Michigan Congresswoman Debbie Dingell is leading an effort that would leverage $35 billion in federal funds over six years to stimulate up to $1 trillion in private spending to address climate change.
A national “green bank” would build off successful programs in several states, including Michigan, that use public funding to spur private investment in clean energy projects like energy efficiency upgrades and solar panels. Backers see future investments expanding to electric vehicle and battery storage projects.
“To properly tackle climate change an aggressive agenda is required that addresses all fronts of the crisis,” Dingell said in a Dec. 12 statement. “The National Climate Bank Act builds on the successful Green Bank example in Michigan, and mobilizes investment directly into the greenhouse gas emissions reduction projects most in need of capital.”
Dingell is co-sponsoring a U.S. House version of a bill introduced by Senate Democrats earlier in 2019. The concept around a national green bank dates back to 2009, when Dingell’s late husband, U.S. Rep. John Dingell, backed the creation of a Clean Energy Deployment Administration as part of a national cap-and-trade bill.
A national green bank, featured in some Democratic presidential candidates’ platforms, could be a key part of nationwide climate change mitigation efforts. Reducing energy costs for participants has helped the concept achieve bipartisan support.
The Coalition for Green Capital, which operates the American Green Bank Consortium, wants to see the bill passed in 2021, a “realistic reflection of the amount of time and effort it takes to create something like this,” the group’s executive director Jeff Schub recently told Utility Dive.
Though unsuccessful at the national level, a dozen state and local green banks have spurred hundreds of millions of dollars in clean energy investment.
Michigan Saves, created in 2009 through the Michigan Public Service Commission, started with $10 million in state and federal funds for a loan loss reserve. As of late December, Michigan Saves had sparked $225 million in private clean energy spending. Those projects include residential energy efficiency installations, such as furnaces, LED lighting, as well as residential and commercial solar projects.
“For every public dollar, it leverages $30 in private investment,” said Michigan Saves President and CEO Mary Templeton. “We’re working really hard to add new lenders to our portfolio to help us expand into more comprehensive work on the commercial side.”
Michigan Saves provides low-interest loans for efficiency and renewable energy projects. Tax equity investors also help nonprofit and municipal organizations that don’t quality for federal tax credits to lower clean energy installation costs. Residential loans, which increased 30 percent in 2018, are issued by credit unions throughout the state.
Michigan Saves has helped finance more than 20,000 residential and commercial projects over the past decade. It has led to utility bill savings of $30.5 million, according to the group’s 2018 annual report.
Templeton said the program, which is growing at about 30 percent per year, is increasingly looking at projects in low- to moderate-income Census tracts, which is also a focus in the National Climate Bank Act.
The national legislation “focuses on underserved and disadvantaged communities to make sure the transition to a clean energy economy is fair and equitable,” Sam Gomberg, senior energy analyst for the Union of Concerned Scientists, said in a statement.
However, Michigan Saves needs additional public investment to continue, Templeton said. The loan loss reserve provides a “backstop” and “risk mitigation” for lenders, while additional public funding could help Michigan Saves initiate its own revolving loan fund.
“A national climate bank would definitely support us in that,” Templeton said. A national climate bank could also support projects that may not yet be attractive to the private lending market, such as vehicle electrification infrastructure and battery storage. Templeton called a potential $35 billion public investment over six years “transformative.”
Michigan Saves has considered going to state lawmakers for additional funding, but green banks here and elsewhere face the political hurdle of using public funds for clean energy projects. Templeton and other supporters maintain that spending particularly on clean energy should be nonpartisan.
“It helps create jobs, helps save energy, helps reduce the impact of climate change, and serves businesses and individuals within all legislators’ districts,” she said. “There are so many really good advantages to doing this work.”