A climate policy that has been in the works for almost a decade can be found on page 667 of the Inflation Reduction Act.
Money from the Greenhouse Gas Reduction Fund totaling $27 billion will be used to support initiatives in the United States that try to reduce emissions responsible for global warming. About $7 billion of that would go toward deploying sustainable energy in low-income regions, but the rest will be used to launch the first national green bank in the United States, a concept long supported by climate campaigners. To hasten the United States’ departure from fossil fuels, these campaigners support the creation of a national green bank that will offer consistent funding to increase the use of clean energy across the country.
In order to get closer to their climate targets, communities can use the green bank’s help to expand their access to capital for the renewable energy industry. Sam Ricketts, the co-founder of the climate nonprofit Evergreen Action, deemed this one of the most exciting and transformative initiatives and programs under the new law. The value of a national clean energy accelerator lies in the fact that it is a federal agency charged with funding similar endeavors across the country.
Years of effort from climate experts and their allies on Capitol Hill led to the establishment of the national green bank. The Waxman-Markey climate bill from 2009 includes a proposal for a green bank, but it was never passed by the Senate. It has been discussed since then, but not implemented until last month, when Vice President Joe Biden signed the Democrats’ massive spending bill, the Inflation Reduction Act.
jobs, justice, and climate change are the litmus tests for a sustainable future. Edward Markey, a Democrat from Massachusetts, argued that these three goals will be met by the National Climate Bank. It is expected that “through this bank, local climate and clean energy entrepreneurs can leverage finance to promote green programs and infrastructure in their communities, so fostering the growth of a healthy local economy and providing quality employment opportunities for residents.”
Over a dozen states already have successful green banks that the federal bank would help support. Since its inception in 2014, New York’s green bank has partnered with the private sector to increase the adoption of sustainable energy technology by lending over $1 billion. Residents who may not be able to put solar panels on their roofs have the option of subscribing to an off-site solar project through the community solar program, an initiative of the New York green bank.
Community solar was identified as an example of the green bank’s finest use by its founder, Richard Kauffman, chair of the New York State Energy Research and Development Authority. Conventional bankers were unwilling to accept funding for community solar projects prior to the involvement of the New York green bank due to the potential financial risks associated with such ventures.
New York City heat data is collected by volunteers using a sensor attached to their vehicle. New York’s green bank aided in risk reduction by sifting through project paperwork and contracts and beginning to provide low-interest loans. The track record of repayment generated by green bank loans increased the likelihood of conventional lenders investing in community solar projects. Kauffman explained that New York’s green bank aimed to fund initiatives for which “the issue was not the cost of funding, but the availability of financing.” There are currently a large number of community solar projects being developed in various regions of the state. They benefited greatly from the green bank’s pioneering efforts in launching the market.
Certainly, the widespread demand for such financial institutions in the United States has been highlighted by state and municipal banks. Coalition for Green Capital co-founder and former FCC chair under Bill Clinton Reed Hundt recently stated that his organization had discovered $21 billion in delayed clean energy projects at state and municipal green banks.
When it comes to launching clean energy projects on a local level, the national green bank will assist alleviate the current backlog and make the process more streamlined overall. Money, as the old adage goes, is necessary for financial success, as Hundt put it. He elaborated by saying that the national funding might give the monetary support necessary to restructure sustainable energy supply chains, which could ultimately result in cheaper costs for American consumers.
State and local green banks already operating in the United States have proven that green loans are a good bet. The Coalition for Green Capital reports that 99.62 percent of green bank loans made by U.S. states and municipalities have been returned. Thanks to these deposits, “green banks” are financially stable, and they can put more money into initiatives that cut down on emissions that contribute to global warming.
It’s sustainable funding, and it’s what keeps businesses running. According to Ricketts, “it won’t just go as a grant and never be seen again.” That initial funding will be recycled so that the financial institution can keep operating indefinitely, as its founder has promised. That’s a feature, not a bug, and that’s one of the more fascinating elements of it.” Experts on climate change have stressed the urgency of speeding up the rollout of renewable energy in the United States. “Any further delay in concerted global action will miss a brief and quickly closing window to assure a habitable future,” the Intergovernmental Panel on Climate Change said earlier this year.
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Biden has set a goal of halving US emissions by the end of the decade, and the national green bank, along with other climate provisions in the Inflation Reduction Act, might play a crucial part in achieving this goal. To curb emissions before it’s too late, we need adoption to pick up speed quickly. Just like that, the problem is solved. “We need to have the market go faster than it would otherwise go,” added Hundt. Unfortunately, “delay is not an option” for us.
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