I’ve heard of a Piggy bank and I’ve heard of breaking the bank, but have you ever heard of the concept of a Green Bank? Well, according to the Clean Energy Finance Center, the development of state-level “greenbanks” are one of the most promising emerging ideas in clean energy financing.

Apparently, this quasi-governmental organization brings together public and private sector capital to finance energy efficiency, small-scale renewable energy, and other clean energy projects. Federal loans and loan guarantees are critical for all three clean energy sources (wind, solar and nuclear projects). Building efficiency improvements unlikely to accelerate without federal financing support is fueling a unique financing mechanism.

A principal aim of the green bank would be purchasing old coal plants from utilities and generators, and then scrapping them. The coalition estimates that 100,000 megawatts of coal plants could be retired in this way, opening room for investments in new clean energy generation.

Limited public sector capital is the main advantage of a green bank which uses public capital to leverage private sector investment. In June 2011  Connecticut passed a landmark energy bill that included the establishment of the first green bank in the country called Clean Energy Finance and Investment Authority (CEFIA). The CEFIA will be able to borrow money and aggregate new and existing capital sources, and will have the flexibility to fund many clean energy project types, including electric and natural gas vehicle infrastructure, electricity storage, renewable energy, and energy efficiency.

Aimed at providing low-cost financing for clean energy and efficiency projects the new entity offers Washington and other states a workable model for promoting investment in clean energy at a time of growing concern about the serious finance problems surrounding clean energy deployment.

CEFIA framework demonstrates how a green bank can combine several existing sources of funding without impacting the state budget. The Rockefeller Brothers Fund is helping to finance the development of CEFIA financing programs. If done right, CEFIA will serve as a model for green banks that can be applied to other states.

For more information see:

http://www.nytimes.com/cwire/2010/05/10/10climatewire-when-clean-energy-grants-run-out-will-a-gree-85696.html?pagewanted=all