Essay by Eric Worrall
If renewables are almost always cheaper than coal, as most greens repeatedly claim, why are special government funded banks required to drive investment?
Using green banks to solve America’s affordable housing crisis – and climate change at the same time
Published: July 18, 2023 10.30pm AEST
Tarun Gopalakrishnan Research Fellow, Climate Policy Lab, Tufts University
Bethany Tietjen Research Fellow in Climate Policy, The Fletcher School, Tufts University
Seth Owusu-Mante Research Fellow in International Development, Tufts UniversityGreen banks are starting to draw attention in the U.S., particularly since the federal government announced its first grant competitions under a national green bank program to bring clean technology and more affordable energy to low-income communities.
But installing more solar and wind electricity generation isn’t the only way green banks can help.
Massachusetts is launching an innovative new green bank that could become a model as states try to manage two crises at once: lack of affordable housing and climate change.
While most green banks focus on clean energy, the Massachusetts Community Climate Bank is specifically designed to boost the state’s stock of sustainable, affordable housing. It comes at an opportune time: States can now tap into billions of dollars in new federal funding for green banks under the Inflation Reduction Act.
…
Read more: https://theconversation.com/using-green-banks-to-solve-americas-affordable-housing-crisis-and-climate-change-at-the-same-time-208098
If you’re wondering exactly what a green investment bank is, the OECD provides this less than helpful explanation;
Green investment banks
To leverage the impact of relatively limited public resources, over a dozen national and sub-national governments have created public green investment banks (GIBs) and GIB-like entities. GIBs are using innovative transaction structures, risk-reduction and transaction-enabling techniques, and local and market expertise to channel private investment, including from institutional investors, into domestic low-carbon, climate-resilient infrastructure.
POLICY PERSPECTIVES: GREEN INVESTMENT BANKS: LEVERAGING INNOVATIVE PUBLIC FINANCE TO SCALE UP LOW-CARBON INVESTMENT
Investment is growing in renewable energy and energy efficiency, but not quickly enough to get the world on track to achieve zero net greenhouse gas emissions globally by the end of this century. Mobilising investment from the private sector will be essential to meet climate change goals. Governments can find ways to make efficient use of available public funding to mobilise much larger pools of private capital.
The OECD report Green Investment Banks: Scaling up Private Investment in Low-carbon, Climate Resilient Infrastructure aims to provide policy makers with the first comprehensive study of publicly capitalised green investment banks (GIBs), examining the rationales, mandates and financing activities of this relatively new category of public financial institution.
It provides a non-prescriptive stock-taking of the diverse ways in which these public institutions are helping to leverage and catalyse private investment in domestic green infrastructure, with a spotlight on energy efficiency projects. Highlighting the role of GIBs within a broader policy framework to mobilise investment, the report also provides practical information to policy makers on how green investment banks are being set up, capitalised and staffed.
A GIB is a public entity established specifically to facilitate private investment into domestic low-carbon, climate-resilient (LCR) infrastructure. Using innovative transaction structures, risk-reduction and transaction-enabling techniques, and local and market expertise, GIBs are channelling private investment into low-carbon projects. GIBs are facilitating investment in such areas as commercial and residential energy efficiency retrofits, rooftop solar photovoltaic systems and municipal-level, energy-efficient street lighting. Download the PDF version
Many of the investments GIBs mobilise are undertaken in urban areas where 54% of the world’s population lived in 2014, and where 66% is projected to live by 2050.
Governments tailor their GIBs based on their unique national and local contexts. GIBs and GIB-like entities have diverse rationales and goals including meeting ambitious emissions targets, supporting local community development, lowering energy costs, developing green technology markets, creating jobs and lowering the cost of capital. Using a range of metrics, GIBs are measuring and tracking their performance. These metrics generally focus on emissions saved, job creation, leverage ratios (i.e. private investment mobilised per unit of GIB public spending), and – for those GIBs that are required to be profitable – rate of return.
GIBs are typically established in countries that do not have national development banks or other entities that are actively promoting private investment in domestic LCR infrastructure. They are relevant for both developed countries and emerging economies as a tool to help meet emissions, technology and infrastructure deployment and green investment targets. The creation of a GIB can send a signal to the marketplace and other countries that a country or region is seeking to become a leader in scaling up private low-carbon investments. To mount a serious effort to mobilise low-carbon investment and get on a path toward zero net emissions by the end of this century, governments need to consider how institutions like green investment banks can help them pick up the pace.FURTHER READING
CONTACT
Source: OECD (content reproduction terms and conditions)
- For more information, please contact: robert.youngman@oecd.org.
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Is Massachusetts short of access to private banks which encourage sound commercial investment? Are US banks not providing the capital to drive forward the economically compelling green revolution? Or is Massachusetts spending all this money just to “send a signal”?
