Saturday, October 31, 2020

Table of Contents for Greenitiatives





Greenitiatives

Banking on Green

 

In June, 2014, Coalition of Green Capital leaders participated in the OECD’s first Green Investment Finance Forum (GIFF) in Paris. The event was the first-ever global meeting on green bank financing, bringing together green bank leaders and national representatives from around the world. The goal of the meeting was to introduce new nations to green bank principles, learn what many countries and states are already doing to spark greater investment in clean energy through green banks, and to find ways for nations from around the world to work together to advance green bank ideas.

 

Participants heard from executives at six green banks from around the world, who explained the principles and financing activities of their institutions. And the event was highlighted by a bold call from former US Vice President Al Gore to all nations of the OECD to create domestic national green banks, as well as an international green bank to support clean energy in the developing world.

 

Green bank ideals are slowly gaining currency around the globe and have currently been established in the United States, UK, Malaysia, Japan and Korea. Such banks can promote not only renewable energy and energy efficiency, but also infrastructure needed to support electric vehicles. 

 

 

STRUCTURES

For the uninitiated a green bank is a public or quasi-public financing institution that provides low-cost, long-term financing support to clean, low-carbon projects by leveraging public funds through the use of various financial mechanisms to attract private investment so that each public dollar supports multiple dollars of private investment. A green bank seeks to promote cheaper, cleaner, and more reliable energy.

 

A green bank may conform to a variety of structures – that of a quasi-independent entity, housed within an existing state agency or incorporated into an infrastructure bank, where it could be established as a separate subsidiary; they could utilise many different public funds, and create a diverse array of financial products and tools such as long-term and low interest rate loans, revolving loan funds, insurance products (such as loan guarantees or loan-loss reserves), and low-cost public investments or could design new financial products.

 

Green banks seek to achieve several goals, including increased deployment of clean energy, more efficient use of public funds, and animation of mature private financial markets for clean energy investing. They encourage a shift from one-time subsidies and grants towards market-catalysing financial tools; propel innovation in policy, incentive structures, financial tools, and   marketing; and spur private sector growth and competition in order to give consumers energy choices.

 

ESTABLISHMENT MODE

The setting up of a new green bank usually undergoes three stages. The first involves putting together a coalition of stakeholders which include clean energy industries clean tech trade associations, environmental groups and state agencies as a base of support. This is essential to create legislation or achieve regulatory change to create a legal framework for the green bank. The second phase involves hiring staff, building capabilities, identifying goals, assessing markets and developing products. The final stage is occupied by the acquisition of customers, lending in partnership with private investors, and recycling of funds to recapitalise the bank.

 

 

SUCCESSFUL MODEL 

With some of the highest residential electricity prices in the United States, Connecticut was in need of a financing entity capable of producing affordable clean energy. In 2011 the Connecticut Clean Energy Finance and Investment Authority (CEFIA) often credited as being the first state Green Bank in the United States was set up following the passage of a ‘green bank’ legislation in the State Senate.  After several years of operations, CEFIA has produced measureable results, deploying 30 MW of clean renewable energy, preventing 250,000 tons of CO2 from being emitted (equivalent to removing nearly 50,000 cars from the roads for a year), and helping to create over 1,200 jobs in just one year. Additionally, in 2013 alone, CEFIA was able to use $40 million of public funds to leverage $180 million of private capital; $20 million of the $40 million of public funds were invested in loans and leases, yielding a leverage ratio of 10:1.




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