The United States has implemented several federal and State-based financial initiatives supporting clean energy investment, research and development. At the federal level, departments including the Department of Energy (DOE), the Department of Agriculture (USDA), the EPA and the Department of the Treasury (DOT) provide a variety of loan, grant and bond programs offering clean energy funding.
For example, the DOE supports a number of grant, loan and financing programs. The majority of renewable energy research and development activities are funded through the DOE’s Office of Energy Efficiency and Renewable Energy (EERE). EERE received approximately $1.9 billion in funding from the government in 2015, and it funds research and development by partnering with businesses and research institutions with the goal of making clean energy technologies cost-competitive with current conventional energy technologies. More information on the EERE may be found here.
The DOE’s Loan Programs Office (LPO) administers another federal program. The LPO issues loan guarantees to eligible clean energy projects through a clean energy loan guarantee program authorized by Title XVII of the Energy Policy Act of 2005 and the Advanced Technology Vehicles Loan Program (ATVM) authorized by Section 136 of the Energy Independence and Security Act of 2007. The LPO currently manages more than $30 billion in loans, loan guarantees and commitments for projects including wind, solar and geothermal energy.
The LPO is currently accepting applications under two main programs. Under the Advanced Fossil Energy Projects Loan Solicitation, authorised by the Energy Policy Act of 2005, up to $8 billion in loan guarantees are available to support innovative fossil energy projects in the United States that reduce, avoid or sequester greenhouse gas emissions. Eligible projects may involve any fossil fuel and can span the spectrum of production and use, including resource development, energy generation and end use. The ATVM provides loans to automotive manufacturers and component suppliers to support the manufacturing of fuel-efficient vehicles and components. ATVM, authorised under Section 136 of the Energy Independence and Security Act of 2007, has approximately $16 billion in remaining loan authority and is currently accepting applications.
At the State level, there are various initiatives in place to support clean energy investment, research and development, including subsidies, tax credits, feed-in tariffs, loans and green banks. While most States have implemented clean energy policies such as renewable energy standards (requiring that a certain amount of State electricity come from renewable resources), several have also implemented financing programs. For example, Iowa has established the Alternative Energy Revolving Loan Program (AERLP). Under this program, no-interest loans of up to $1 million for alternative energy projects are available to organisations and municipal utilities. These loans have terms up to 20 years and cover up to 50 percent of project costs. AERLP received an initial $5.9 million from Iowa’s investor-owned utilities, and an additional $5 million in fiscal years 2009 and 2010 from the Iowa I-JOBS bill. Eligible projects include solar energy, wind, biomass and hydroelectric proposals.
Other States, including Connecticut and New York, have implemented, or are considering, green banks. Green banks are quasi-public corporations into which existing State clean energy funding is placed, attracting private investment and enabling the bank to make loans and leverage its’ capital with additional private capital for clean energy projects. For example, the State of Connecticut launched the Connecticut Green Bank (CTGB) in July 2011 with the aim of shifting that State’s clean energy market from government-based incentives to private-sector financing. The CTGB offers the commercial sector several programs, including commercial property assessed clean energy financing, which allows property owners to finance energy improvements or alternative energy projects on their buildings and repay the loan through a tax assessment on their property.
The CTGB reviews proposed projects based on merit, and renewable energy projects are eligible for loans ranging from 10 to 20 years at an interest rate of 5 to 6 percent with a closing fee. To date, the CTGB has completed nearly 9,000 projects and reduced carbon emissions by approximately one million tonnes.
Likewise, New York recently created the New York Green Bank (NYGB), aimed at reducing the $1.4 billion New York spends yearly on clean energy incentives. Initially capitalised with $210 million in 2013, the NYGB has continually posted an open request for proposals to allow market actors to propose projects and programs for Green Bank investments. In October 2014, New York announced its first round of NYGB investments totalling $800 million for clean energy projects.