If private banks and private financiers don’t want to touch green investments now, at anything like the required scale, how will creating a green investment bank change their minds? Or are Green Investment Bank enthusiasts just assuming private companies need a little leadership from government, to understand what a great opportunity green investments are? What happens if that “leadership” falls flat, and private companies fail to respond the way public sector green bank enthusiasts hope they will?
I sure hope Massachusetts taxpayers are paying attention to what their state government is doing with their money. Because someone is going to have to pay for all this.
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And operate like Fanny Mae?
Green investments have a terrible long term record. This is because green investments are almost always subsidised in one way or another. If an investment needs subsidies to proceed, it is almost certainly a really bad business idea and usually fails eventually when the subsidies stop. Anybody promoting these schemes could be sued by disgruntled investors who have lost money on them. I would advise everybody to steer well clear of any investment which touts itself as green.
“Are Green Investments so Lame they need Special “Green Banks” to Succeed?”
In a word… Yes.
go one step further back:
i.e. Governments are now so lame they need these things
:OK, why are Governments ‘lame’
Testable assertion/hypothesis: Could that not possibly be because are composed of individuals and that they are, en masse = ‘lame’
So if there’s a ‘masse’ of Lame People inside Government, where did Gov get them all from and might they be found being active/inactive anywhere else?
e.g Schools, universities, science labs, doctors office & hospitals, myriad aspects of personal/social/sexual relationships. e.g2: Baby-making
Alright, this looks like progress: Soooo, what caused the ‘Lameness of People‘
Remember what your mother said:” You are what you eat
Meanwhile, here’s a collage of today’s newspapers as assembled by the BBC
It. Has, Got, The, Lot.
It’s a Catalogue of Lameness and is the same each and every day
I highlighted the (Greek fires) kid = a New Boris Johnson if ever there was, because:
How old is that kid and needs to be carriedHow old and wearing a nappyWhy so much belly fat on itWhy, at that age, sucking on a pacifierRemember what your mother said:” You are what you eat
What about her mother – is that why Greece is on fire right now=
Because of something they ate – and it made them ‘lame’
Just like that kid needs to be carried.
There’s what Green Banks are about: Lame People propping up (carrying) ever more Lame People. Just like the Greek Fire picture
PS Ain’t ya just gotta love the advert for Private Jets being (haha) carried by the Financial Times
“Governments are now so lame”
Now that each house in the public school has the same ideas, aims and general policies – there are differences on the mechanics and methods – what is there to oppose…. but mechanics and methods.
Starmer is the perfect example. He backed everything the technocrats wanted in the pandemic – and then some. They didn’t go far enough for his liking. Have you heard the empty suit talking lately? Ah, you missed it; another u-turn.
Our government is unique. An elected feudal dictatorship (Est. 1660). Which over the centuries has fought heroically to preserve the status quo. Here and there it has had to concede – those uppity wimmin, for example. But tides come in and they go out and government aided by technology is taking powers back unto itself again.
At the next election, Peta, will you be voting for:
Tory Net Zero
Labour Net Zero
Limp Dum Net Zero
???
https://wattsupwiththat.com/2023/07/19/neil-oliver-fear-mongering-over-high-temperatures-is-an-incessant-attempt-to-keep-us-frightened/#comment-3751567
“To mount a serious effort to mobilise low-carbon investment and get on a path toward zero net emissions by the end of this century, governments need to consider how institutions like green investment banks can help them pick up the pace.”
Now we’re aiming at the year 2100 instead of 2050 for “net zero?” What insanity, to push “green” spending on solar and wind sources, and battery storage, that have at best a 25-year life!
It is now blatantly obvious to everybody that the 2050 net zero target is completely impossible. Postponing the target to 2100 is progress of a sort. It would be more sensible to abandon the net zero target completely, but I regard this as a first step in that direction. I suppose that making the target a century in the future actually means abandoning it in practice without officially saying that the target has been abandoned.
I can assure you, Woke-achusetts will not postpone the goal of reaching net zero from 2050. It’s amazing how such naive people fail to understand how fast time flies. Of course it’s impossible to ever reach net zero.
I hope you are right that it is a “first step in that direction.” But the crazy train is still accelerating toward the inevitable wreck, more so in some places like here in NY.
Woke-achusetts has a net zero by 2050 law on the books- so it’ll push the green banking to speed up.
Similar story here in NY with the CLCPA.
“GREEN INVESTMENT BANKS: LEVERAGING INNOVATIVE PUBLIC FINANCE”
So these institutions aren’t really banks at all, just fronts to disguise the transfer of taxpayers’ money to the chosen ones.
