As the clock ticks on Biden climate initiatives, major green banks take action
Climate Week NYC produced a veritable tsunami of announcements, initiatives, and progress reports. With an estimated 100,000 climate-focused professionals, activists, and journalists attending more than 900 official events and scores of unofficial ones, it’s no wonder that some of this news flies under the radar.
But for those working at the intersection of climate at finance, we’d like to highlight a noteworthy item that was overlooked by most press coverage of Climate Week: The launch of a new entity by nearly 40 of the country’s leading green banks, which collectively, put up more than $10 billion in new investments in 2023. The U.S. Green Bank 50 (GB50) is a partnership between nonprofit financial and clean energy-focused public institutions to drive investment into climate solutions across the country — particularly in historically underserved communities. The bottom line: a faster, more equitable transition to clean energy driven by bringing private capital into clean energy markets.
“By sharing peer knowledge, tools, and resources, GB50 aims to extend capital into communities by maximizing the impact of federal clean energy incentive programs,” says the announcement. “The goal is to accelerate the expansion of green banking and drive investment, especially in lower-income areas that have been disproportionately impacted by pollution and environmental injustice.”
“The goal is to accelerate the expansion of green banking and drive investment, especially in lower-income areas that have been disproportionately impacted by pollution and environmental injustice.”
Why does this matter? The excitement around the Biden administration’s landmark Inflation Reduction Act passed in 2022, has been tempered by the glacial speed of its execution. With hundreds of billions of dollars worth of tax credits, loans and grants for renewable energy, grid improvements and and other climate-related projects, the rollout of the IRA is a lumbering process. In part, this is because enacting major legislation first requires the bureaucracy to create the specific rules and regulations. Plus, as Energy Secretary Jennifer Granholm has offered: “It takes a while to build the actual factories.”
Some 40% of the largest U.S. manufacturing projects funded through IRA and another major piece of legislation, the CHIPS and Science Act, have been delayed or temporarily stopped, the Financial Times (subscription) reported. The National Association of Manufacturers recaps that reporting here. U.S.-based cleantech and semiconductor supply chain projects totaling $84 billion that were sparked by the legislative incentives have been delayed for between two months and several years, or even paused indefinitely.
There’s little room for these delays, given the political landscape. The Biden administration is racing to disburse IRA monies ahead of the November 3 presidential election. The programs are expected to continue if Democratic candidate Kamala Harris wins the White House. But Republican candidate and former President Donald Trump has vowed, if he is re-elected, to roll back Biden’s climate initiatives and — on Day One — “drill, baby, drill.”
The GB50 envisions a more ambitious approach to green banking than currently exists in the mission-directed investment community. Ceres has just issued an update on the state of climate finance in the banking sector that underlines the need for such an entity. GB50’s scale, in both its history (that $10 billion invested in 2023) and its scope — it includes green banks in almost all 50 states, Washington, D.C., and Puerto Rico — may be the ingredients needed to accelerate climate-related investment and help local and state governments bring home climate solutions.
Featured photo: A Green Bank 50 project: Electrifying school buses in Nevada. Photo source: Zum
