Latitude Frontier Forum Recap: How do we make America’s Green Bank a success?

Latitude Media recently hosted a Frontier Forum on the Greenhouse Gas Reduction Fund (GGRF), a $27 billion initiative aimed at deploying clean energy technologies to underserved communities. The conversation, led by Stephen Lacey, Executive Editor and Co-Founder of Latitude Media, Amanda Li, Co-Founder and COO of Banyan Infrastructure, and Billy Briscoe, CEO of the Clean Energy Fund of Texas, discussed the GGRF's potential impact, challenges with implementation, and strategies for success.

The GGRF consists of three subprograms:

• The National Clean Investment Fund (NCIF)
• The Clean Communities Investment Accelerator (CCIA)
• Solar for All (SFA)

These programs, which aim to fund national nonprofits, community lenders, and solar projects in low-income communities, are crucial components of the GGRF. 

Challenges and How to Overcome

The main challenge for the industry is the scale and complexity of the GGRF. As an industry, capital must be deployed effectively, and stakeholders must collaborate, but there is a clear gap in how to quickly deploy this amount of capital. 

As a larger renewable finance community, educating industry participants about the GGRF and ensuring that underserved communities can access the funding is a critical first step.

Need for Standardization

A central theme of the discussion was the pressing need for standardization in lending practices and reporting requirements. Amanda stressed the importance of finding common ground among stakeholders, from local lenders to Wall Street investors, to ensure that projects can be bundled and scaled effectively: 

“Where parts and bits of a credit box or document are shared in a way that drives to a little more uniformity, a better ability to mobilize quickly, and reduce overhead. And that’s the friction point we’re trying to avoid: there is a complete opposite of standards.”

“If every single loan, document, and transaction is unique in every possible manner. It’s going to make it much slower to deal with, right? So we will put out fewer projects, impact our communities at a much slower rate than we want, and add to overhead costs. It will mean that we’re spending limited resources to be all pooled together on top of a single transaction.”

“If we could all have alignment early and often, that would help. At the same time, we are trying to apply a bit of an iterative principle not only to be able to come to the table but to try to meet in the middle and try things out because it won't be perfect on day one. As we collaborate, we need to try to take incremental steps forward. Do quick learnings, and throughout the program, window in so it gets better and better, faster and faster as we move on.”

Billy then highlighted the importance of creating positive trends in renewable energy lending standards and emphasized the need for different approaches for micro-lending and macro-lending, considering the unique needs and circumstances of different communities and projects.

“There will be an arc of activity over the next three to four years that will begin to shape and define those standards. I think what we've got to be in the business of doing over this period is making certain that we are creating positive trends instead of negative ones. When you think about standardization within the consumer market base, you have to think outside the box regarding the key decision trees that result in a “yes” in deploying micro amounts of capital. That will look significantly different than when discussing your commercial and industrial capital deployment and putting those deals together. It's a bit more human capital intensive, and that trend will look different. That standard will look different.”

“It's the hope of our community that we'll have a little lead time to begin to develop renewable energy standards around micro-lending and macro-lending that will stand the test of time as traditional lending has.”

Operational Best Practices

They dove into the operational aspects of the GGRF, discussing the importance of streamlining deal flow, managing compliance, and tracking impact. Amanda discussed how technology can play a crucial role in these areas, citing the example of Banyan Infrastructure's work with NY Green Bank. 

“The reporting compliance piece is the other friction point, and at Banyan, we're trying to make it as low of a friction point as possible, making sure that [performance and metrics] are clear, consistent, and easy to report on. We need to think through the processes, people, and tools in place to ensure that as we think about reporting and compliance in this program, our ultimate dreams are making it a positive experience. We need to easily show this program's successes and impact on communities, the planet, and the wealth created for all the participants, rather than being this tedious exercise at the end of the quarter that everyone dreads as we wrangle spreadsheets.”

Billy shared insights from his experience at the Clean Energy Fund of Texas, emphasizing the importance of developing a clear investment thesis, credit criteria, and community engagement strategies.

Community Impact

The webinar also addressed how to ensure that GGRF funds reach the communities that need them most. Both speakers stressed the importance of community engagement and education and the need for collaboration between public and private sector entities. They also discussed the potential for green banks to serve as clearinghouses for identifying and funding projects that benefit underserved communities.

Billy stated, “Within the first 12 months we might not have big demonstrations of projects, like a solar farm or community level storage, but we will have direct community investment and impact, like efficient light bulbs and insulation, greener roofs, heat pumps, and EVs. There's a huge workforce component to this and economic development component to the GGRF. Dollars will be pushed down directly to the local communities. So, you'll begin to see the impact throughout the ecosystem from a workforce development perspective and from a community engagement perspective. And then you'll start to see larger scale projects towards the third or fourth quarter of next year.”

Mitigating Risk

The webinar touched on the potential political risks to the GGRF and strategies for mitigating them. Both speakers expressed optimism about the program's future and emphasized the importance of demonstrating early wins to build momentum and support. They also encouraged industry participants to actively engage in the conversation and collaborate to ensure the GGRF's success.

Billy stated “I can only echo what we're doing, and that is to get our systems in place early. Then understand what the secondary markets are requiring. A secondary market has been like a Goldman or a Merrill or one of the traditional larger entities might require and will require something different than the teacher's retirement fund or some sort of municipality. We won't be attractive to some and we will be attractive to others and make certain that our internal decision process, investment process, are aligned with who we're targeting. We've got to scale quickly and we've got to scale with talent.”

Want to hear the entire webinar? You can watch it on-demand here.