Blog Posts
Creative Thinking on Infrastructure and Clean Energy 07/20/2011
Intransigence in Congress stymies necessary action to address economic uncertainty. While the unemployment rate sits at 9.2 percent, politicians refuse to move forward on job-creating legislation to help finance clean energy development and deployment.A study released by the Brookings Institution last week, however, shows that there are currently more jobs in the clean energy economy (2.7 million) than the fossil fuel industry (2.4 million).
The clean energy economy needs low cost finance to continue growing. American infrastructure needs a complete overhaul to maintain public health and a vibrant economy.
A national infrastructure bank offers a solution to these problems. As a recent article in Forbes explains, an infrastructure bank as proposed by Coalition for Green Capital CEO Reed Hundt and Thomas Mann of the Brookings Institution last month in The Washington Post, could be funded with repatriated foreign earnings from U.S. corporations brought back at a reduced tax rate set at an auction. The Forbes article describes how, “Under this plan, the economy would surge from the real stimulus of added investment and jobs. More people employed also means less government spending and more government tax revenue.”
Not only would an infrastructure bank create jobs without significant government spending, but its investments in clean energy and energy efficiency would also smooth the transition to a strong domestic clean energy economy. An infrastructure bank offers a winning idea for the economy and for clean energy that should push through the current political stalemate.
Promoting Action on Infrastructure and Clean Energy 07/12/2011
Friday’s report from the Labor Department offered a grim perspective on the current unemployment situation in the U.S. As Coalition for Green Capital (CGC) CEO Reed Hundt noted over the weekend, the report underscores the need for decisive action to create jobs and make the economy more productive. One solution that has sparked interest on Capitol Hill is a proposal to use a limited repatriation of foreign earnings to capitalize an infrastructure bank. The repatriation would provide funding for the bank and a source of revenue for the U.S. Treasury. The infrastructure bank would offer long-term low interest loans and loan guarantees to infrastructure and clean energy projects. These projects, in turn, would create jobs and enable a transition to a clean energy economy.
To learn more about the repatriation proposal, please see a recent Washington Post op-ed that Reed Hundt wrote with Thomas Mann and a recent letter to the editor in The New York Times from Reed Hundt and CGC general counsel Ken Berlin.
CGC to NYT: Infrastructure Investment is Answer 07/05/2011
Coalition for Green Capital (CGC) CEO Reed Hundt and General Counsel Ken Berlin told The New York Times in a letter to the editor this weekend that proposals to provide a lower tax rate for repatriated funds should be tied to infrastructure investments. CGC's letter is available here. They were responding to a June 26 editorial in The Times, "Whose Stimulus?" that criticized plans for corporations to repatriate funds by redirecting funds to domestic investments.
Under the CGC proposal, the U.S. Treasury conducts auctions for the right to repatriate overseas corporate earnings at a reduced tax rate. The winners at auction will be those corporations that bid the highest tax rate to repatriate a limited amount of money. They would then place “all or part of the remainder in an infrastructure bank and receive shares in the bank in return.” The Infrastructure Bank will issue long-term low interest loans and loan guarantees to infrastructure and clean energy projects that will create jobs and economic growth.
To learn more about this idea, link to a recent Washington Post op-ed that Reed Hundt wrote with Thomas Mann: http://www.washingtonpost.com/opinions/rebuild-american-infrastructure-companies-offshore-profits-can-help/2011/06/15/AGlYAqXH_story.html
Making Headlines in Connecticut 06/30/2011
Connecticut’s bi-partisan energy overhaul earlier this month which created the nation’s first state-level green bank continues to draw praise. In a piece in The New Republic, Mark Muro and Devashree Saha commend Connecticut’s new Clean Energy Finance and Investment Authority (CEFIA) as a classic example of state experimentation that can bypass federal gridlock. CEFIA will provide loans and loan guarantees to clean energy and energy efficiency projects without raising electricity rates or taxes. The clean energy and energy efficiency projects funded by the bank will create jobs and lower electricity bills. Given its potential to finance Connecticut’s transition to a clean energy economy, Bloomberg New Energy Finance notes “Connecticut’s green bank could be a model for a similar one at the federal level or in other states.”
