A new US “green bank” aims to channel more than $160 billion in capital into climate technology

For years, banks have been financing large renewable energy projects, from utility-scale solar farms to expansive wind farms. But smaller projects, like installing a heat pump in someone’s home or rehabilitating affordable housing, are often overlooked. They simply weren’t profitable enough.

But the demand is there, which is why advocates have been calling on the federal government to support a so-called green bank, which would finance this type of project.

This green bank has now become a reality. On Thursday, E.P.A Announce It awarded $20 billion in grants under the Inflation Reduction Act to eight organizations that will use the money to make loans that will help with those projects.

“It’s an opportunity to prove that this works and creates real, on-the-ground benefit for people across America,” said Dawn Lippert, founder and CEO. The racist acceleratorhe told TechCrunch, adding that “tribal communities, rural communities, low-income communities, underserved communities are really the focus here.”

In fact, more than $14 billion in funding will be directed toward communities that meet these descriptions, the EPA said.

What’s more, since the money will be used for loans, it can be recycled once those loans are repaid. Green bank loans also have a good track record. For example, Connecticut Green Bank has a delinquency rate On an equal footing With the other Commercial lenders Across both residential and commercial portfolios.

In addition to providing financing for energy improvements, the Greenhouse Gas Reduction Fund, as it is known, hopes to attract $7 in private capital for every dollar it distributes. In fact, this may be a conservative number: Mackenzie expects The new green bank should attract more than $12 in private investment for every dollar on its balance sheet.

The United States is expected to need $27 trillion by 2050 to reach net zero carbon emissions, according to McKinsey estimates, which may make the $20 billion allocated by the Green Bank seem small. But its ability to stimulate private investment and the fact that it is not a one-off grant should allow it to make an impact beyond the initial minimum.

Founders and investors should see some benefits, too. Although the funds mostly target consumers and small businesses, investing in stocks is a possibility, Lippert said. In addition, the financing should increase demand for proven technologies that are ready for commercial deployment.

For those who haven’t done so yet, green bank loans should have a cascading effect, sending a signal to founders and investors that there are markets for consumer-level climate technology that works for low-income and underserved communities.

“This $20 billion in funding will have a truly significant impact on job creation, lowering costs for American families, and creating a healthier, more secure future for our children,” Lippert said.