WASHINGTON — Identical bills recently introduced in the House and the Senate would create a federal "green bank" that would be capitalized by bonds issued by the Treasury Department and would provide loans and other types of financing support for clean-energy and energy-efficiency projects.
The legislation is called the "Green Bank Act of 2014." The House bill, H.R. 4522, has been referred to the House Ways and Means and Energy and Commerce committees. It is sponsored by Rep. Chris Van Hollen, D-Md., and is cosponsored by 11 other House Democrats, most of whom are from the Northeast and Virginia. The Senate bill, S. 2271, was referred to the Senate Finance Committee. It is sponsored by Sen. Christopher Murphy and cosponsored by Sen. Richard Blumenthal, both Connecticut Democrats.
The green bank would be able to provide several types of financing support to clean-energy and energy efficiency projects, including loans, loan guarantees, debt securitization and insurance. No more than 80% of each project could be financed by the bank.
The bank would be an independent, not-for-profit corporation wholly owned by the United States. One of the bank's purposes would be to foster the level of financing support necessary to advance national objectives such as achieving energy independence from foreign energy sources and abating climate change.
"This legislation will accelerate the development, deployment and production of clean energy technologies across the United States," Van Hollen said in a release.
The bank would be authorized to partner with, and provide seed funding to, state clean energy financing entities. It could make up to $500 million available through a low-interest loan to a state entity, so long as that institution provides at least an equal amount for its establishment and only uses funding from the federal bank for qualified clean-energy or energy efficiency projects.
Four states — Connecticut, New York, Vermont and Hawaii — have already established their own green banks, and 10 others are exploring having such a tool, House Democrats said.
"As we've seen in Connecticut, green banks are a perfect way to encourage consumers to 'go green,'" Murphy and Blumenthal said. "By supporting these green banks, our bill will make it easier for homes and business across the country to reduce their carbon footprints and ultimately slow the effects of climate change."
The Treasury would issue $10 billion of "green bonds" to initially capitalize the green bank, but no more than $200 million of that amount could be used for costs the bank incurs in its first year. At the bank's request, the Treasury would be able to issue additional green bonds to further capitalize the bank, but no more than $50 billion of green bonds could be outstanding at any time.
Capitalizing the bank would be paid for with savings from eliminating a tax loophole that encourages companies to invest borrowed money abroad rather than in the U.S., according to a fact sheet about the bill.
This is not the first time green bank legislation has been introduced in Congress, the fact sheet said. A green bank was included in the American Clean Energy and Security Act that the House passed in 2009.
