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Posts Tagged ‘green banking’
Wednesday, July 21st, 2010
Mission driven financial institutions in the developing world, like those in the United States, are beginning to explore creative ways to use energy finance to encourage sustainable economic development. Recently, I attended a conference on energy financing at Yale’s School of Management where representatives from microfinance institutions, energy service companies, and governments from around the globe all convened to explore the opportunities and challenges presented by small-scale alternative energy systems.
Insights from this conference include:
- The talent pool examining energy financing is astounding and it extends from one corner of the earth to the other. Very smart, tech savvy entrepreneurs are creating an array of exciting tools to help deploy alternative energy systems in very remote locations. By using mobile technology, GPS systems, and internet applications, businesses are utilizing sophisticated new technologies to facilitate loan payments, track carbon savings, and monitor energy performance from every corner of the Earth.
- The problems confronting wide-scale adoption of small-scale, alternative energy systems internationally are familiar to those of us working on deployment of these systems domestically. The issues range from technology risk, to the economic viability of the energy systems, to concerns about installation and maintenance, to the difficulties of dealing with the relatively large transaction costs that come with deploying alternative energy.
The business models being developed to tackle the issues outside of the US are similar to those gaining attention in the U.S. For instance SELCO, a leading solar technology firm in India, employs a business model similar to Solar City, the fast growing PV installer in the Southwest. In both cases, these companies have simplified the process for their customers by offering solar packages that include financing, extended warranties, and long-term service contracts. These firms have pre-selected specific solar applications, offer pre-packaged financing, and provide in-house installation and maintenance over the life of the systems.
While overcoming the challenges limiting widespread adoption of small-scale alternative energy systems is a prodigious undertaking, the talented entrepreneurs dedicated to tackling the problem across the globe offer hope for a brighter future.
Tags: alternative energy, energy finance, global micro-energy finance, green banking, microfinance
Posted in Green Collar | No Comments »
Tuesday, June 22nd, 2010
“An invitation to a wedding invokes more trouble than a summons to a police court” – in terms of the environment, that is. No matter how eco-friendly my friends and family’s weddings, if I, as a wedding guest, do not take eco-and monetarily conscious steps when attending nuptials, my actions can add to the footprint of even the most eco-friendly planned wedding. How?
1. Wedding guests spend an average of $500 dollars to attend a wedding.
2. The average wedding emits 63 tons of CO2.[1] Who is the biggest contributor to that CO2 emission? Friends and family!
3. Using this calculator I calculated that the 2 weddings I am attending this year will generate 2,895 lbs of CO2 and cost me $1,000.
I do believe we can make our own green wedding attendance plans. Here is a breakdown of where I think I can do to save green and be an eco-friendly guest this wedding season:
Travel Green. As my colleague Karen said in this blog post, look at three different factors when making travel arrangements: how far you are going, what is your vehicle, and, how many people are traveling with you? “If your party has two people and you are traveling 1,000 miles then flying economy beats out driving – the flight creates 835 pounds of CO2 while driving would create 1,125 pounds of CO2.” You might then also consider purchasing the appropriate quantity of carbon offsets ($17.85 will offset my 2,895 lbs of CO2). - Dress Green. Throw caution to the wind and dare to wear something from your current closet, even if other guests have previously seen it. A classic almost always works. (Not to mention the $200 savings you can pocket).
- Stay Green. Share rooms, reduce electricity and air conditioning use, and request your towels to be washed every other day. You can save 1.3 gallons of water daily per room (and even more if you share!)[2]
- Give Green. Make and give an eco-friendly gift. Not only will this reduce your financial and environmental expenditure, but giving an off-registry homemade gift can have greater positive meaning for the newlyweds. (Not crafty? Cash is also a perfectly acceptable green gift.)
- Eat Green. Ask for the vegetarian or the fish option – even if you like meat. In my experience, the veggie option is often prepared individually and tastes better than its companion meat dish. Some research also implies that producing a calorie of meat protein means burning more than ten times as much fossil fuel, and spewing more than ten times as much heat-trapping carbon dioxide, as does a calorie of plant protein.[3]
- Drink Green. Request locally produced beverages on draft, wherever possible. Not only do you minimize packaging and travel, but drinking locally can also provide you with a better cultural flavor of the wedding location.
I believe that everybody, not just the wedding planners, can do their part to generate a greener wedding. Here’s to a happy (green) wedding season.
[1] http://www.examiner.com/x-11943-SF-Green-Weddings-Examiner~y2010m3d31-The-environmental-impact-of-weddings-and-how-to-really-calculate-your-weddings-carbon-footprint
[2] http://www.economicallysound.com/towelsheet_reuse_program_savings.html
[3] http://www.huffingtonpost.com/kathy-freston/vegetarian-is-the-new-pri_b_39014.html
Tags: environmental sustainability, green banking, green transportation, green weddings
Posted in Outreach | 2 Comments »
Tuesday, June 8th, 2010
Raise your hand if you spent your adolescent summers doing household chores, attending camps, or volunteering? Do you still summer like that? I don’t. After years of Girl Scouts service projects, band camp attendance, and hours of daily household chores, I now do little more in the summer than pack organic picnic baskets and attend free concerts in the park. But what if I put the baskets away and actually created a to-do list similar to the one I had as a youth, only with a triple bottom line goal instead? What impact could I make with these summer 2010 triple bottom line to-dos?:
Financial:
- “Green” clean my finances. I am going to sign up for as many autopilot online and paperless banking products as I can.
- “Green” my budget. I need to revamp my food, housing, and entertainment budgets for the appropriate amount of organic product, air conditioning (or in my case – a lack there of), and travel expenditures.
