bond to fund the clean energy project and the project owners need to charge customers a lower price in order to make a fair return. Specifically a conventional wind project can needs a 6 or 7 cent per kilowatt hour wholesale price in order to compete with "dirty". With Green Bank financing that is doable right away. Without Green Bank financing the price has to rise to 11 to 12 cents, and then the project is competitive only in very high price states like Hawaii, Connecticut, and parts of California.

As to raising the price of "dirty" that is the purpose of a cap or a carbon tax. It is important. It is desired. But even if the House climate bill were passed, it would not raise the price of "dirty" sufficiently to make "clean" competitive without Green Bank financing until at least 2020 or possibly longer. In short, "both" is the right answer: lower the price of clean now, raise the price of dirty as soon as the economic health of the country and the political make-up of Congress permit.




Posted by: Alex Kragie



]]>Sun, 24 Jan 2010 13:51:10 -0800http://www.coalitionforgreencapital.com/1/post/2010/01/energy-conversion-devices-supports-rep-van-hollens-call-for-a-green-bank-in-the-jobs-bill.htmlROCHESTER HILLS, Mich., Jan. 21 /PRNewswire-FirstCall/ -- Energy Conversion Devices, Inc. (ECD) (Nasdaq: ENER), the leading global manufacturer of thin-film flexible solar laminate products for the building integrated and commercial rooftop markets, commented today on the letter sent by Congressman Chris Van Hollen to President Obama urging the President to include creation of a Green Bank in the Jobs Bill.

In his letter to President Obama, Congressman Van Hollen proposed the creation of a "Green Bank" separate and apart from the existing bureaucracy of government, similar to the Clean Energy Deployment Administration included in the House-passed American Clean Energy and Security Act, and mandate that the Green Bank support private investment in conventional, job-generating retrofit and clean energy projects across every state in America.

Congressman Van Hollen also noted, "A Green Bank could be capitalized on a one-time basis with $20 billion and never need another dime from government. With an annual budget of less than $200 million and several hundred employees, it could cause more than $200 billion in new private sector investment, propel economic growth and create more than two million good-paying jobs over the next three years. Most importantly, it could launch a new era of broadly shared prosperity in a way that permanently strengthens our national security."

"We continue to be very appreciative of the Obama Administration's efforts to support American clean technology," said Mark Morelli, ECD President and CEO. "As part of the effort to support clean energy and clean technology development, we support Congressman Van Hollen's request that the Green Bank be created and implemented quickly. The most efficient way to do this is in the Jobs Bill. Our American clean technology and clean energy industries need immediate and visible support to continue the recovery that has begun with the stimulus programs.  The Green Bank will be a critical partner with private industry to deliver on the promise of job creation and energy independence."

About Energy Conversion Devices

Energy Conversion Devices is a leader in building integrated and rooftop photovoltaics. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to energy using proprietary technology. ECD's UNI-SOLAR® brand products are unique because of their flexibility, light weight, ease of installation, durability, and real-world efficiency. Through its Solar Integrated Technologies business, the company also designs, manufactures and installs rooftop photovoltaic systems which enable customers to transform unused space on the rooftop into a value-generating asset. For more information, please visit www.energyconversiondevices.com.]]>Thu, 14 Jan 2010 10:20:20 -0800http://www.coalitionforgreencapital.com/1/post/2010/01/rep-van-hollen-letter-to-president-obama.htmlThis morning, Rep. Chris Van Hollen sent a letter to President Obama advocating for the inclusion of an independent, conventionally focused Green Bank for inclusion in any Jobs Bill. You can find the full text of the letter in the Downloads/Additional Information section of the site.

Rep. Van Hollen is and has been an exceptionally strong leader on clean energy issues, and we're very happy to have such a gifted legislator leading the charge towards millions of new jobs, energy independence and the transition from carbon to clean.

-Posted by Alex Kragie
]]>Wed, 06 Jan 2010 09:39:11 -0800http://www.coalitionforgreencapital.com/1/post/2010/01/2010.htmlAs 2010 begins, Congress is presented with a tremendous opportunity to dramatically improve the future of the clean energy industry in the United States. Before the year is out, we have the opportunity to include mechanisms for financing energy efficiency and conventional energy projects in the Senate version of the upcoming Jobs Bill, the House version of the upcoming Jobs Bill and a final Energy/Environment Bill in the Senate. By providing low-cost financing for these projects, we can leverage public funds to stimulate private investment in the clean energy sector, creating millions of jobs. As we move into the new year, we need your help to make sure that Congress hears you. You can make your voice heard through four easy steps:

1. Go to http://www.senate.gov/general/contact_information/senators_cfm.cfm

2. Find your Senator's contact info on the easy to use list and click on the link under their name that says "Webform"

3. Tell your Senators that you want to see the future of the clean energy industry in America ensured through the passage of a comprehensive Energy and Environment bill in the US Senate

4. Then tell your Congressman to be sure to include the Green Bank/CEDA in any House Jobs Bill at https://writerep.house.gov/writerep/welcome.shtml

We'd also like to hear your ideas directly. Send me an email at coalitionforthegreenbank2010@gmail.com, and let me know what you're thinking. Best practices, suggestions, comments; feel free to get in touch with me with your thoughts.

Happy New Year to you and your family, and let's help make this the year that we secure our domestic clean energy future here in the United States.

Alex

-Posted by Alex Kragie
]]>Thu, 10 Dec 2009 14:47:38 -0800http://www.coalitionforgreencapital.com/1/post/2009/12/norm-ornstein-on-the-green-jobs-bank.html "The idea out there that intrigues me the most is to create a win/win by focusing on green technologies, via a variation of the Green Bank that had wide bipartisan support in the House Energy and Commerce Committee and in the Senate Energy panel. Crafted and championed by Chris Van Hollen in the House and Jeff Bingaman in the Senate, the Green Bank is a way to leverage public capital into serious private investment in enhancing energy development and conservation.


A Green Jobs Bank would require Congress to fund a one time capitalization of $25 to $50 billion to make loans and loan guarantees to private companies—not, in the short run, to do cutting edge technology, but to focus on bread-and-butter things like energy conservation via retrofitting of buildings, conventional clean energy production, and ramped-up manufacture of clean energy components like wind turbines and solar panels."

From Roll Call (12/9/09)

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