Hopes build for US Green Bank

New York, 4 February: A proposed ‘Green Bank’ to help finance renewable energy projects in the US may get a boost from an unexpected source: a series of jobs bills aimed at lowering the nation’s stubbornly high unemployment rate. And renewable energy advocates hope the Green Bank will encourage US banks to get off the sidelines and start lending money to clean energy projects.

The Clean Energy Deployment Administration (CEDA), a proposed government-owned, non-profit bank, would fill a market void, facilitating the flow of low-cost capital to clean energy projects by taking on risks that financial institutions are unwilling or unable to absorb, advocates said.

Provisions authorising CEDA, more commonly known as the Green Bank, were featured in the comprehensive energy and climate bill passed by the US House of Representatives last June and a bill adopted by the Senate energy and natural resources (ENR) committee that month.

But with strong bipartisan support, the Green Bank is one of the provisions most likely to be lifted from those bills and placed into the jobs bills, a spokesman for the ENR committee said Wednesday.

“We’re on the verge of making a lot of progress in this particular agenda in a way we really didn’t expect to in 2009,” said Reed Hundt, a principal at business consulting firm REH Advisors and co-chairman of the Coalition for the Green Bank. “This could really happen.”

The “genius” of creating CEDA, Hundt said, is that the Senate could leverage $40 billion in spending from the private sector, generating 400,000 jobs, if it takes just $2 billion from the $11 billion it is considering allocating to energy efficiency projects in the jobs bills and devotes that to the newly-formed entity.

“That’s what’s at stake right now,” he said at a Monday event in Washington, DC to launch Clean Energy Week, organised by a coalition of NGOs, associations, private companies and government agencies to promote the passage of comprehensive energy and climate legislation.

Establishing the Green Bank is a “no-brainer”, said Michael Eckhart, president of the American Council on Renewable Energy in Washington, DC.

Debt financing for US projects is coming from non-US commercial backs in Europe and Asia, he said. US banks such as Bank of America, Citibank and Wells Fargo are not lending money to renewable energy projects, but they participate “very effectively” on the equity side, Eckhart added.

“It is a scandal of the moment that US banks are not lending in this sector,” he said.
Foreign financial institutions have stronger balance sheets and faith in the US economy while US banks have become averse to any risk, Hundt said.