Green bank (financial institution)

A green bank (sometimes referred to as green investment bank, clean energy finance authority, or clean energy finance corporation) is a financial institution, typically public or quasi-public, that uses innovative financing techniques and market development tools in partnership with the private sector to accelerate deployment of clean energy technologies. Green banks use public funds to leverage private investment in clean energy technologies that, despite being commercially viable, have struggled to establish a widespread presence in consumer markets. Green banks seek to reduce energy costs for ratepayers, stimulate private sector investment and economic activity, and expedite the transition to a low-carbon economy.

In the United States, green banks have been created at the state and local levels. The United Kingdom, Australia, Japan, and Malaysia have all created national banks dedicated to leveraging private investment in clean energy technologies. Together, green banks around the world have driven approximately $20 billion of clean energy investment.

In the US, the green bank concept was originally developed by Reed Hundt and Ken Berlin, as a part of the 2008 Obama-Biden Transition Team’s efforts to facilitate clean energy development. A similar concept was adopted as an amendment to the federal cap and trade bill, called the American Clean Energy and Security Act, introduced in May 2009. A companion piece of federal green financing legislation was simultaneously introduced in the Senate, where it received broad bipartisan support.

When the 2009 cap and trade legislation ultimately failed to pass the Senate, green bank advocates in the US focused on the state level.Connecticut established the first state green bank in 2011, followed by New York in 2013. By the end of fiscal year 2015, the Connecticut Green Bank had supported $663 million in project investments.

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