Money starts flowing from national “green bank”

For more than 15 years, Reed Hundt has been pushing for a national “green bank” that would use public money to attract private investment in the clean energy transition. 

“A green bank is a publicly capitalized investment firm that partners with the private sector to build clean power platform components — offshore wind, solar farms, transmission systems, rebuilding houses and commercial buildings,” said Hundt, a former chairman of the Federal Communications Commission during the Bill Clinton administration. 

Back in 2008-2009, he tried to convince the Barack Obama administration to set up such a bank, Hundt said, but a financial crisis intervened.

“They passed up the opportunity on the grounds that they had a lot of problems with banks that they had to fix, and they didn’t need a new bank,” he said. 

Instead, Hundt started a nonprofit — the Coalition for Green Capital — to create a network of state and local green banks. Then, during the Joe Biden administration, his dream of federal funding finally came through. The Inflation Reduction Act, passed by Congress in 2022, created the $27 billion Greenhouse Gas Reduction Fund. A portion of that funding — $5 billion — was awarded to the Coalition for Green Capital.

This fall, CGC began announcing its first projects. Spruce Root, a Native community development financial institution in southeast Alaska, will receive a line of credit of up to $10 million to facilitate clean energy projects in tribal communities. 

Spruce Root will use some of the money to refinance debt for a hydropower project on Prince of Wales Island, said Alana Peterson, a member of the Tlingit tribe and executive director of Spruce Root.

“That refinance will allow them to reduce their payments for up to four years at least,” she said. “Then that will immediately reduce the rate that ratepayers on the island are paying for electricity.”

A separate grant from the Department of Energy will help install highly efficient heat pumps in hundreds of homes and buildings on the island, powered by that clean energy.

“So, the combination of the heat pump installations on homes will increase demand because there’s excess hydropower,” Peterson said. “And then refinancing that debt has an immediate rate reduction effect for people in the communities on that island.”

The Coalition for Green Capital has also announced public-private investments in a fleet of electric vehicles and clean energy upgrades in commercial buildings. Public funding can help attract private investment by reducing risk or lowering the cost of loans, said Adam Kent, head of green finance at the Natural Resources Defense Council. 

The Greenhouse Gas Reduction Fund is divided into three programs. Of the $20 billion invested in the National Clean Investment Fund and the Clean Communities Investment Accelerator, “these investments are estimated to mobilize, for every dollar of public investment, $7 of private investment,” Kent said. 

The money is targeted to reach low-income, rural and other disadvantaged communities “that are being overlooked right now in the climate transition,” he said.

It’s not clear what Donald Trump’s reelection and a Republican-led Congress might mean for these investments, Kent said. Trump has threatened to rescind any unspent funds from the Inflation Reduction Act.

All the money from the Greenhouse Gas Reduction Fund has been awarded, said Dale Bryk, director of state and regional policy at the Harvard Environmental and Energy Law Program. She said the money is either in the hands of grantees or in escrow accounts, with legal contracts that would make it difficult to claw back funds.

“It’s always safer when people can see the benefits in real life,” she said. “So I think there is an urgency to show what this money can do.”

Once people start to see jobs created, lower energy bills, and cleaner air and water, “I don’t think that those are benefits that Congress or the administration are going to want to take away from their constituents,” Bryk said. 

Most of the money from the Inflation Reduction Act has gone to Republican congressional districts. The Coalition for Green Capital’s Reed Hundt said that most of his group’s investments will be in red states, “because that’s where most emissions come from.”

The EPA estimates projects funded by eight recipients of Greenhouse Gas Reduction Fund grants will reduce climate pollution by up to 40 million metric tons of carbon dioxide per year, or the equivalent of nearly 9 million cars.