Opportunities for Green Financing
Wednesday, October 29th, 2008
One of the most interesting changes in the energy efficiency arena is the extent to which finance has come to be more fully recognized as a key element of any effort. This recognition represents a fundamental shift from just a few years ago, when ShoreBank launched its energy efficiency lending programs, including our Homeowners’ Energy Conservation Loan Program.
The shift comes at an interesting moment given the turmoil in the banking sector, but I think presents a unique opportunity to develop more inclusive and creative financing options. With loans from conventional sources more difficult to come by, ensuring low cost, accessible financing options is critical. Developing these new lending vehicles will likely mean reaching out to more creative lenders, such as community development financial institutions (CDFIs).
In the past, CDFIs have been largely absent from policy discussions around energy efficiency, yet they present a tremendous vehicle for reaching less affluent communities and for leveraging philanthropic, utility, and public benefit funding. One only has to look at the excellent work done by The Reinvestment Fund in Philadelphia to see the possibilities. With home equity loans practically non-existent, reaching carbon reduction goals will require a broader dialogue and new partnerships.
Indeed, the credit freeze could not have come at a more inopportune time given climate goals. A recent analysis conducted by the World Business Council for Sustainable Development suggesting existing homes must reduce energy usage by a much greater levels than previously thought if carbon goals are to be met. However, the lack of financing options for homeowners presents one more impediment to meeting climate goals.
