'Green banks': The answer to clean energy's subsidy woes?
Green banks, clean-energy finance banks that operate as public-private financing institutions, are being touted as a life-line that will push the clean energy industry into maturity, according to OilPrice.com
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State budgets are challenged financially, so Green State Banks would be a sound solution that would allow states to leverage public money with private sector funds and, importantly, private sector experience. The overall effect will be to cut clean energy’s dependence on federal subsidies and tax credits, which in turn will make them more competitive and hopefully push development into full maturity, all the while allowing states to make their own decisions. It is also much easier for states to forge public-private relations than it is for the federal government.Skip to next paragraph
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There is no single model that could work across states, however, so it is up to each state to design their own form of green banking. There are at least three models of banks that states could choose from depending on their specific circumstances and needs. The Connecticut model is a semi-public corporation that merges funds the state already has for clean energy with private investment in the bank. They could also take an existing infrastructure bank and add on a Green Bank to its services, or transform a grant authority into a lending authority in partnership with the private sector. (RELATED: What Does the Future Hold for Natural Gas Prices?)
More to the point: How will this affect the consumer? According to Bill Ritter, Director of the Center for the New Energy Economy (CNEE) at Colorado State University, consumer purchased energy resources “have never fit well without our existing utility model” because “utilities charge consumers for energy on a monthly basis, having financed their investments over time. Yet, when a consumer purchases efficiency or generation resources, traditionally they need to make a one-time, large up-front expenditure and then see their savings accrue over time through a reduction in their utility bill.”
Green Banks, he argues, would give consumers more and better options. Specifically, they would allow consumers to replace a portion of their monthly utility payment with a payment for energy efficiency or solar power and thus “protect themselves against rising utility bills and increase the value of their home or business while lowering their utility costs at the same time.”
The bottom line is that green banking is a good idea, as long as it remains the purview of state governments rather than the federal government. At a time when clean energy is under attack and only on the cusp of maturity, state green banks could be the first feasible plan out there, and it’s likely to be attractive to a host of governors. The idea will gain even more traction if Congress fails to extend the production tax credit (PTC) this year. Without green banking, the PTC is the only way the clean energy industry will survive. Green banking is a more viable alternative that extending the PTC.
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