As 'green banks' sprout around globe,

As 'green banks' sprout around globe,

Reed Hundt wants them here

March 07, 2011

EXCLUSIVE INTERVIEW

http://www.smartgridtoday.com

Former FCC Chief's Coalition Promotes Clean Energy Policy

Former FCC Chairman Reed Hundt is working with some US senators to create a federal “energy investment trust” to would supply low-cost financing to clean-energy projects, he told us last week in an exclusive interview. Two states are working to create their own such “green banks” and Hundt's 21-month-old Coalition for Green Capital is planning a conference on national and international green banks, in conjunction with a prominent business school.

Much of this planning depends, he stressed, on whether the federal government continues functioning. “Everything is very much in flux because of the potential for shut-down,” Hundt said. “If the government isn't shut down, within a month we ought to see a lot of action. If it is, all bets are off.”

Republicans proposed steep cuts in the federal budget while Democrats agree with only a fraction of them and a failure to agree before March 18, when a temporary government-funding bill expires, could force the government to shut down non-essential services and lay off hundreds of thousands of workers, Reuters reported Friday.

Assuming the federal government continues to function, “people will start looking at a tax bill, an energy bill,” Hundt said. Passage of an energy bill is essential to his plans.

Wishes explained

“Our belief and hope and wish” is that the bill would create a clean-energy deployment administration, or CEDA, attached to DOE, Hundt said. The CEDA, requiring a congressional appropriation to fund it, would “deploy, define or prove success” in clean-energy projects. It would perpetuate DOE's R&D program. “Then the energy investment trust [EIT] would complement CEDA, building out what CEDA had proved could be successfully deployed,” Hundt said.

An energy bill -- thus far having eluded the President Barack Obama's administration -- would likely be a single piece of legislation containing multiple programs and other components, ideally including CEDA, the EIT and “some kind of renewable or clean-energy standard,” Hundt said. “It's fair to say everybody in Congress believes an energy bill would have more than one piece and no one believes there would be multiple bills,” he said.

Bingaman's finale

US Sen Jeff Bingaman, D-NM, “has told me he's going to do his darndest” to ensure the passage of an energy bill “and I assume he's told the president that,” Hundt said. Bingaman, a five-term incumbent, last month said he will not seek re-election in 2012, so this 112th Congress, which ends Jan 3, 2013, will be his last. “He's decided this is his last hurrah and these two years he's going to dedicate to making something happen,” said Hundt. “He's got a proven record of being able to do that and I think that's the way everybody should bet.”

Hundt declined to name the couple US senators his group is working with on a bill to create the EIT, saying they asked him not to. If the EIT is created, it would be a federally chartered patriotic corporation, he said. Such corporations are established and owned by Congress, not by shareholders, and have whatever powers Congress gives them. They may be not-for-profits, if Congress says so. The Boy Scouts of America is an example of a patriotic corporation.

Hundt's group wants Congress to make the EIT a not-for-profit with authority to borrow money from the US treasury and thus it would not require a Congressional appropriation, he said.

States may try it

The two states planning green banks -- Hundt declined to name them, either -- are contemplating using low-cost loans to underwrite energy-efficiency measures in commercial buildings and would create incentives for utilities to retire out-of-date facilities. States today are strapped for cash and cannot afford to give tax breaks -- two ways they might otherwise help building owners promote energy efficiency by buying insulated windows or building insulation or taking other measures, Hundt said.

“But one thing they can do is give long-term, low-cost loans, because in exchange they get a secured interest in the buildings,” he said. “Obviously the techniques would have to be worked out, but that's an example.”

State green banks might also make long-term, low-interest loans to owners of fleets of vehicles such as rental car firms, FedEx, Ryder and UPS, to upgrade fleets to EVs. “That could end up creating new markets for repair, maintenance and sales of used EVs,” he said.

“I think you'll see lots of states trying to accomplish those goals by offering low-cost financing.” No state has yet created a green bank, he noted, but “that's the way the wind is blowing.”

Even if the federal government fails to pass an energy bill or create CEDA or an EIT, states may succeed in doing so, he added. “One nice thing about federalism is that when the national government does not step up to the mark, a lot of states do. And vice-versa,” he said.

Stay tuned for event

The Coalition for Green Capital is planning to co-host a conference on national and international green banks in late June or early September with a “prominent business school I can't name,” Hundt said. In the wake of the “frankly very limited success” of the international climate-change conferences in Cancun and Copenhagen, “it's clear many nations will create nation-state green banks.”

The UK, even in the middle of “terrible” budget cuts, is trying to, Hundt reported. “There are green banks in India, though they don't use that name and China is using green banks as a huge export-promotion machine. So we're seeing, all around the world, the emergence of government-defined national green banks for different purposes. But they all represent a reaction to the clear evidence there will not be a global treaty.”

That impetus is big enough, he said, that “it deserves a conference. So we intend to host the first global conference on that.”

Money buys business

China will go to Honduras, for example, and offer to loan it money if it installs Chinese-made wind turbines, Hundt said. It is “stapling loans to projects, then exporting them. It is using loans as an export-support mechanism.” India, in contrast, is inviting other countries to invest there by providing low-cost loans, he added.

Hundt's group in December released a legislative proposal called Project 2011, meant to cut the cost of clean-energy projects (SGT, Dec-14). Part of Project 2011, he said, was the EIT. Other parts were tax and regulatory measures that are “on hold right now” until the federal budget confrontation has been resolved, he said.

Hundt chaired FCC from 1993-97.

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