WASHINGTON – Rep. Chris Van Hollen has introduced a bill that would create a federal green bank to provide loans and loan guarantees to help regional, state and local green banks finance clean energy and energy efficiency projects.
"This legislation will provide state and local green banks the support they need to jump-start innovative renewable energy and energy efficiency projects," the Democrat from Maryland, who is running for a U.S. Senate seat, said, in introducing the bill late last month. "Action to prevent the most harmful impacts of climate change is long overdue, and the creation of a national green bank is one way we can build a 21st century clean energy economy that spurs growth in industries that create more good-paying American jobs."
The first county green bank in the country was established this year by Montgomery County, Md.
Sen. Chris Murphy, D-Conn., said he plans to introduce a companion bill in the Senate. Connecticut launched the first green bank in the country in 2011 and it's attracted over $800 million of investment in clean energy since then, according to Murphy.
The bill is similar to, but slightly different than, legislation introduced in 2014 by Van Hollen and Murphy and to a bill offered by Van Hollen in 2009. But while those bills failed to gain traction, the election in November might improve the prospects of this bill.
Democratic presidential nominee Hillary Clinton has voiced support for green banks and has proposed a $25 billon infrastructure bank that would create an additional $225 billion in investment for such projects.
Speaking at the University of Bridgeport, Conn., in April, Clinton pointed to the Connecticut Green Bank, saying it funds the same kinds of projects she envisions an infrastructure bank funding.
"Connecticut is leading the way," she said. "You have something called a green bank, a green bank that helps to fund energy efficiency and clean, renewable energy jobs. When I'm president, I want to have a national infrastructure bank that will fund these kinds of projects that will make us richer and cleaner."
So far, there are six state and local green banks in the U.S., according to the Coalition for Green Capital. Besides Connecticut and Montgomery County, Md., they are in New York, California, Rhode Island, and Hawaii. Green banks have also been created in the United Kingdom, Australia and Japan.
"There is enormous pent-up demand for these institutions, which are designed to be financially self-sufficient, but states and cities face such budget constraints that it's difficult for them to come up with the funds," said Reed Hundt, chief executive officer of CGC. "The Green Bank Act directly addresses this barrier by opening up federal financing to capitalize green banks.
Van Hollen's Green Bank Act of 2016 (H.R. 5802), co-sponsored by seven Democrats, would authorize the Treasury Department to issue up to $10 billion of green bonds to capitalize the bank. The department could issue more bonds, but no more than $50 billion of bonds could be outstanding at any time.
The bonds would be "fully and unconditionally guaranteed as to interest and principal" by the U.S., according to the bill. It would be chartered for 20 years and have a seven-member board, with one member designated by the Treasury Secretary, one by the Energy Secretary, one by the Transportation Secretary and four appointed by the president. They would have four-year staggered terms.
A Green Bank Establishment Fund, a revolving fund, would be created for the bank. The federal bank would provide, on a competitive basis, loans, loan guarantees and credit buy-downs to regional, state and local green banks for clean energy and energy efficiency projects. No more than 80% of each project could be financed by the federal bank and it could not directly fund projects.
The earlier measures bills would have authorized the federal green bank to help fund projects, but this one limits its help to institutions, including nonprofits.
The bill defines clean energy projects to include solar, wind, geothermal, biomass, hydropower, ocean and hydrokinetic, fuel cells, advanced batteries, carbon capture and sequestration, next generation biofuels form nonfood feedstocks, as well as alternative fuels infrastructure and vehicles.
It defines energy efficiency projects as "any project, technology, function, or measure" that reduces energy use to achieve the same output level.