States are Investing in Green Banks to Maximize Federal & Private Funding

Overview

States continue to look at green banks in 2024 to support high-impact investments in clean energy infrastructure. Green Banks are mission-driven institutions that use innovative financing to accelerate the transition to clean energy and fight climate change. Despite the word “bank” in the name, green banks do not take deposits, rather, they function like loan or investment funds and use financial tools to develop clean energy infrastructure. This year, nine states are considering at least 15 pieces of legislation to expand green banking. 

• Why it matters: Green banks have come to the forefront in recent years as a clear recipient for federal and regional funding for clean energy and energy efficiency. The Inflation Reduction Act (IRA) created the Greenhouse Gas Reduction Fund, which directs $20 billion to nonprofit entities with the features of a typical green bank. States are introducing legislation creating green banks to receive this funding. Green banks have mobilized $9 billion in overall green investment over the past 10 years using only $2 billion in public funds. 

2024 Policy Movement and Themes

This year’s green bank legislation largely focuses on establishing new banks. Of the nine states considering green bank bills in 2024, Virginia is the first to pass legislation through both chambers. Both Virginia and Vermont’s 2024 green bank legislation create their respective states’ first green bank.  

Virginia SB-729 would create the Virginia Clean Energy Innovation Bank to finance clean energy projects, greenhouse gas emissions reduction projects, and other qualified projects via grants, loans, credit enhancements, and other financing mechanisms.

Vermont H.586 would establish the Climate Infrastructure and Resilience Fund to finance climate mitigation and resilience projects, and allocate funds for water quality and flooding resiliency. 

Other State Action

Last year, Minnesota, Massachusetts, and New Mexico created green banks in their states. This year, Virginia and Vermont are joined by at least six other states considering green bank legislation, including California, Hawaii, Massachusetts, New Jersey, New York, and Washington. 

Stay Informed on State Policy With NCEL

Stay up to date on trends in Green Banks policy across the country this year with NCEL’s Bill Tracking Map.