Bank Gaining Momentum 06/27/2011
Momentum is quickly building in support of using repatriated funds from U.S. companies to capitalize an infrastructure bank. Following Coalition for Green Capital (CGC) CEO Reed Hundt’s co-authored op-ed in the Washington Post on June 17th, a variety of political leaders have advocated for this politically expedient solution to investing in infrastructure. Chicago Mayor Rahm Emanuel called for using repatriated earnings to fund an infrastructure bank at a speech to the U.S. Conference of Mayor’s on Saturday, June 18th. In addition, Sen. Charles Schumer (D-NY), a top Senate Democrat, has voiced support for repatriating foreign profits in order to create jobs and spur infrastructure development.
Clean energy should be a major facet of the infrastructure bank because it will create jobs and reduce dependence on foreign energy imports. As support for an infrastructure bank grows, CGC will continue to promote investment in clean energy as an integral part of any plan to improve U.S. infrastructure.
Rebuilding American Infrastructure 06/20/2011
On Friday, June 17th, Coalition for Green Capital (CGC) CEO Reed Hundt co-authored an op-ed with Brookings Institution Senior Fellow Thomas Mann in the Washington Post, outlining recommendations for using repatriated funds from U.S. companies to capitalize an “infrastructure bank.” They argue that U.S. companies, which currently hold about $1 trillion of profits abroad, should be permitted to bring this money back to the U.S. at a reduced tax rate if they invest it in an infrastructure bank for a term of years. The bank will then issue low-interest, long-term loans for projects that will put Americans back to work, such as clean energy generation, building efficiency, and high-speed rail. This option not only encourages U.S. companies to repatriate profits, but it also provides a politically feasible mechanism for funding much-needed infrastructure improvements without significant government spending.
This sort of ‘out-of-the box’ thinking has drawn praise from policy-makers and the blogosphere. In an article about the need for fresh ideas to solve problems in an otherwise intractable political climate, Politico cites CGC’s proposal for an Energy Independence Trust (EIT) and the recent passage of the first state-level Green Bank in Connecticut as examples of bi-partisan solutions for funding the clean energy and energy efficiency projects that will lead the way to a new clean energy economy. Such creative ideas are now finding support in several states and on the national level as politicians recognize the link between investing in clean energy and creating jobs.Add Comment Breakthrough in Connecticut06/14/20110 Comments Edit | Settings | Delete On Tuesday, June 7, 2011, Connecticut became the first state in the nation to create a Green Bank. Connecticut established the Green Bank, called the Clean Energy Finance and Investment Authority (CEFIA), by regrouping a line charge previously used for the Clean Energy Fund. CEFIA will have $48 million in capital in its first year with which to make guaranteed low-interest loans to both clean energy projects and energy efficiency projects. These projects will create jobs and lower electricity prices in the state without additional costs to taxpayers.
In addition to enabling development and deployment of clean energy technologies without raising rates, the bill streamlines Connecticut’s existing energy administrative authorities under a consolidated Department of Energy and Environmental Protection (DEEP), headed by Commissioner Dan Esty.
The Connecticut Green Bank offers Congress and other states a model for promoting investment in clean energy. CGC staff members have been working on the bill, which passed unanimously in the Senate and by a 139-8 margin in the House, with Governor Daniel Malloy, Commissioner Dan Esty, and the Connecticut General Assembly over the past six months. The CGC now turns to helping implement the Connecticut Green Bank and advocating for other states and the federal government to follow Connecticut’s lead.
For more information, see http://thinkprogress.org/romm/2011/06/09/240624/connecticut-passes-america%E2%80%99s-first-full-%E2%80%98green-bank%E2%80%99-proving-clean-energy-is-a-bipartisan-issue/
Energy Independence Trust in the Huffington Post 09/28/2010
Dan Froomkin wrote an article in the Huffington Post about clean energy legislation. Our CEO Reed Hundt was interviewed:
http://www.huffingtonpost.com/2010/09/28/a-convenient-truth-gearin_n_741430.html
So what may be the last, best hope for major federal clean-energy investment is a retooled green bank proposal that former FCC chairman Reed Hundt is pushing.
Bowing to the political realities -- that, as he puts it, "Congress won't appropriate any money now for any cause, no matter how worthy" and that unemployment is a more urgent priority than clean energy -- Hundt is advocating a nonprofit Energy Independence Trust (EIT) that he bills as a massive jobs generator, and that he says would not require appropriations because it would just be borrowing money from the Treasury.
