Cuomo Proposes “NY Green Bank” To Spur Renewable Energy Investments
Looking to boost returns from investments in renewable energy and efficiency, New York may follow the example of one of its neighbors.
Governor Andrew Cuomo has proposed creating a $1 billion “NY Green Bank,” a quasi-independent authority that would provide capital for energy projects, aiming to leverage scattered resources and open the door to projects that might struggle to attract investment on their own.
Though not a bank in the traditional sense — it would lack a charter — the authority would combine public and private funds, largely through the use of low-interest loans, bonding and credit enhancements.
“A Green Bank is a fiscally practical option in a time of severe budget conditions,” the governor said in a booklet companion to his state of the state address Wednesday (January 9). “Many public credit and investment programs require only a small amount of government funds.”
A similar $30 million program is currently under way in Connecticut, where it has helped fund several projects over the past year. Lawmakers in a few other states are considering it, too.
Creating a green bank isn't seen as a heavy lift for states because they can simply harness already-existing government resources. That, says Cuomo, is what New York would do.
The idea represents a shift away from one-time subsidies, which are still the most common means of state support for renewables and efficiency projects. New York, for instance, currently spends $1.4 billion each year on renewables and energy efficiency, putting about $1.15 billion toward subsidies, as it pursues an ambitious goal of deriving 30 percent of its energy from renewable sources by 2015. “In spite of this level of spending," Cuomo said, “the State is far from realizing its clean energy goals.”
As federal funding for the sector dries up and states continue their budget struggles, green banks are seen as a way to keep the industry stable and boost investors' confidence.
The proposal has won wide support among energy experts and advocates.
“At a time when Washington can't or won't act, states are stepping up and launching ambitious, sophisticated new experiments,” says Mark Muro, policy director for the Brookings metropolitan policy program.
It holds the most promise for financing wind and solar projects, says Muro and other researchers. That's because those technologies are establishing a stronger foothold in the energy industry, and are seen as a low risk for investors.
New York will have a big name developing the green bank proposal: Richard Kaufmann, a senior adviser to U.S. Secretary of Energy Steven Chu. Last week, Cuomo announced his appointment as the state's “energy czar,” a new subcabinet position.