The idea of a National Climate Bank is catching on in Congress, and it could infuse billions of dollars into efforts to eliminate the US’s planet-heating carbon emissions. A handful of Congressional proposals have been made over the past year calling for the government to start investing in technology upgrades and inventions that would cut down on greenhouse gases. Funds from the National Climate Bank would ideally lower the financial risks associated with green innovation — encouraging private investors to throw more money into the pot, without shifting costs to consumers. The hope is that the bank can tackle everything from building up the infrastructure for electric vehicles and solar power storage, to making communities more resilient to the effects of climate change.
A National Climate Bank is at the center of a broad set of policies proposed this month by the House Committee on Energy and Commerce. The effort, called the Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act, is aimed at bringing greenhouse gas emissions down to essentially zero by 2050. The National Climate Bank would pull together the public and private investment needed to transition to an economy with pretty much no carbon footprint. It builds on bills introduced in both the House and Senate that would create an independent nonprofit bank capitalized with $35 billion in federal funds. That bank could mobilize up to $1 trillion in total public and private investment over three decades, advocates estimate.
It’s a business-friendly environmental strategy with bipartisan appeal and a proven track record thanks to the success of state and local green banks, advocates of the national bank say.
“I think this should be one of the less controversial provisions that people talk about, because I don’t care who you are, we need to be investing in innovation and technology,” Congresswoman Debbie Dingell (D-MI) tells The Verge. Dingell introduced the National Climate Bank Act bill in the House in December. Senator Ed Markey (D-MA) introduced a similar bill in the Senate in July. The bank they’re proposing would be able to fund projects directly and funnel cash into existing regional green banks.
Over the past decade, state and city green banks have popped up across the US. These aren’t banks you deposit money into. They bring together public, private, and philanthropic capital to push clean energy projects forward that otherwise might not get off the ground. Since the the concept first got rolling in 2009, 14 green banks across the nation have generated $3.67 billion in clean energy investment, according to an annual report from the American Green Bank Consortium, a membership organization for green banks and financing groups.
Congresswoman Dingell points to Michigan’s green bank, Michigan Saves, as one successful model. It’s financed about $220 million in local environmental projects since its founding in 2009. For each public dollar the state puts in, it can mobilize $30 in private investment, according to Michigan Saves president and CEO Mary Templeton. A majority of that has gone to residents who, say, want to upgrade their homes with solar power or insulation to become more energy efficient. The challenges the bank faces now, Templeton tells The Verge, have to do with scaling up and reaching low to moderate income communities where some people might not quality for traditional credit.
The National Climate Bank could help in both areas, she hopes. And there’s another green bank floating around Congress that could give Michigan Saves a boost too. The Green Bank Act of 2019 has also been introduced by legislators in both chambers. That would set up a United States Green Bank within the Department of the Treasury, which would issue up to $50 billion in Green Bonds as a way to provide more capital to state and local green banks.
The idea for a National Climate Bank has failed in Congress before. Legislative efforts to establish such a bank flopped in 2009, 2014, and 2017. And the business-friendly appeal of a National Climate Bank hasn’t gained as much traction with more left-leaning Democrats. The push for the bank has for the most part come from moderate Democrats who are less skeptical of relying on the market to fix the problems it created with its dependence on fossil fuels.
Things could be different this time around. Writing the National Climate Bank into the CLEAN Future Act, which has been billed as a more moderate alternative to the Green New Deal, is a sign that the idea could be gaining ground. And with United Nations scientists advising that the world needs to cut its carbon habit by 2050 to avoid catastrophic effects of climate change, urgency is building to take action and involve the private sector.
“It’s not Wall Street’s job to solve climate change,” says Jeffrey Schub, executive director of the Coalition for Green Capital, which has pushed the green bank and climate bank bills. Still, he adds, “There are self-interested reasons they should want to invest in decarbonization.” Schub points out that there are “unimaginably large” risks to businesses associated with climate change. The climate crisis could cost the US economy hundreds of billions of dollars each year by 2090, by some estimates.
Climate change has also emerged as a key 2020 election issue for Democrats, and people are already placing early bets on the policies that could move forward if a Democrat is elected the next president.
“The window of opportunity and interest is growing at the federal level right now,” says Schub. “Lots of smart folks realize that now is the time to start laying out blueprints for climate action in 2021.”
Correction: An earlier version of this story stated that Ed Markey is a senator from New York. Markey is a senator from Massachusetts. We regret the error.