banks as a hub of information about this unique fnancial institution. The six founding members of the Green
Bank Network closed transactions worth $22 billion as of
November 2016, according to
Green & Resilience Banks.
CGC also has been collaborating with the Organization for Economic Co-operation and Development
(OECD), based in Paris, for a
number of years on the topic
of green banks.
So What is a Green Bank?
A green investment bank is
a public entity established
specifcally to facilitate private investment in domestic
low-carbon, resilient infrastructure. Currently, there are
13 green banks around the
world, according to the OECD.
Seven of the 13 are located in
the U.S., and there is one each
in the UK, Switzerland, Japan,
Malaysia, Australia and the
United Arab Emirates.
Schub said that, in the U.S.,
we will see more state green
banks coming online this
year, and we will see more
innovation in the model of the
The green banks in New
York and Connecticut, for
example, “are purpose-built,
public or quasi-public entities that are heavily funded
by state government,” he said.
“I wouldn’t be surprised if we start seeing green banks that are
private, nonproft organizations that are funded by state govern-
ments but also funded by foundations.”
He said that creative applications will arise in the U.S. in an
attempt to move more quickly and to make the institutions bet-
ter-suited to draw on different capital sources.
Schub also said that the CGC, through the Green Bank Network, has had conversations with individual nations and development banks that are interested in understanding how green
banks could be implemented in their markets. He said that, in
2017, those conversations are going to mature.
Substantial progress already has been made in India to develop a green bank, and Schub said it is likely that one will be formally established there this year. CGC, in cooperation with its
partner, NRDC, has been developing the green bank opportunity in India. Schub said that an existing entity, called the Indian
Renewable Energy Development Agency, is creating a green bank
wing of the organization that will engage in innovative public-private partnership structure fnancing that is designed to leverage private investment with public dollars and take on more creative risk mitigation structure.
“India, as the third largest emitter in the world, would send a
Green Banks in Action
really powerful signal to have an institution like that,” Schub said.
Green banks have the opportunity to focus funding on gaps in
local investment by using a wide range of tools and approaches to
attract and deploy capital, according to Green & Resilience Banks.
The paper provided the following tools as examples:
• Co-investment through debt and equity; co-investments
involve direct green bank investment in a project alongside
a private investor
• Risk mitigation and credit enhancements; green banks
use a range of credit enhancements, such as loan loss
reserves, loan guarantees and risk sharing mechanisms
• Aggregation, warehousing and securitization; these solutions are critical to supporting small, disaggregated projects
• While developed nations are making strong progress in
green bank creation, identifying whether the above – or
other – fnancial products can work in emerging markets is
key to accelerating the green bank concept globally.