At the core of the proposal is Hundt's embrace of one of the many facts that deficit hawks try to ignore: that despite concerns that high deficits will force the U.S. to increase interest rates, the Treasury is currently able to borrow money -- i.e. sell Treasury bills -- at stunningly low rates.
"You want to take the astoundingly low interest rates that the government has to pay to borrow money, and you want to transfer that to the degree possible to productive, revenue-producing businesses," Hundt told HuffPost. "There's a huge unmet need for productive new investment, but the only way to really prime the pump is to put in really cheap capital."
The investments Hundt is talking about, however, need to generate returns. "You want to build toll roads, not roads; dams that produce electricity, where you get paid back after a long period of time; electric transmission lines, where the revenue comes in from carrying the electricity; wind farms, where the revenue comes in from selling the electricity."
The Treasury would sell securities at very low interest, lend the money at cost to the EIT, and the EIT would then turn around and lend it to private investors. Hundt calls this "really, really, low, wonderfully low, cheap capital for investors who will build these clean energy systems."
And everyone would eventually get paid back.
"It's really pretty simple. In fact, it's what China does," Hundt said. "And in fact China has used low-cost lending to stimulate about twice as much clean energy investing as we have in the United States."
But how many jobs would this create?
"Roughly speaking, $1 billion in capital is 10,000 direct jobs and about 50,000 indirect jobs," Hundt said. "So one way to do it is say: How many jobs to you want?
"So if you tell me you want a million jobs, then I need $100 billion of investment, which means that I need probably about $30 billion of cheap capital, because the rest would come from other forms of capital."
Meanwhile, that $100 billlion would buy an awful lot of clean power. "Everyone knows that we need to build a clean energy system to replace a dirty energy system," Hundt said.
The plan also allows for private industry and the states to be the decisionmakers. "I don't believe that we need some kind of federal, national comprehensive, Washington-dictated solution. Electricity is a very local business," Hundt said.
"But I do believe if we said to all the states and all the businesses: Here's a once-in-a-lifetime opportunity for very cheap capital... then we would be opening the door to a variety of technological solutions that would be selected on the local level....
"If you want to rebuild the country, this is a golden opportunity."
-Posted by Alex Kragie
What we're doing right now...06/21/2010
Here'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:
Intransigence in Congress stymies necessary action to address economic uncertainty. While the unemployment rate sits at 9.2 percent, politicians refuse to move forward on job-creating legislation to help finance clean energy development and deployment.A study released by the Brookings Institution last week, however, shows that there are currently more jobs in the clean energy economy (2.7 million) than the fossil fuel industry (2.4 million).
The clean energy economy needs low cost finance to continue growing. American infrastructure needs a complete overhaul to maintain public health and a vibrant economy.
A national infrastructure bank offers a solution to these problems. As a recent article in Forbes explains, an infrastructure bank as proposed by Coalition for Green Capital CEO Reed Hundt and Thomas Mann of the Brookings Institution last month in The Washington Post, could be funded with repatriated foreign earnings from U.S. corporations brought back at a reduced tax rate set at an auction. The Forbes article describes how, “Under this plan, the economy would surge from the real stimulus of added investment and jobs. More people employed also means less government spending and more government tax revenue.”
Not only would an infrastructure bank create jobs without significant government spending, but its investments in clean energy and energy efficiency would also smooth the transition to a strong domestic clean energy economy. An infrastructure bank offers a winning idea for the economy and for clean energy that should push through the current political stalemate.
Promoting Action on Infrastructure and Clean Energy 07/12/2011
Friday’s report from the Labor Department offered a grim perspective on the current unemployment situation in the U.S. As Coalition for Green Capital (CGC) CEO Reed Hundt noted over the weekend, the report underscores the need for decisive action to create jobs and make the economy more productive. One solution that has sparked interest on Capitol Hill is a proposal to use a limited repatriation of foreign earnings to capitalize an infrastructure bank. The repatriation would provide funding for the bank and a source of revenue for the U.S. Treasury. The infrastructure bank would offer long-term low interest loans and loan guarantees to infrastructure and clean energy projects. These projects, in turn, would create jobs and enable a transition to a clean energy economy.
To learn more about the repatriation proposal, please see a recent Washington Post op-ed that Reed Hundt wrote with Thomas Mann and a recent letter to the editor in The New York Times from Reed Hundt and CGC general counsel Ken Berlin.
