NEW ENERGY WANTS A GREEEN BANK

When Clean Energy Grants Run Out, Will a 'Green Bank' Take Over?
Peter Behr, May 10, 2010 (NY Times)

"…[A]ll but about $300 million [of funding in the 2009 American Recovery and Reinvestment Act] has been committed…Recovery Act energy dollars [are] finally entering the economy. Spending by grant recipients reached $3.5 billion in April…The question looming now is: What next?

"Recovery Act energy grants must be committed by the end of September. Energy tax credits have to be taken by the end of the 2011 fiscal year. What happens if further support programs tied to climate legislation die in Congress? …[A] wide range of new energy initiatives remain in a federal incubator…heavily dependent upon continued support from Washington. But the prospects for future backing could hardly be murkier."

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"If the Senate fails to get the 60 votes necessary to pass climate and energy legislation, clean energy proponents are looking at possibilities of tying key measures to tax or jobs legislation that has better prospects for passage this year…Backers of proposals for a new federal "green energy" financing bank say they have the answer.

"Former Federal Communications Commission Chairman Reed Hundt heads the Coalition for Green Capital, a lobbying group that supports and works with congressional sponsors of a proposed Clean Energy Deployment Administration (CEDA)…A coalition paper issued last month calculates that energy stimulus spending will peak this year at $400 billion, shrink to about $120 billion in 2011 and be virtually gone by 2015…[P]rivate investment is not strong enough to fund a trillion-dollar overhaul of the energy sector…A federal financing administration would change the equation…"

Another disruptive idea for financing New Energy (click to enlarge)

"The coalition offers an example of two higher-cost wind energy projects, one paid for solely with private financing, the other backed by federal loan guarantees…Federal loan guarantees cut the interest rate on the $165 million wind project in nearly in half, to 4.5 percent from 8 percent, and stretch out repayments, raising the amount of debt that developers of the guaranteed project could take on by $24 million, making the project easier to finance, according to the coalition.

"…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…The coalition is also lobbying for…[New Energy-favoring] tax law changes…The green bank proposal is seen by supporters as a survivor if the Senate can't produce comprehensive climate legislation…Skeptics of the green bank approach see self-interest at play…But there is no disputing the impact that federal financial backing can have on new energy projects…"