Public Banks for Clean Energy and a Just Transition
Principled Partnerships for a Just Transition: How Public Banks Can Finance Clean Energy Upgrades for Low-Income Renters
In 2019, California became the third state to authorize the establishment of Public Banks. The new law authorizes “public ownership of public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities.”
While the success of conventional Wall Street finance is defined by maximizing returns for shareholders on a quarterly basis, public banks are designed to hold and use government funds to achieve public policy goals that benefit local communities. By investing in the creation and preservation of multi-family affordable housing with a goal to increase available capital for energy efficiency, public banks can produce greater social and economic benefits per dollar than a for-profit bank while supporting emissions reductions, public health, and climate resiliency.
Our paper, Public Banks: Potential to Reduce Cost and Eliminate Silos of Financing for Clean Energy and Just Transition, summarizes Public Banking’s major features and opportunities in the United States and explores its relationship to existing financing tools, policies, and programs.
- Public banks could reduce the cost of borrowed capital to develop new affordable housing buildings, support comprehensive energy efficiency retrofits for existing affordable housing, and be aligned with conversion of existing buildings to affordable housing.
- By lowering the total cost of repayment, public banks create direct and ecosystem benefits including enabling broader adoption of energy efficiency without green financing products or post-construction incentives, create greater positive cash flow for affordable housing operators, maximize household benefits for low-income renters through energy savings, and help stabilize our climate.
We argue that energy efficiency and affordable housing practitioners should participate in the arena of public finance and how doing so will address interwoven issues of racial injustice in energy, housing, and finance. We discuss how Public Banks relate to insufficient capital, misalignment of financial markets to public benefits, incorporating measures with no revenue stream into whole building retrofits, and creating financing efficiencies that support higher adoption of energy efficiency. Lastly, we make recommendations to ensure energy efficiency priorities are reflected in Public Banking.