CGC to NYT: Infrastructure Investment is Answer 07/05/2011
Coalition for Green Capital (CGC) CEO Reed Hundt and General Counsel Ken Berlin told The New York Times in a letter to the editor this weekend that proposals to provide a lower tax rate for repatriated funds should be tied to infrastructure investments. CGC's letter is available here. They were responding to a June 26 editorial in The Times, "Whose Stimulus?" that criticized plans for corporations to repatriate funds by redirecting funds to domestic investments.
Under the CGC proposal, the U.S. Treasury conducts auctions for the right to repatriate overseas corporate earnings at a reduced tax rate. The winners at auction will be those corporations that bid the highest tax rate to repatriate a limited amount of money. They would then place “all or part of the remainder in an infrastructure bank and receive shares in the bank in return.” The Infrastructure Bank will issue long-term low interest loans and loan guarantees to infrastructure and clean energy projects that will create jobs and economic growth.
To learn more about this idea, link to a recent Washington Post op-ed that Reed Hundt wrote with Thomas Mann: http://www.washingtonpost.com/opinions/rebuild-american-infrastructure-companies-offshore-profits-can-help/2011/06/15/AGlYAqXH_story.html
Making Headlines in Connecticut 06/30/2011
Connecticut’s bi-partisan energy overhaul earlier this month which created the nation’s first state-level green bank continues to draw praise. In a piece in The New Republic, Mark Muro and Devashree Saha commend Connecticut’s new Clean Energy Finance and Investment Authority (CEFIA) as a classic example of state experimentation that can bypass federal gridlock. CEFIA will provide loans and loan guarantees to clean energy and energy efficiency projects without raising electricity rates or taxes. The clean energy and energy efficiency projects funded by the bank will create jobs and lower electricity bills. Given its potential to finance Connecticut’s transition to a clean energy economy, Bloomberg New Energy Finance notes “Connecticut’s green bank could be a model for a similar one at the federal level or in other states.”
Bank Gaining Momentum 06/27/2011
Momentum is quickly building in support of using repatriated funds from U.S. companies to capitalize an infrastructure bank. Following Coalition for Green Capital (CGC) CEO Reed Hundt’s co-authored op-ed in the Washington Post on June 17th, a variety of political leaders have advocated for this politically expedient solution to investing in infrastructure. Chicago Mayor Rahm Emanuel called for using repatriated earnings to fund an infrastructure bank at a speech to the U.S. Conference of Mayor’s on Saturday, June 18th. In addition, Sen. Charles Schumer (D-NY), a top Senate Democrat, has voiced support for repatriating foreign profits in order to create jobs and spur infrastructure development.
Clean energy should be a major facet of the infrastructure bank because it will create jobs and reduce dependence on foreign energy imports. As support for an infrastructure bank grows, CGC will continue to promote investment in clean energy as an integral part of any plan to improve U.S. infrastructure.
Rebuilding American Infrastructure 06/20/2011
On Friday, June 17th, Coalition for Green Capital (CGC) CEO Reed Hundt co-authored an op-ed with Brookings Institution Senior Fellow Thomas Mann in the Washington Post, outlining recommendations for using repatriated funds from U.S. companies to capitalize an “infrastructure bank.” They argue that U.S. companies, which currently hold about $1 trillion of profits abroad, should be permitted to bring this money back to the U.S. at a reduced tax rate if they invest it in an infrastructure bank for a term of years. The bank will then issue low-interest, long-term loans for projects that will put Americans back to work, such as clean energy generation, building efficiency, and high-speed rail. This option not only encourages U.S. companies to repatriate profits, but it also provides a politically feasible mechanism for funding much-needed infrastructure improvements without significant government spending.
This sort of ‘out-of-the box’ thinking has drawn praise from policy-makers and the blogosphere. In an article about the need for fresh ideas to solve problems in an otherwise intractable political climate, Politico cites CGC’s proposal for an Energy Independence Trust (EIT) and the recent passage of the first state-level Green Bank in Connecticut as examples of bi-partisan solutions for funding the clean energy and energy efficiency projects that will lead the way to a new clean energy economy. Such creative ideas are now finding support in several states and on the national level as politicians recognize the link between investing in clean energy and creating jobs.Add Comment Breakthrough in Connecticut06/14/20110 Comments Edit | Settings | Delete On Tuesday, June 7, 2011, Connecticut became the first state in the nation to create a Green Bank. Connecticut established the Green Bank, called the Clean Energy Finance and Investment Authority (CEFIA), by regrouping a line charge previously used for the Clean Energy Fund. CEFIA will have $48 million in capital in its first year with which to make guaranteed low-interest loans to both clean energy projects and energy efficiency projects. These projects will create jobs and lower electricity prices in the state without additional costs to taxpayers.
