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Press Release of Senator Cantwell
Landmark “Green Energy Bank” Bill Passes Key Committee; Will Accelerate Nation’s Transition to Clean Energy Economy
Cantwell amendment to create energy efficiency loan fund approved unanimously
Thursday, July 14,2011
WASHINGTON, D.C. – Today, the Energy and Natural Resources Committee (ENR) voted to advance the Clean Energy Deployment Administration (CEDA) Act, a bipartisan measure that will create an independent institution dedicated to providing affordable financing for clean energy technologies, especially breakthrough technologies that can make our nation’s energy system more diverse and affordable.
The ENR members also approved an amendment, offered by U.S. Senator Maria Cantwell (D-WA), chair of the Energy Subcommittee, that would create a loan program specifically for electricity and natural gas providers to make energy efficiency investments.
“Investing in America’s clean energy economy creates jobs today and lays the foundation for economic growth,” said Cantwell. “This Energy Efficiency Loan Fund helps correct a market failure in which efficiency project investments with short payback periods and virtually no risk are still running into financing barriers. This fund recognizes that energy efficiency is the cheapest, cleanest and best way to reduce emissions and energy costs. The program will help get those off-the-shelf technologies into America’s homes and businesses so ratepayers can start saving money for decades to come.”
The Energy Efficiency Loan Fund would provide electric and natural gas utilities with access to long term, very low interest loans to fund qualifying energy efficiency projects. This loan program would serve as the essential financial catalyst needed to persuade energy providers nationwide to install energy efficiency and electricity demand reduction technologies that benefit their ratepayers at no cost to the government. Any entity that sells electricity or natural gas would qualify.
“In today’s global economy, American manufacturing must be as productive and efficient as possible,” wrote David Gardiner, Executive Director of the Alliance for Industrial Efficiency, in a July 12, 2011 letter to Cantwell expressing the Alliance’s support of her amendment. “Efforts like these to finance energy efficiency projects would spur investments in manufacturing competitiveness within the paper, steel, aluminum, glass, chemical, and other energy-intensive industries. It would encourage near-term, shovel-ready projects that create and maintain thousands of jobs within those industries as well as in the manufacturing, installing, and operating of combined heat and power and waste heat recovery equipment.”
“Innovative public financing models like CEDA are essential to leverage private sector support for advanced energy technologies,” wrote Chad Holliday and General Jim Jones of the American Energy Innovation Council in a July 13, 2011 letter to the ENR Committee in support of CEDA. “…we strongly believe that a commitment to energy innovation is a commitment to long-term prosperity. Accelerating the commercialization of advanced energy technologies will improve our national security and our economic competitiveness.”
The American Energy Innovation Council is agroup of America’s top business executives who have developed a plan to make America a global leader in energy technology innovation. The Council’s members include Bill Gates, chairman and former chief executive of Microsoft; Norm Augustine, former chairman of Lockheed Martin; Ursula Burns, chairman and chief executive of Xerox; John Doerr, partner at Kleiner Perkins; Chad Holliday, chairman of Bank of America and former CEO of DuPont; Jeff Immelt, chief executive of GE; and Tim Solso, chairman and chief executive of Cummins.
Cantwell’s amendment would allow the Clean Energy Deployment Administration to make very low-interest loans, 50 basis points above the Federal funds rate, for a term of up to 30 years for any eligible energy efficiency project. If there are any additional revenues generated from energy cost savings attributable to the project above and beyond those needed to pay back the loan, the revenues are split evenly between the energy utility (as an incentive to undertake efficiency investments that will reduce electricity demand within their service territory) and CEDA’s Clean Energy Investment Fund (to help fund more breakthrough technology opportunities).
With such low interest rates and long repayment schedules, any qualifying energy efficiency project should, within just a few years, save significantly more in avoided energy costs then the value of the loan. Given this dynamic, and the ability of a utility to include a cost-of-service charge on the monthly utility bill of each address benefitting from the energy efficiency project, there is very little risk that a loan recipient will be unable to repay the U.S. Treasury in full.