Governor Bill Walker’s Climate Action Leadership Team is trying to envision innovative ways to reduce carbon emissions in Alaska. For inspiration, task force members are looking to Connecticut, where a state-sponsored bank has helped loan millions of dollars for energy efficiency projects.
Bert Hunter has a favorite project the Connecticut Green Bank has helped fund. You can almost hear hear his eyes sparkling through the phone as he describes it. An old textile mill is being transformed into shops and affordable housing, and on site is a built-in hydroelectric dream.
“Literally, a river will run through it,” Hunter said with a chuckle.
That river will generate power for the building through two turbines — lowering energy costs for the residents.
Hunter is the Connecticut Green Bank’s Chief Investment Officer, and he admits this is unusual project for a conventional bank loan. He says those barriers to installing energy upgrades can exist for regular homeowners, too. Not just big ambitious commercial projects. That’s because in the eyes of a traditional bank, a loan for something like a kitchen remodel is typical.
“But if you start talking about solar and energy efficiency … you know, most bankers don’t know how to approach that,” Hunter said.
Hunter says the concept of renewable energy is still relatively new, which can make traditional banks cautious. But the Connecticut Green Bank has enough leverage to put those lenders at ease.
Hunter explains the Connecticut Green Bank partners with credit unions and community banks, acting like a conduit. For residents who apply, that’s where the money comes from. If a homeowner does default on their loan, it’s the Green Bank that shares the burden of paying back those cost.
This lowers the perceived risk for lenders, and it’s how Hunter says they can offer single digit interest rates for energy efficiency projects.
In the six years it’s been around, the Connecticut Green Bank has more than doubled its initial investment of $70 million dollars, and states like Alaska are starting to take notice.
“We’re talking about setting up an enterprise that is going to make money,” said Chris Rose, who serves on Governor Walker’s climate action task force.
Rose is a big fan of establishing a green bank here. It’s included in a draft policy, which is expected to be submitted to the governor next month.
Rose thinks Alaskans could save a lot of money by making their homes more energy efficient.
“In the past, the state spent over a half a billion dollars to do that very successfully. But we don’t have that grant money anymore,” he said.
Rose says a system that operates like a business makes a lot of sense. You put money in and that money comes back in the form of interest.
But Alaska has a huge budget deficit. So, where would that initial money come from?
“I don’t think a green bank would be a huge lift,” Rose said. “I do think the issue of where the money is going to come from is a big question. A carbon tax is just one potential source of revenue.”
Rose says to look at what other states are doing. At least seven have proposed carbon pricing legislation. Alaska should be thinking long term.
Connecticut didn’t establish its green bank with a carbon tax. It transformed an existing energy program and collects a small fee on utility payments.
However Alaska decides to go about it, Bert Hunter has some advice: get the state on board and start with a pot of money.
“Alaska is no stranger to making these kinds of investments,” Hunter said.
Hunter is talking about Alaska’s Permanent Fund Corporation. It invested close to a hundred million dollars in a leading financier of renewable energy this year.