How can private-sector money be leveraged by states to spur clean energy investments? During today's OnPoint, Reed Hundt, the CEO of the Coalition for Green Capital and a former chairman of the Federal Communications Commission, discusses successful examples of state green banks and explains how similar models can be implemented throughout the country as states craft mechanisms for complying with U.S. EPA's Clean Power Plan.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Reed Hundt, the CEO of the Coalition for Green Capital and a former chairman of the Federal Communications Commission. Reed, thank you for coming on the show.
Reed Hundt: Hi, Monica.
Monica Trauzzi: Reed, your work focuses on the creation of green banks, and that's where money is leveraged from the private sector by offering low interest rates to spur investments in clean energy. We see green banks already in New York, California and Hawaii. What successes have these states had when it comes to green banks?
Reed Hundt: Well, the first green bank was in Connecticut, actually. Little Connecticut, 3 million people, but for 3 million people, the Connecticut Green Bank has already sparked $300 million of investment in green energy projects. That's a 3-year-old green bank. New York's followed, and now they have $1 billion going out in green energy projects. About 30 percent of it is from the state and about 70 percent is from the private sector.
Monica Trauzzi: So what states have approached your organization with interest about green banks?
Reed Hundt: So our organization is a nonprofit that offers free consulting services, not forever, but for a couple of months, to states that want to set up green banks, and right now we have a team in Vermont. We have a team that just finished working in Minnesota. We've just been approached by Delaware, Nevada. The newly elected governor of Rhode Island said that she would like to create a green bank. So those are some of the states.
Monica Trauzzi: So you think this plugs in directly to state compliance plans for EPA's Clean Power Plan. How can green banks help states meet their targets?
Reed Hundt: So, as you know, the EPA regulation is going to require every state that has some kind of carbon-based electricity generation, every state that has that is going to have to take a look at the Clean Air Act regulation and figure out how to begin to move from carbon to clean. In that toolkit, they're going to think, well, how do we promote more efficiency, how do we promote more renewables? If a state wants to keep the price of electricity down, or even lower it from what it is, it's going to want to create a green bank. So the green bank, I think, ought to be part of the toolkit for every state complying with the EPA regulation.
Monica Trauzzi: So how can states tailor a green bank to fit its specific needs?
Reed Hundt: Well, the way we talk to states is let's figure out your top three clean energy markets, the markets that can be the biggest and that can grow the fastest. An example in Vermont is it's really important to diminish the dependence on fuel oil. Very expensive, very dirty. How can Vermont couple state money with private-sector money and get the state to be off of the fuel oil platform and onto some renewable energy instead? So state by state, you have to figure out what is the market that really needs to change, but everywhere, the state is very, very advantaged if it can couple its financing with private-sector financing.
Monica Trauzzi: Just how much public-sector money is needed?
Reed Hundt: In Connecticut, we did not know the answer to that question. We now know that it's only about 10 to 15 percent of the total amount of that money. In other words, for every dollar that the Connecticut Green Bank puts into a project, we get about $10 of private-sector money in. Now, how much money are we talking about? In Minnesota, to decarbonize the state is about a $100 billion program. You don't have to do it all at once, but it's really, really beneficial to the people in Minnesota to get it going right away because that $100 billion translates to a very, very large number of jobs.
Monica Trauzzi: So why is something like a green bank necessary? Why aren't private-sector dollars flowing towards clean energy?
Reed Hundt: Well, there's a number of obstacles that commercial banks see that are quite real. No. 1, many clean energy projects are too small for a commercial bank. They need to be built in multiple forms and then aggregated. An example is rooftop solar. Unless you have 1,000 roofs or 10,000 roofs covered with solar, you don't have enough volume for a commercial bank to come in. Another example is the commercial banks aren't familiar with clean energy projects. But you want to think of the state as pump priming, just getting the process going and then leading the commercial sector in to join up with the public money.
Monica Trauzzi: Is a rule like the Clean Power Plan needed to make green banks successful?
Reed Hundt: It absolutely is because the biggest market for clean energy is substituting for carbon energy. Substitution is the story in the United States. Now, if we were in India or if we were in Africa, it would be all about new build and you'd want the new build to be on the renewable platform. But in the U.S. of A, it's a substitution story.
Monica Trauzzi: So if a state is looking to start a green bank, they watch this interview, it's of interest to them, especially when it comes to 111(d), they give you a call, what are the next steps then?
Reed Hundt: We'll find a partner in the state. We don't ever want to tell a state what to do. We want to work with somebody in the state, and we'll send a team and we'll partner up with somebody in the state and we'll give them a two- to three-month pro bono consulting package.
Monica Trauzzi: All right. Very interesting. This is something that's rapidly emerging, and I appreciate your time in coming in to talk about this. Thank you.
Reed Hundt: Thanks, Monica.
Monica Trauzzi: All right, and thanks for watching. We'll see you back here tomorrow.
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