A green bank, or clean energy fund, is a market-based approach to boost investment in clean and efficient energy solutions. This class of innovative financing tools incentivizes private investment in projects that protect and improve the environment while promoting participation in emerging markets, such as energy efficiency, clean energy, beneficial electrification, and climate-resilient infrastructure. Clean energy funds also facilitate market development by educating consumers, centralizing administration for originators and lenders, connecting capital supply to customer demand, and reducing risk to private investors.
Drawing from the best practices of successful green banks across the country, the Nicholas Institute is advising states in the Southeast on design, development, and implementation of green banks. By strategically leveraging limited public funds, Southeast states may be able to better accomplish policy goals, stimulate job growth and economic development, and support energy equity to serve citizens as well as municipal and state governments’ needs.
In North Carolina, a green bank or clean energy fund was among the top recommendations of three parallel stakeholder processes in 2019—the N.C. Clean Energy Plan, the N.C. Energy Efficiency Roadmap and the Department of Transportation’s Zero Emission Vehicle Plan. The Nicholas Institute and the Coalition for Green Capital worked with stakeholders to conduct a market assessment that identifies areas where the N.C. Clean Energy Fund could spur clean energy growth in the state. Released in October 2020, the assessment found that such a fund could catalyze private investment in clean energy and energy efficiency projects, helping the state meet its greenhouse gas reduction goals and create jobs for a post-COVID-19 recovery.