Low-Cost Capital Provided to Community-Based Lenders Will Support Projects That Reduce Greenhouse Gas Emissions in Disadvantaged Communities
Accelerates Equitable Advancement Toward Nation-Leading Climate Goals to Reduce Greenhouse Gas Emissions 85 Percent by 2050
Supports Climate Act Goal to Ensure At Least 35 Percent With a Goal of 40 Percent of Benefits of Clean Energy Investments Go to Disadvantaged Communities
Governor Kathy Hochul today announced NY Green Bank, a division of the New York State Energy Research and Development Authority and the state’s clean energy and sustainable infrastructure financing entity, has launched a $250 million Community Decarbonization Fund. The CDF, a wholesale lending pathway that will provide low-cost capital to Community Development Financial Institutions and other mission-driven lenders for local clean energy and building electrification projects and other scopes of work, will support lenders financing projects that reduce greenhouse gas emissions in disadvantaged communities. Today’s announcement supports New York’s equitable advancement toward the Climate Leadership and Community Protection Act goals of reducing greenhouse gas emissions 85 percent by 2050 and to ensure at least 35 percent with a goal of 40 percent of the benefits of clean energy investments go to disadvantaged communities.
“As we continue to build an equitable, clean energy future for all New Yorkers, NY Green Bank is sending a clear signal that our state is a leader in green infrastructure and economic development,” Governor Hochul said. “Increasing the capacity of community-based lenders to support clean energy projects in underserved communities across our state will improve access to renewable energy and healthier, affordable housing while we continue working to ensure a greener New York for all.”
President and NYSERDA CEO Doreen M. Harris said, “Support for community-based organizations that are knowledgeable of the local needs of residents is critical to this targeted effort to bring the benefits of the clean energy transition to disadvantaged communities across the state. The feedback from stakeholders has been extremely valuable and serves as the foundation for this new fund which will allow more projects, such as those that advance energy efficient buildings, to receive support.”
NY Green Bank President Andrew Kessler said, “NY Green Bank's focus on filling market gaps includes our dedication to engaging with stakeholders to ensure products are responsive to their needs. We are truly grateful for the input received that was crucial in developing the Community Decarbonization Fund and excited to work with community-based lenders to integrate green best practices into their already successful lending.”
NY Green Bank Managing Director David Davenport said, “NY Green Bank’s Community Decarbonization Fund is a key component of a broader effort to expand and continually improve our product offerings while more effectively deploying capital within New York’s historically disadvantaged communities. This initiative reflects our commitment to an inclusive approach with involvement of a wide variety of stakeholders, and we look forward to enabling community-based lenders to expand their offerings to directly support projects in their communities.”
Carsey School of Public Policy Center for Impact Finance Finance Research Fellow Hannah Vargason said, “The Center for Impact Finance has deep experience in working with CDFIs and other lenders providing financing solutions to people, project developers, and community-based organizations working in historically marginalized communities. NY Green Bank’s Community Decarbonization Fund presents an exciting opportunity – and a welcome challenge – for those lenders and should serve as an enticing incentive to integrate green lending best practices into their overall portfolio of activities.”
Forsyth Street Advisors Managing Director Michael Freedman-Schnapp said, “NY Green Bank’s Community Decarbonization Fund is a transformational investment tool for bringing clean energy to New York State’s historically underserved communities. Too often, the capital needs of low-income communities are overlooked when making policy. Having a flexible capital source that works through the community-based lenders who know the needs of low-income New Yorkers is exactly what is needed at this time. The unique nature and scale of the Community Decarbonization Fund is helping set the pace nationally for green banks’ investment in disadvantaged communities.”
New York City Housing Partnership Executive Vice President and President of HP Sustainability Esther Toporovsky said, “The launch of NY Green Bank’s Community Decarbonization Fund introduces an important new capital resource for community based and mission driven lenders to expand their financing capabilities to include green and sustainable projects. HPN and its clients – including CDFIs, locally based developers and community-based nonprofits – all stand to benefit from the capital injection provided by this new resource.”
While the CDF reflects an enhanced approach to expand green lending in DACs, NY Green Bank has been actively supporting projects in historically marginalized communities throughout its history. As of December 31, 2022, NY Green Bank had made commitments of more than $216.5 million to projects located in DACs, including rooftop solar on affordable housing, and clean heating and cooling solutions (heat pumps specifically) in community facilities and houses of worship. NY Green Bank’s current pipeline of support for DAC-related projects is expected to advance the CDF’s commitment to invest $100 million for decarbonization of buildings in and/or serving DACs and $150 million for green affordable housing by 2025.
The CDF structure, design and offerings were informed by initial and ongoing solicitation for stakeholder feedback that began in December 2021, with invitations sent to over 130 entities, resulting in both individual meetings and 11 small group virtual roundtable sessions. These sessions served as opportunities for stakeholders to identify existing financing gaps and potential solutions which would expand the benefits of clean energy investments in DACs. A summary of the feedback provided in these sessions, including the recommendation for the fund announced today, is in the 2021-22 Amended Annual Plan filed with the Department of Public Service and available on the NY Green Bank website. NY Green Bank welcomes additional feedback on the overall structure, format and content of the request for proposals (RFP) itself, which can be provided by email to [email protected], with “NY Green Bank: RFP 23 Feedback” in the subject line.
Stakeholder engagement has continued throughout the development of the CDF to provide updates and receive feedback from participating organizations including:
- Property developers, service providers, owners and operators;
- Environmental justice advocates;
- Community-based organizations; and
- Community Development Financing Institutions (CDFIs) and other specialty finance companies with strong pipelines of affordable housing and other DAC-related clean energy and sustainable infrastructure projects.
NY Green Bank will host a webinar on May 11, 2023 at 10:00 a.m. to share more detail on the CDF, its intended purpose and eligible recipients. Please register here. For additional details please visit the NY Green Bank website.
Overall, since its launch in 2013, NY Green Bank has committed $1.9 billion across 120 transactions and mobilized $5.6 billion in capital as of December 31, 2022. Projects supported by NY Green Bank investments are estimated to result in annual greenhouse gas emissions reductions of up to 1,910,000 metric tons, equivalent to removing more than 415,000 cars from the road.
New York State's Nation-Leading Climate Plan
New York State's nation-leading climate agenda calls for an orderly and just transition that creates family-sustaining jobs, continues fostering a green economy across all sectors and ensures that at least 35 percent, with a goal of 40 percent, of the benefits of clean energy investments are directed to disadvantaged communities. Guided by some of the nation’s most aggressive climate and clean energy initiatives, New York is on a path to achieving a zero-emission electricity sector by 2040, including 70 percent renewable energy generation by 2030, and economywide carbon neutrality by mid-century. A cornerstone of this transition is New York's unprecedented clean energy investments, including more than $35 billion in 120 large-scale renewable and transmission projects across the state, $6.8 billion to reduce building emissions, $1.8 billion to scale up solar, more than $1 billion for clean transportation initiatives, and over $1.9 billion in NY Green Bank commitments. These and other investments are supporting more than 165,000 jobs in New York’s clean energy sector in 2021 and a 2,100 percent growth in the distributed solar sector since 2011. To reduce greenhouse gas emissions and improve air quality, New York also adopted zero-emission vehicle regulations, including requiring all new passenger cars and trucks sold in the State be zero emission by 2035. Partnerships are continuing to advance New York’s climate action with nearly 400 registered and 100 certified Climate Smart Communities, nearly 500 Clean Energy Communities, and the State’s largest community air monitoring initiative in 10 disadvantaged communities across the state to help target air pollution interventions and combat climate change.