A group of Democratic senators in the US have tabled a bill to establish the country’s first national green bank, with the hope that it could eventually catalyse up to $700bn investment in clean energy and emissions reductions.
The National Climate Bank Act 2019, which is sponsored by Massachusetts Senator Ed Markey, a champion of the New Green Deal, was introduced to Congress yesterday and has now been referred to the Committee on Environment and Public Works.
It proposes the creation of an independent not for profit body to drive green investment in the country.
Initially it would be capitalised with $10bn in public funds, followed by $25bn over the following five years.
The bill points to the potential of green banks to unlock private investment by offering “complementary capital” that can change the “dynamics of a capital stack and make new projects worth investing in for private sector capital providers”.
It cites the $3.6bn investment in clean energy projects driven by green banks in the US already.
The proposed bank would also be able to use its funds to accelerate the retirement of “carbon-intensive power generation facilities” and to “acquire carbon assets for the purpose of reducing emissions”, as part of a “Cash for Carbon” programme.
It comes as the US reportedly generated more energy from renewables (22%) than from coal (20%) in April, a first for the country.
The mooted bank would also have an explicitly social dimension and would prioritise investments in underserved, low-income communities and those most affected by the transition to a low carbon future.Eligible “regional, state and local green banks” could also be financed by the national bank under the new bill.
Currently, there are 14 green banks in the US, including the New York Green Bank.
The non-profit Coalition for Green Capital has described the bill as the first “substantial legislative plank to support achievement of the climate goals of the Green New Deal”.
It’s not the first bill attempting to create a national green bank: several attempts have been made to establish one since 2009 when the idea came to prominence but none have been successful to date.
“We stand at a precipice when it comes to addressing the threat of climate change.”
“A national climate bank is a model for how the financial, government, and private sectors can work together to leverage investment in climate action,” said Senator Markey. “We must continue to find innovative ways to capture and accelerate the momentum of the green economy, and a National Climate Bank will help invest in projects that are looking to decrease energy use and decrease carbon emissions.”
“We stand at a precipice when it comes to addressing the threat of climate change. A central part of any plan to deal with the crisis must include a major federal investment in clean technologies,” added Maryland Senator Chris Van Hollen, who also sponsored the current bill and other previous bills. “A smart way to do this is to create a National Climate Bank, which will give a jump start to the great work already happening at the state and local levels and within the private sector.”