Congressional Democrats are pushing for the creation of a national climate bank to bolster investment in green energy projects and hasten the country’s transition away from fossil fuels.
“The climate crisis has fully arrived and we have both an imperative and an opportunity to act to protect the economy,” said Sen. Edward Markey, Massachusetts Democrat.
Mr. Markey, along with Democratic Sen. Chris Van Hollen of Maryland, is the primary backer of the National Climate Bank Act. The legislation would establish a national bank, to be run as an independent nonprofit, to provide loans for green-energy projects.
The bank would be funded by tax dollars, with an overall cost of $100 billion. Upon its creation, the bank would receive $50 billion in public funding. Subsequently, an additional $10 billion would be provided annually for a five-year period.
“The costs of doing nothing about climate change are real and staggering,” Mr. Van Hollen said. “But rather than focusing solely on the costs of inaction, we should focus on opportunities for action.”
According to the legislation, the bank would make direct investments in projects “that reduce carbon emissions, support workers and communities negatively impacted by the climate transition.” It would further require that at least 40% of all loans go to low-income and minority communities.
The two lawmakers have argued that a national climate bank with $100 billion in federal tax money could generate as much as “$884 billion in [private] investment into clean energy related projects over just 10 years.”
“Put simply we need a national [climate bank] to put Americans at work at the cutting edge of a clean energy economy,” Mr. Van Hollen said. “If we don’t get into this game more seriously we will fall further and further behind on clean energy.”
A national climate bank would also provide “technical assistance” and funding for state and local governments to set up their own climate banks. Local banks would then be responsible for providing smaller loans to individuals to offset the cost of solar panel installations and retrofitting homes to clean energy standards.
Overall the legislation’s goal is to hasten the country’s transition away from fossil fuels. But Republicans question the merits and effectiveness of such a strategy.
“We know that when the government substitutes its judgment for that of the market, it picks winners and losers based on political favoritism, not business fundamentals,” said Sen. Pat Toomey of Pennsylvania, the ranking Republican member of the Senate Banking Committee.
Mr. Toomey and others point to the more than $80 billion in loan guarantees and tax credits given to green energy projects in former President Barack Obama’s 2009 stimulus program.
In that case, tax dollars went to several high-profile projects that either never got off the ground or failed to repay the initial federal investment. Most notable was Solyndra, a solar panel manufacturer that received $535 million in Obama-era loans before filing for bankruptcy in 2011 without ever generating a profit.
“The Obama-Biden administration’s loan program, which lost hundreds of millions of taxpayer dollars in loans to companies like Solyndra, is a good example of what we can expect on a much larger scale from a national climate bank capitalized at $100 billion,” said Myron Ebell, the director of the conservative Competitive Enterprise Institute’s Center for Energy and Environment.
Some also wonder whether a national climate bank is truly needed given the financial sector’s recent embrace of combating climate change.
Earlier this month, two of the nation’s largest banks, JPMorgan Chase and Citigroup, announced massive investments in “sustainable finance.”
JPMorgan Chase is pledging to spend upward of $2.5 trillion in loans over the next decade to renewable energy projects, “sustainable agriculture, development finance and more.” Citigroup, likewise, is committing to $1 trillion to “help accelerate the transition to a low-carbon economy.”