October 22, 2020

Nicholas Institute-CGC Assessment Finds N.C. Clean Energy Fund Would Spur Projects to Cut Emissions, Create Jobs

Nicholas Institute for Environmental Policy Solutions
Nicholas Institute-CGC Assessment Finds N.C. Clean Energy Fund Would Spur Projects to Cut Emissions, Create Jobs

DURHAM, N.C. — A North Carolina Clean Energy Fund would support economic recovery from the COVID-19 pandemic by equitably investing in clean and efficient energy solutions for the state, according to a new market assessment from Duke University’s Nicholas Institute for Environmental Policy Solutions and the Coalition for Green Capital (CGC). The fund could be seeded by a National Climate Bank, which has passed the U.S. House of Representatives with $20 billion, and now awaits Senate consideration.

The assessment estimates that $100 million in funding could catalyze private investment in clean energy and energy efficiency projects, potentially leading to creation of 15,000 jobs in North Carolina within the fund’s first five years of operation. For comparison, an estimated 21,000 clean energy workers, or roughly a fifth of the state’s pre-pandemic clean energy workforce, remained unemployed in North Carolina as of July. Any new jobs created by a Clean Energy Fund would support a range of projects to help meet the goals of the N.C. Clean Energy Plan — a 70 percent reduction in greenhouse gas emissions from the electric power sector below 2005 levels by 2030 and carbon neutrality by 2050.

"The North Carolina Clean Energy Plan reflects a consensus vision for combating climate change in our state while building a prosperous clean energy economy," said Sushma Masemore, state energy director and deputy assistant secretary at the N.C. Department of Environmental Quality. "The Clean Energy Fund will encourage investment in innovative solutions to both reduce carbon emissions and put North Carolinians back to work."

Formation of a N.C. Clean Energy Fund was among the top recommendations of the N.C. Clean Energy Plan, as well as two parallel stakeholder processes in 2019 — the N.C. Energy Efficiency Roadmap and the Department of Transportation’s Zero Emission Vehicle Plan. Also known as green banks, clean energy funds incentivize private investment in clean energy projects by addressing and alleviating market barriers, specifically for underserved communities and nascent technologies.

In November, the Nicholas Institute and CGC met with a diverse set of stakeholder groups to discuss perceived financing gaps in clean energy and energy efficiency that a clean energy fund could fill. The conversations cited a range of potential projects throughout the state, including renewable power, building efficiency, and clean transportation.

“A North Carolina Clean Energy Fund provides a unique opportunity to catalyze investment in emerging clean energy markets and fill crucial financing gaps for vulnerable populations,” said Jennifer Weiss, senior policy associate in the Nicholas Institute’s Climate and Energy Program. “By providing technical assistance and credit enhancements, the fund can reduce the risk for private investors.”

There are four key roles a Clean Energy Fund could play in the North Carolina energy market to increase access to clean and efficient energy solutions:

  • Connector in the market to provide technical assistance
  • Risk mitigator by partnering with commercial lenders to expand access through credit enhancements
  • Direct lender in order to expand the market to projects that otherwise could not be financed
  • Bundler to aggregate small projects to meet scale to attract private capital

In addition to lowering market barriers, clean energy funds also provide more equitable access to the benefits of clean energy, such as improved health outcomes and reduced financial burdens from energy costs, according to the Nicholas Institute-CGC assessment. That could be achieved by earmarking a portion of the fund’s spending for low-to-moderate income communities or incentivizing or prioritizing those communities for investment.

“The data in this assessment supports what we’ve long-believed: green banks can help alleviate the disproportionate energy burden low-income communities often face,” said Marilynn Marsh-Robinson, manager of partnerships and outreach at Environmental Defense Fund. “By offering low-cost financing options for both renters and homeowners, we can help all North Carolinians get access to affordable capital to make their homes more efficient and lower their power bills. Further, by getting more projects like this off the ground, we help put people back to work, employing those in the communities where services — and jobs — are needed.”

Over the coming months, the Nicholas Institute and CGC will host informational panels on the possible structure of and financing sources for a N.C. Clean Energy Fund. The process will engage a wide range of stakeholders: state and local government agencies, the environmental advocacy community, clean energy organizations, commercial capital providers, community development finance institutions, community groups and private foundations.

Clean energy funds can take a variety of forms depending on the market gaps, policy priorities and budgetary landscape in a particular state or region. The assessment found that a nonprofit organization supported by public policy “seems most likely to yield results supportive of a clean and efficient energy economy” in North Carolina and quickly spur job growth.

Based on the market needs identified by stakeholders and experiences in other states, the assessment recommends at least $100 million in seed capital for a N.C. Clean Energy Fund. In addition to the National Climate Bank, other capital sources could include private foundations, social impact investors, and public money from the state.

"North Carolina already knows first hand that clean energy investment is a huge job creator. A dedicated Clean Energy Fund will deliver those economic benefits to every corner of the state. And the timing couldn't be better, as the National Climate Bank gets closer to passage, so the North Carolina Clean Energy Fund should get ready to deploy hundreds of millions of those dollars," said Jeff Schub, executive director of the Coalition for Green Capital.

The market assessment was written by Weiss; Hannah Beinecke, program director of the Coalition for Green Capital; and Jill Bunting, deputy director of the Coalition for Green Capital. The full report, “How a Green Bank Can Drive the North Carolina Clean Energy Economy: A Market Opportunity Overview,” is available at nicholasinstitute.duke.edu/publications/how-green-bank-can-drive-north-carolina-clean-energy-economy-market-opportunity.

The report’s authors will discuss the concept of a North Carolina Clean Energy Fund in more detail during a webinar on Nov. 17, at 1 p.m. More details and registration information are available here.  

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