Fed, States Ponder 'Green Banks'

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"As America's clean energy industry takes up position in a no-man's land between subsidies and sustainability, the idea of 'Green Banks' is being touted as a life-line that will push the industry into maturity."

green piggy bank

NuWire Investor, Jen Alic

A “green bank” is a bank established for the purpose of loaning money and providing interest for investment in green energy and the idea is catching on in the U.S. Connecticut has already established the Clean Energy and Investment Authority with funds collected from conventional energy companies. Germany and the United Kingdom are also looking into the idea, although experts argue green banks would have to operate at the state level because a unified model would not work for each individual state. Even so, as the push for more eco-friendly power increases many believe green banks and other similar initiatives will gain traction.

As America’s clean energy industry takes up position in a no-man’s land between subsidies and sustainability, the idea of “Green Banks” is being touted as a life-line that will push the industry into maturity, but it’s an idea that will only work on a state level and by empowering states to make their own clean energy decisions.

Green Banks are essentially clean energy finance banks formed at the federal or state level that operate as public-private financing institutions with the power to raise capital to support clean energy projects through loans and loan guarantees. These banks can issue bonds and sell equity and they can often offer cheap loans.

In the US, it is the state level that would likely take the lead in forming Green Banks, and the state of Connecticut has already taken the plunge with the establishment of the Clean Energy Finance and Investment Authority (CEFIA). Launched last year, CEFIA merges several clean energy funds whose revenues come from a utility system benefit fund and the Regional Greenhouse Gas Initiative, among others, with a financing authority repurposed as a clean energy investment bank. Presently, CEFIA is talking with solar photovoltaic stakeholders to boost the bundle, and according to the Brookings Institute, is close to making its first loans. . .View Full Article

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