One of the worst hit states by last year’s Superstorm Sandy, New York is moving aggressively to avert future climate-related weather events. Governor Cuomo announced the launch of a Green Bank last week, giving the state a timely and much-needed Christmas gift.
The move shows the state’s strong commitment to the acceleration of a clean, low-carbon energy economy. New York joins the ranks of several other states, including Connecticut and Hawaii, in addressing a key issue holding clean energy in America back, namely financing. The Green Bank, which has $210 million in initial funding originating from existing ratepayer and Regional Greenhouse Gas Initiative funds, targets market barriers to private financing of renewable energy and energy efficiency projects.
Working with private sector financial institutions, the Green Bank will offer financial products such as credit enhancement, loan loss reserves and loan bundling to support securitization (which promotes liquidity in the marketplace) and help build secondary markets. These products have long-proven successful in stimulating market developments and creating investment-quality, asset-backed securities that can be bought and traded.
When introducing the New York Green Bank in his State of the Union address earlier this year, Governor Cuomo stated that it would be capitalized at $1 billion – so the Green Bank is expected to grow in size after offering its first financial products in early 2014.
This could not have come at a better time for New Yorkers. In the aftermath of Sandy and other major environmental events, it is critical that New York develop a strong, resilient energy infrastructure. Governor Cuomo recognizes that government funds alone cannot address these large-scale issues and that integrating private capital into the mix can greatly accelerate much-needed improvements.
Indeed, some estimates say the creation of a $1 billion Green Bank could unlock $78 billion of financing opportunities for sustainable energy projects. This would put New York on track to meet state energy reduction goals, improve the resilience of its energy infrastructure and create numerous job opportunities.