In addition to enabling development and deployment of clean energy technologies without raising rates, the bill streamlines Connecticut’s existing energy administrative authorities under a consolidated Department of Energy and Environmental Protection (DEEP), headed by Commissioner Dan Esty.
The Connecticut Green Bank offers Congress and other states a model for promoting investment in clean energy. CGC staff members have been working on the bill, which passed unanimously in the Senate and by a 139-8 margin in the House, with Governor Daniel Malloy, Commissioner Dan Esty, and the Connecticut General Assembly over the past six months. The CGC now turns to helping implement the Connecticut Green Bank and advocating for other states and the federal government to follow Connecticut’s lead.
For more information, see http://thinkprogress.org/romm/2011/06/09/240624/connecticut-passes-america%E2%80%99s-first-full-%E2%80%98green-bank%E2%80%99-proving-clean-energy-is-a-bipartisan-issue/
Energy Independence Trust in the Huffington Post 09/28/2010
Dan Froomkin wrote an article in the Huffington Post about clean energy legislation. Our CEO Reed Hundt was interviewed:
http://www.huffingtonpost.com/2010/09/28/a-convenient-truth-gearin_n_741430.html
So what may be the last, best hope for major federal clean-energy investment is a retooled green bank proposal that former FCC chairman Reed Hundt is pushing.
Bowing to the political realities -- that, as he puts it, "Congress won't appropriate any money now for any cause, no matter how worthy" and that unemployment is a more urgent priority than clean energy -- Hundt is advocating a nonprofit Energy Independence Trust (EIT) that he bills as a massive jobs generator, and that he says would not require appropriations because it would just be borrowing money from the Treasury.
At the core of the proposal is Hundt's embrace of one of the many facts that deficit hawks try to ignore: that despite concerns that high deficits will force the U.S. to increase interest rates, the Treasury is currently able to borrow money -- i.e. sell Treasury bills -- at stunningly low rates.
"You want to take the astoundingly low interest rates that the government has to pay to borrow money, and you want to transfer that to the degree possible to productive, revenue-producing businesses," Hundt told HuffPost. "There's a huge unmet need for productive new investment, but the only way to really prime the pump is to put in really cheap capital."
The investments Hundt is talking about, however, need to generate returns. "You want to build toll roads, not roads; dams that produce electricity, where you get paid back after a long period of time; electric transmission lines, where the revenue comes in from carrying the electricity; wind farms, where the revenue comes in from selling the electricity."
The Treasury would sell securities at very low interest, lend the money at cost to the EIT, and the EIT would then turn around and lend it to private investors. Hundt calls this "really, really, low, wonderfully low, cheap capital for investors who will build these clean energy systems."
And everyone would eventually get paid back.
"It's really pretty simple. In fact, it's what China does," Hundt said. "And in fact China has used low-cost lending to stimulate about twice as much clean energy investing as we have in the United States."
But how many jobs would this create?
"Roughly speaking, $1 billion in capital is 10,000 direct jobs and about 50,000 indirect jobs," Hundt said. "So one way to do it is say: How many jobs to you want?
"So if you tell me you want a million jobs, then I need $100 billion of investment, which means that I need probably about $30 billion of cheap capital, because the rest would come from other forms of capital."
Meanwhile, that $100 billlion would buy an awful lot of clean power. "Everyone knows that we need to build a clean energy system to replace a dirty energy system," Hundt said.
The plan also allows for private industry and the states to be the decisionmakers. "I don't believe that we need some kind of federal, national comprehensive, Washington-dictated solution. Electricity is a very local business," Hundt said.
"But I do believe if we said to all the states and all the businesses: Here's a once-in-a-lifetime opportunity for very cheap capital... then we would be opening the door to a variety of technological solutions that would be selected on the local level....
"If you want to rebuild the country, this is a golden opportunity."
-Posted by Alex Kragie
What we're doing right now...06/21/2010
Here'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
