Five Emerging U.S. Public Finance Models

Five Emerging U.S. Public Finance Models: Powering Clean-Tech Economic Growth and Job Creation

The following is an excerpt from Five Emerging U.S. Public Finance Models: Powering Clean-Tech Economic Growth and Job Creation. To read the full report, please download the PDF file by clicking on the link to the left.

We live in interesting times. Clean technologies, from solar and wind power to the smart grid, energy efficiency and green buildings, have emerged as a central driving force within a host of established and emerging economies around the world. The clean-tech sector has caught the attention of early-stage venture investors, well-entrenched multinationals, and governments large and small. But financing and supporting the continued growth of clean technologies and the jobs that come with them will not be easy. We continue to face the consequences of one of the most significant global economic crises in generations, and the credit freeze, along with the loss of tax-credit appetite by investors, has made the growth of any industry challenging, to say the least.

Clean tech (and indeed, any technology-based industry) is built on the alignment of three pillars: technology, capital, and policy. Positive support and advancements in all three pillars are necessary, in varying amounts, for an industry to grow and thrive. In today’s challenging economic climate, government actions to get capital flowing again have taken center stage. The United States’ $787 billion stimulus plan, officially the American Recovery and Reinvestment Act (ARRA) of 2009, is one of the most prominent examples, along with stimulus efforts in other countries such as China, Japan, and Germany.

But even with large investments already being made in the U.S., the nation faces the very real threat of falling behind in the race to capture its share of the clean-tech sector. One reason: only a fraction of America’s stimulus funding, approximately $100 billion of the $787 billion total, is currently earmarked for clean-tech related projects. And the prospect for more clean-tech stimulus funding in the U.S. is uncertain. Equally important, other advancements have not yet been signed into law, most notably a federal renewable energy standard (RES) mandating that a portion of the nation’s electricity must come from new renewables, and a workable scheme to put a price on carbon 

In short, to gain the benefits of the clean-tech revolution – from green jobs and energy security to climate solutions and the creation of a 21st century economy – the United States needs new financial instruments that can provide the capital necessary for the rapid expansion of clean-tech industries.

In this report, we analyze five of the most promising financing models:

  • Clean Energy Deployment Administration (CEDA) aka The Green Bank
  • Clean-Energy Victory Bonds
  • Tax-Credit Bonds
  • Federal Loan Guarantees
  • Clean-Tech City Funds

We examine each of these models – their history, current state of activity, and potential impact on clean-tech economic growth and job creation. While this report is not intended to provide in-depth analysis for the technical implementation of each model, it should help bring readers up to speed on a range of new and emerging financing opportunities -- and provide fodder for further thought and exploration.

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