States can help increase investments in renewable energy and energy efficiency by utilizing "green banks," institutions that use innovative financing initiatives to assist customers with developing clean energy.
This promising avenue for scaling up investments in clean energy is particularly useful in the context of the EPA's Clean Power Plan, which requires states to reduce carbon emissions from existing power plants.
To demonstrate this approach in action, this report highlights the efforts of six state governments (Connecticut, New York, Pennsylvania, Kentucky, Iowa, and Massachusetts) and one national government (Germany) to mobilize public and private capital to strengthen clean energy investment.
Financing mechanisms that help deploy clean energy
Photo: Armin Kübelbeck/Wikimedia Commons
To spur investments in renewable energy and energy efficiency, states can adopt a number of proven clean energy market-development mechanisms. The most popular to date include renewable electricity standards, energy efficiency resource standards, public benefits funds, tax and incentive policies, utility rebates, building-energy codes, net metering, and carbon cap-and-trade.
In addition, many of the states highlighted in this report have used green banks and other new financing initiatives to help secure funding and scale up clean energy investments without the need for substantial direct incentives. These policies complement the available set of policy options above, and can also help make renewable energy and energy efficiency more competitive, especially as existing policies change, expire, or become less effective.
Photo: Dave Center/Flickr
This report describes six state-level programs and one international program that have successfully leveraged limited funding to scale up clean energy investment. These programs range from all-encompassing green banks to more discrete efforts focused on a particular clean energy market sector.
- Connecticut's Green Bank: Over the past three years, the program has completed 8,800 projects and installed solar panels in more than 10,000 Connecticut homes, thereby creating almost 6,200 jobs and reducing carbon emissions by one million tons.
- New York's Green Bank: In October 2014, New York announced its first round of Green Bank investments, totaling $800 million, across a diverse portfolio of investment types and clean energy market segments.
- Pennsylvania's Keystone Home Energy Loan Program (HELP) and Warehouse for Energy Efficiency Loans: Since its inception, Keystone HELP has supported more than 12,000 residential loans totaling nearly $90 million.
- Kentucky's Home Performance Program: The program supported 1,000 retrofits of single-family homes and trained some 150 contractors to perform energy efficiency retrofits in the state.
- Iowa's Clean Energy Revolving Loans: The Iowa Green Bank offers $50,000 to $500,000 in the form of 1-percent interest loans for up to 10 years.
- Massachusetts' Mass Save HEAT Loan: Energy efficiency experts consider the HEAT Loan program one of the most successful U.S. financing programs for residential energy efficiency.
- Germany's Kreditanstalt für Wiederaufbau (KfW) Green Bank: The KfW’s suite of financing options have financed €105 billion in renewable energy and energy efficiency investments, creating hundreds of thousands of jobs and significantly reducing power plant carbon emissions between 2011 and 2013.
These seven case studies clearly demonstrate that clean energy financing programs offer a promising avenue to help states achieve their Clean Power Plan emissions-reduction targets while reducing American contributions to global warming.
What's more, another important property of these financing programs is that they can jump-start renewable energy and energy efficiency markets while allocating fewer taxpayer or ratepayer dollars—aspects that have traditionally galvanized bipartisan support.
To learn more, download the full report.