Washington, January 11, 2012
- State clean energy funds (CEFs) have emerged as effective
tools that states can use to accelerate the development of energy
efficiency and renewable energy projects says a new paper released
by the Brookings Institute.
These clean energy funds, which exist in over 20
states, generate about $500 million per year in dedicated support
from utility surcharges and other sources, making them significant
public investors in thousands of clean energy projects.
The paper released as part of the
Brookings-Rockefeller Project on State and Metropolitan
Innovation argues that with federal clean energy
activities largely on hold, there is tremendous promise for
the continued design and implementation of smart clean energy
finance solutions and economic development that U.S. states
can pursue.
"We contend that the nearly two dozen clean
energy funds (CEFs) now running in a variety of mostly northern
states stand as one of the most important clean energy forces at
work in the nation and offer at least one partial response to the
failure of Washington to deliver a sensible clean energy
development approach," note two of the paper's authors, Mark Muro, Senior Fellow and Policy
Director, and Lewis M.
Milford, Nonresident Senior
Fellow,Brookings Metropolitan Policy Program.
However they add, state clean energy funds'
emphasis on a project finance model-which directly promotes clean
energy project installation by providing production incentives and
grants/rebates-is by itself not enough to build a statewide clean
energy industry.
State clean energy funds also need to pay
attention to other critical aspects of building a robust clean
energy industry, including cleantech innovation support through
research and development funding, financial support for early-stage
cleantech companies and emerging technologies, and various other
industry development efforts.
Some of these state clean energy funds are
already supporting a broader range of clean energy-related economic
development activities within their states.
California's
Public Interest Energy Research (PIER) program-administered by the
California Energy Commission (CEC)-has been playing a critical role
in advancing the state's clean energy research for years. Since its
creation in 1996, the PIER program has helped support state energy
policy goals by conducting public benefit research with high-risk
thresholds that is not adequately provided by competitive and
regulated markets.
As more and more states reorient their clean
energy funds from a project finance-only model in order to
encompass broader economic development activities, clean energy
funds can collectively become an important national driver for
economic growth.
To become true economic development engines
in clean energy state clean energy funds should:
- Reorient a significant portion of their funding toward clean
energy-related economic development
- Develop detailed state-specific clean energy market data
- Link clean energy funds with economic development entitites and
other stakeholders in the emerging industry
- Collaborate with other state, regional, and federal efforts to
best leverage public and private dollars and learn from each
other's experiences
The paper notes that to date, over 20 states have created
a varied array of these public investment vehicles to invest in
clean energy pursuits with revenues often derived from small
public-benefit surcharges on electric utility
bills.
Over the last decade, state CEFs have invested over $2.7
billion in state dollars to support renewable energy markets,
counting very conservatively.
Meanwhile, they have leveraged another $9.7 billion in
additional federal and private sector investment, with the
resulting $12 billion flowing to the deployment of over 72,000
projects in the United States ranging from solar installations on
homes and businesses to wind turbines in communities to large wind
farms, hydrokinetic projects in rivers, and biomass generation
plants on farms.
The paper advances several recommendations for moving states
more aggressively into this new period of clean energy economic
development.
It suggests states need to lead by making available quality data
on the number of jobs in their regions, the fastest-growing
companies, the critical industry clusters, gaps in the supply chain
for those industries, their export potential, and a whole range of
economic development and market indicators.
It also recommends states should better link their clean energy
funds with economic development entities, community development
finance institutions (CDFIs), development finance organizations and
other stakeholders who could be ideal partners to develop
decentralized funding and effective economic development
programs.
The full Brookings paper can be downloaded
here.