By John D. Podesta - 07/22/09 11:11 AM EDT
Unfortunately, opponents’ are attempting to block or weaken the bill by claiming it will send our economy into a tailspin. Nothing could be further from the truth. Instead, the bill will create new jobs and foster economic growth while protecting consumers from price increases. This “win-win” future is possible in part because of a little-noticed provision in the legislation that would create a new Green Bank—called the Clean Energy Deployment Administration in the bill—to facilitate the flow of private capital into renewable energy and energy-efficiency projects.
The Green Bank has been the missing piece of the energy debate. It’s the way we actually finance the transformation of our economy to run on clean energy quickly enough to meet our climate and competitiveness goals and cheaply enough to protect families and businesses. The Green Bank is a critical element of the bill’s integrated strategy to put a price on carbon, require utilities to replace some of their carbon-based energy resources with renewable energy, and finance investments in clean energy and energy efficiency.
It turns out that clean-energy projects—wind, solar, geothermal, advanced biomass, and energy efficiency—are ready to go but lack financing because of the ongoing credit crisis, the size and novelty of these investments, and the chicken-and-egg problem of replacing transmission lines to carry renewable energy from where it can be generated to where it is needed before those sources of energy have been tapped. The Green Bank can resolve all of these problems by providing low-cost, long-term financing to get these clean-energy projects off the ground.
That’s why both the newly passed House bill and the Senate bill now under debate contain such an energy financing entity that draws on the ability of the U.S. government to borrow at low interest rates and then leverage that money to draw in matching investments from the private sector. The private sector Green Bank Coalition has determined that the lower interest rates and longer repayment terms that government financing can deliver would allow new wind, solar and other clean-energy projects to attract investment at today’s electricity prices.
The House bill provides an initial capitalization of $7.5 billion, all paid for in the bill, that would generate $75 billion in loans and, when matched with private sector equity, $150 billion in investment in new industries and jobs. The proposal by Senator Energy Committee Chairman Jeff Bingaman (D-NM) in the Senate energy bill would operate in a similar fashion.
In the coming weeks, the bill’s opponents will complain loudly that the legislation will impose hardships on families and slow economic growth. But the truth is that the legislation prepares for the day when we will put a price on what we want to consume less of (carbon), by wisely lowering the price of what we want to consume more of (renewable energy) through the Green Bank. By doing both, the bill protects consumers and spurs new investment to ease the transition.
This is the kind of government action that spurred investment and growth throughout our history. Government support for private canals and railroads in the 19th century allowed products to find markets and knit together the new national economy. The Tennessee Valley Authority, a government-owned entity created in the 1930s, developed the infrastructure to deliver electricity to and drive economic development of rural Appalachia.
More recently, government spending during World War II created industrial technologies and manufacturing capacity that helped create the postwar economic boom. And, the space race in the latter half of the 20th century led to new technologies and services that power our economy today, including robotics, new materials, and computer command-and-control systems that led directly to the invention of ARPANET, the precursor of the Internet.
The Green Bank cannot single-handedly lead this 21st century economic transformation, but with caps on carbon emissions and requirements that utilities switch to renewable energy, the Green Bank can put in place the long-term financing needed to put our country on a win-win path to a prosperous clean-energy future. Passage of this legislation by the Senate with the Green Bank provision intact could not be more important to our nation.