Tuffs U.?? The home of some of the craziest climate nut jobs on the planet- including, Bill Moomaw, who fantasized “proforestation”- the idea that forests must be locked up “to save the planet”. They’ll have no function other than sequester carbon. Moomaw was an IPCC author in the early days. He knows zero about forests. He has a Phd in physical chemistry. I’ve debated with him- or tried to- but he won’t respond. I sent him an email with several questions about his fantasy and he will not respond.
Lack of affordable housing here in Woke-achusetts?
One reason is too many people don’t have decent jobs since almost all industries have been exported to China and Mexico.
Another reason is most communities have rigid zoning codes and they’re not likely to reduce them because they LIKE them!
Another reason housing is expensive here is that energy here is expensive- the 3rd highest electricity in the nation. And the state refuses to allow an increase in natural gas- and the state wants everyone to install heat pumps and dump their home oil burners.
Another reason: powerful labor unions. Here, you’re lucky to get a plumber for as low as $100/hr. Most other trades are also very, very expensive. Then when you build something, it costs a fortune for lawyers, architects, getting approvals, etc.
Another reason- there is a shortage of buildable land. It’s a small state with 6M people. Much of the land is forest and much of that is owned by the state. Much of the private forest is semi locked up in the state’s forest tax law program. Existing farm land is strongly protected. Nobody wants nice fields being built on- whether for solar or for housing.
What land is available- much of it is threatened by conversion to solar farms.
The state might not have a housing shortage if it wasn’t so easy for illegal migrants to come here and get on welfare. Many of the communities are “safe communities” where the local officials won’t help immigration authorities to bust the illegals- not including Martha’s Vineyard of course where DeSantis sent a planeload and they were instantly flown out to a national guard base on Cape Cod. Although most young people who are born here leave the state for job opportunities, the population has remained stable with all the immigrants, both legal and illegal.
No green bank is going solve these problems or even address them. This state has gone nuts.
Affordable housing is not sustainable. Renters, who have no stake in the house, will trash it very soon. At least in the Old World.
right- we’ve seen that before in many big American cities and now many of these housing projects (ghettos) are now being torn down
if people can’t afford to live in a city or state- they can MOVE!
“The OECD report Green Investment Banks: Scaling up Private Investment in Low-carbon, Climate Resilient Infrastructure…”
which of course will be far more expensive than “normal” infrastructure
Like, what the heck does that even mean- low-carbon climate resilient infrastructure?
“I sure hope Massachusetts taxpayers are paying attention to what their state government is doing with their money. Because someone is going to have to pay for all this.”
They aren’t paying attention! They are all hoodwinked by our lesbian govenor who has appointed only woke people to all positions who make great promises and who will not be able to deliver on them. By the way, I’m not homophobic or racist. I just think we hear too much about this woke shit, all day, every day. It’s getting exhausting. No wonder I call my state Woke-achusetts.
Normally, the purpose of a bank is to make money by lending money to people (such as home buyers) or businesses who pay back their loans with interest, which becomes profit for the bank.
But “investments” in green energy, such as wind or solar, are rarely profitable unless either government money is seeded into the investment, or the energy generated is artificially expensive due to government-mandated price supports.
In the late 1990’s and early 2000’s, policy-makers tried to encourage home ownership by forcing government-subsidized Fannie Mae and Freddie Mac to offer mortgages to low-income people, many of whom could not make the payments. Those in charge of Fannie Mae even earned sales commissions based on the number of loans made. although they were lending government money, not their own.
This incentivized extending loans to insolvent borrowers, without the risk aversion that is inherent in private banks leading them to vet the borrowers. From 2005 through 2008, private banks bought “mortgage-backed securities” based on government-subsidized loans, and when some of the borrowers failed to make the payments, this led to the massive bank failures of 2008 and 2009.
A “green investment bank” subsidized by the state of Massachusetts is likely to suffer the same fate as Lehman Brothers and AIG did in 2008.
Back in 2008, the failed banks were bailed out by the Federal Reserve. But would the Fed bail out a “green investment bank” set up and subsidized by a single state?
If Massachusetts is interested in “affordable housing”, houses or apartment buildings become more affordable when well-insulated and equipped with an oil-burning or gas-fired furnace than if they have solar panels or heat pumps.
But would the Fed bail out a “green investment bank” set up and subsidized by a single state?
Based on the evidence, most likely. After all, it isn’t their money.
Well, if the electricity being produced was so inexpensive that they might as well give it away for free, how could anyone make money on their investments? It isn’t a socialist economy, after all.
These metrics generally focus on emissions saved, job creation, leverage ratios (i.e. private investment mobilised per unit of GIB public spending), and – for those GIBs that are required to be profitable – rate of return.
This is all you need to know (and – for those GIBs that are required to be profitable – rate of return)
What a crock, so we are expected to support banks but don’t expect them to be profitable? These guys have lost their minds.