Background on CGC: Who we are and what we do
I. Background on CGC
The Coalition for Green Capital (CGC) is working on the state, national and international level to establish investment funds that would provide low cost financing to clean energy and energy efficiency projects. We call these funds green banks, which are more similar investment banks then regular banks (regular banks take deposits and the green banks we are proposing would not be depository institutions). These funds would be used to speed the deployment of wind, solar and other clean energy technologies.
The Waxman-Markey climate change bill of 2010 included $7.5 billion in seed capital for a national green bank but the comprehensive energy legislation did not pass the Senate. In 2011, CGC then turned to the states and in June, 2011 Connecticut passed the first state green bank with almost unanimous bipartisan support (36-0 in the Senate, 139-8 in the House). CGC is now working in 8 to 10 states to create similar state green banks.
Although costs are dropping, renewable energy projects are still not cost competitive in most of the country because the energy they generate is more expensive then the cost of energy from existing fossil fuel facilities. New energy generation sources need to be approved by state regulatory commissions (in some states consumers need to be willing to buy their energy) and neither of these will happen if the cost of energy from renewable energy sources is too high. To lower the cost, both federal and state governments have provided various tax incentives and grants and subsidies. Many of these sources of support are going to disappear during the current cut back on government spending. Green bank would replace or reduce the need for these current sources of funding.
II. The Green Bank
The first goal of a green bank is to lower the coat of clean energy by providing lower cost financing then is available from commercial sources. Our studies have shown that a green bank should be able to lower the delivered cost of energy from a project by 15-20% compared to today's commercial lending rates. This would greatly expand the areas of the country in which renewables can be deployed, as wind and solar are stronger in some areas of the country then others. Because of their structure, green banks would also provide 100% up-front, low interest rate financing for energy efficiency retrofit projects at a low interest rate without further government buy downs of interest rates or other types of subsidies.
The second goal of a green bank is to make limited government funds go further. At the state level, we do this by consolidating several existing state programs (without new requests for funding), switching them from a grant model to a financing model where the loans are repaid and put in a revolving fund (we also use loan guarantees and other financing methods), leveraging those funds so that one dollar supports $5 or $10 worth of projects, and raise money from private investors to match the state funds. Private investors will receive a capped rate of return.
On the federal level, our basic goal now is to borrow up to $10 billion from the U.S. Treasury in a way that results in a zero impact on the federal budget and to match that amount with private capital. We are also seeking to require through an auction process that if a tax holiday is granted for company profits repatriated from outside the U.S., a portion of the repatriated funds to go into an energy and infrastructure bank.
