As the Maine Climate Council concluded work on its climate action plan last November, one legislator issued what Sen. Anne Carney (D-Cape Elizabeth) recalled as a “plaintive plea: ‘We have to figure out how to pay for this now.’”
Half of the Council’s work groups recommended establishing a “green bank” or “sustainability accelerator” that would use public funds to leverage private capital – making loans for clean energy and climate resilience measures. The nation’s first green bank, established a decade ago in Connecticut, has raised on average seven dollars of private capital for every public dollar invested.
A sustainability accelerator could help ensure an equitable energy transition by reducing barriers for lower-income residents and small businesses to finance weatherization, heating system conversions and renewable power generation. Environmental financing also could help municipalities with the daunting costs of fortifying infrastructure in the face of rising sea levels and more extreme storms.
Accelerator loans would fuel job growth and represent a sizable return on investment; research has shown that every dollar spent on hazard mitigation saves roughly six dollars in avoided costs.
Given the breadth of potential economic and environmental benefits a sustainability accelerator would offer, there is no organized opposition to its creation.
So why, five months after the release of the “Maine Won’t Wait” climate action plan, are we still waiting on its launch? It’s time to put the pedal to the metal on this accelerator.
‘Build it as we go’
President Biden’s jobs plan proposes $27 billion for a federal “Clean Energy and Sustainability Accelerator,” a national green bank that would raise private capital and funnel funds to state-level accelerators – with a particular focus on underserved communities and those heavily dependent on fossil fuels. (Maine’s reliance on home heating oil is the highest in the nation.)
Substantial federal support will “make Maine’s (climate) plan more fully achievable,” said Hannah Pingree, Maine Climate Council co-chair and director of the Governor’s Office for Policy Innovation and the Future (GOPIF). The White House has already signaled, she added, that its vision for the accelerator is to “meet the needs that states have.”
Given bipartisan congressional support, approval for the federal accelerator could come by September, said Abraham Wapner, program director at the nonprofit Coalition for Green Capital; now the question for states is, “How would you work to get that money out the door if it became available?”
In Maine, that question rests with the Legislature’s Joint Standing Committee on Energy, Utilities and Technology – as its members weigh two proposals during a public hearing on May 12. One, LD 1659, would create a clean energy and sustainability accelerator within Efficiency Maine Trust, an independent quasi-state agency that already makes home and small business energy loans. The second, a resolve, would form a 13-member study commission to vet financing models and submit findings for the Legislature to consider next winter.
Maine could certainly benefit from further analysis of where the greatest capital needs lie. Some gaps are already identified, like $325 million needed by towns to address a backlog of climate mitigation infrastructure projects, but more research is needed.
The analysis should be done by experts with extensive knowledge of clean energy finance, climate/carbon finance and conservation finance. And it should be completed soon, given the prospect of federal accelerator funds and the burning fuse of the climate crisis.
Pingree said her office is prepared to get this kind of study done quickly, and has “identified some funds to put a rapid but comprehensive consulting project out to bid.”
That’s an idea backed by Maine State Treasurer Henry Beck, an advocate of the green bank concept. He would support using consultants to “outsource the analysis,” he said, and provide a “fresh disinterested look at what’s needed for resources.”
It would be wise “to set really ambitious timelines,” Wapner noted, completing a study within two to three months. If a fast-tracked study confirmed that an existing entity, like Efficiency Maine Trust, should house the accelerator, it would not need legislative approval to start receiving funds, Pingree said, whereas a new entity would require that. Efficiency Maine has experience in clean-energy lending, and could add staffing capacity and expertise to offer a broader spectrum of environmental financing.
Connecticut Green Bank is on the verge of expanding its mission from green energy to environmental infrastructure, pending legislative approval. “We should all be planning for and getting prepared … for capital to come” from the federal level, said its president, Bryan Garcia.
Environmental finance requires nimble institutions that can work at the pace of business, given that “green banks are kind of intermediaries between policy and markets,” he added. “We do kind of build it as we go.”
Maine need not wait for study results to start seeking finance experts with the relevant investment and lending experience. “Building that capacity is needed,” Pingree said.
Green finance is “a fairly niche market as far as jobs go,” Wapner noted, so a search could take time. Maine might get lucky finding someone “who cares a lot about the state and is at a stage in their career where they want to give back,” Garcia said, adding that it’s critical that staff can “communicate in the language of business, banking and finance” to draw new capital in.
Staff at the accelerator would likely juggle a complex array of loan programs – spanning from renewable energy and clean transportation to regenerative agriculture and climate resilient infrastructure. Funding might come from diverse sources that could potentially include the federal accelerator, Property-Assessed Clean Energy (PACE) financing, institutional investors (such as the Maine Public Employee Retirement System), and the Transportation Climate Initiative.
‘Need to get going’
Ideally, green banks operate “in lock step” with broader state policy goals, Wapner said. That is easiest if the state has done high-level economic planning to assess how “decarbonizing” energy will affect different economic sectors and where support is needed for a just transition. Maine has completed an economic plan for clean energy and has one underway for clean transportation, but has not yet undertaken a comprehensive economic roadmap.
In the meantime, there’s clear consensus Maine needs a sustainability accelerator, and the EUT committee should work to establish it by this fall – not delaying action until next year’s legislative session.
“You’re always going to be in planning mode,” Garcia observed, “but you need to get going.”