Can Congress get behind a "Clean Energy Bank?"
With Washington focused on a clean energy standard and legislative efforts to block EPA’s greenhouse gas (GHG) regulations, proposals to establish a “clean energy bank” are quietly gaining significant support. Last Congress, both the Waxman-Markey and Senate Energy Committee bills included provisions that would have established a clean energy deployment administration (i.e. a clean energy bank). These bills differed slightly on how to establish and structure CEDA, but generally the agency would operate as either an independent or quasi-independent agency to provide loan guarantees and other financing to support clean energy. CEDA addresses a critical problem many renewable projects face – gaining access to capital to move beyond the R&D phase to deployment.
Two events occurred last week that could spur momentum for CEDA. First, the Senate Energy Chair Jeff Bingaman (D-NM) outlined his energy agenda for 2011 in which he called for the creation of CEDA. This development was expected given that Senator Bingaman has been an ardent supporter of CEDA, but his comments reflect that this issue will be a priority for him this year.
Secondly, the U.S. Chamber of Commerce unveiled its 2011 Energy Plan that included explicit support for a “clean energy bank” that provides financing for nuclear and renewable projects. The Chamber’s endorsement could provide some political cover for Republicans, particularly in the House, to support CEDA. House Republicans are expected to ratchet up oversight of DOE’s loan guarantee programs initially created by the 2005 Energy Policy Act and expanded by the stimulus bill, along with other tax incentives for renewable production. The establishment of CEDA as an independent agency could offer a way to reform these programs.
Moreover, in a period of fiscal austerity, CEDA is an attractive option to spur clean energy since supporters argue that it would only need some initial seed money to get off the ground. Waxman-Markey proposed that the Department of Treasury provide CEDA with the authority to issue $7.5 billion in “green” bonds to support the project. Under the Senate bill, the Treasury would transfer $10 billion to help start CEDA. After the initial start-up funding, CEDA is designed to operate on a self-sustaining basis with any resulting profit from its activities going to the U.S. Treasury.
The adoption of any energy legislation is never easy, and there is concern that CEDA could allow for unlimited loan guarantees that reward the more expensive and risky technologies. Nonetheless, the Chamber’s endorsement, coupled with Sen. Bingaman’s commitment to the issue, provides a significant opportunity for the nuclear and renewable industries.
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