- Re-evaluate my 401(K) to participate in socially responsible investments. I did evaluate my 401(K) as promised in my 2010 resolutions; however, I want to verify that my portfolio has not modified in whom it invests and re-adjust my investments accordingly.
- Go 2 weekends without drinking non-water beverage and donate the savings. According to MSN Money, Americans spend more on beer from Memorial Day through Labor Day than at any other time of the year. There is more than one nonprofit that can use my donation.
Community:
- Meet My Neighbors. Not only does it improve community cohesion, but it also increases my safety, as neighbors you know are more likely to alert you if there is suspicious behavior around your neighborhood.
- Support local businesses at street festivals. Street festivals can really provide an economic impact for a community.
- Volunteer for at least 4 hours per month. Volunteers reduce organizational cost while helping to improve the community. And when a community is doing well as a whole, its individuals are better off, too.
Environment:
- Pick up litter for at least one hour. According to Every Monday Matters, if every person picked up one piece of litter today, there would be over 300 million fewer pieces of litter.
- Invest in a urban window garden. I still haven’t completed this resolution! But I think I have added another 3,000 pounds of CO2 from flying this year. It is time.
- Eco-shred all of my hoarded paper. I don’t know how paper adds up, but somehow, all of a sudden, I have stacks of unsolicited credit card offers and napkins everywhere!
Think about the impact that I alone can make with this triple bottom line to-do list! Help me stay on track and join me in becoming a triple bottom line summer activist. The “What does ‘Green’ mean to me?” Facebook photo contest runners up have already gotten on board! Who else is with me?
“What does ‘Green’ mean to me” Facebook Contest Runners Up Photos:
Tags: community development, green banking, socially responsible investing, triple bottom line
Posted in Outreach | 1 Comment »
Tuesday, April 20th, 2010
One of the sad truths about urban life is that we often do not know our neighbors well. Yet, our neighbors are working diligently to make our neighborhoods better places to live and work!
Each Earth Day, ShoreBank recognizes one of the unsung heroes in our community by presenting an award to a customer that exemplifies ShoreBank’s approach to sustainable development. Deemed “The Green Neighbor Award,” recipients are nonprofit organizations that promote environmental sustainability in urban neighborhoods, while also catalyzing job growth, community empowerment, and economic inclusion.
This year’s winner is the Resource Center, a nonprofit offering recycling services to neighborhoods throughout the city. Led by long-time Executive Director, Ken Dunn, the organization has pioneered ways to transform trash into economic opportunity for low wealth communities.
To use the organization’s own words, “For 35 years, the Resource Center, a non-profit environmental education organization, has led the way in demonstrating innovative techniques for recycling and reusing materials. Too often in the urban setting, abundant and important resources are wasted. In our recovery work we aim to reverse waste and to improve the quality of life for urban dwellers. We have been devoted from the beginning to the economic and educational revitalization of city neighborhoods through recycling, urban gardening, composting, and other programs that reclaim and reuse resources.”
But, as Earth Day’s 40th anniversary approaches, it is also important to realize how important ShoreBank’s (and your) support is to our green neighbors. When Resource Center needed a working capital loan, following a collapse in the price of aluminum, paper, and glass, it had few alternatives. As a nonprofit, it was ineligible for an SBA loan or any of the other governmental loan programs that support lending to small businesses. ShoreBank, however, offers a novel lending program that enabled the Resource Center to obtain the necessary financing, preserving 23 green collar jobs and ensuring that 14,000,000 pounds of waste continued to be recycled annually.
With commodity prices now largely recovered, the Resource Center is again expanding its services, adding to its payroll, and helping to grow the green (neighborhood) economy. Thanks to green neighbors like the Resource Center, Earth Day is sure to be a beautiful day in the neighborhood.
Tags: environmental sustainability, green banking, green jobs, green neighbor award, recycling tactics, urban gardens
Posted in Green Collar | 2 Comments »
Tuesday, February 16th, 2010
Although landlords are ultimately responsible for a building’s energy efficiency, there are a number of steps which environmentally-friendly renters, some of whom pay their own utility bills, can take to reduce energy costs and consumption. So I am going to share with you some of the easy and convenient steps that we share with our ShoreBank customers and encourage building owners to pass along to their tenants.
*P.S. Many of the tips also apply to anyone owning or inhabiting a home, apartment, or condo.
1. Turn off unused lights and computers and replace incandescent light bulbs with compact fluorescent bulbs (CFLs).
2. Caulk and weather-strip windows and outside doors. For older windows, place a sheet of plastic over them and use two-way tape to affix it. The greatest source of heat loss in a home comes from the windows.
3. Remember to use the storm windows which help insulate the home and keep heat inside it.
4. Keep your drapes open in the winter to let sunlight naturally warm the room and home. And in the summer, keep them closed to prevent the place from getting too warm.
5. For each degree lower or higher you set the thermostat, you will save potentially two to 10 percent on heating or cooling costs. In the winter, keep the temperature set at 68 degrees during the day and 55 in the evening. Wearing a sweater or layered clothing will make the temperature more tolerable, especially on days when the bill arrives in the mail.
6. Clean the coils on the back of the refrigerators which contribute to about 15 percent of the total monthly electrical bill. This can help persuade your landlord to finally get around to replacing the old one with an ENERGY STAR model.
7. Get an electric blanket. Besides the joy and comfort that comes from getting into a bed at night with warm sheets, it is less expensive than heating your bedroom.
8. Move your furniture away from the exterior walls to create space between you and the cold walls. This will make space for the air to move around, making the air warmer.
9. Keep your radiator and heating vents clean from dust. Dust and dirt prevents heat from flowing into the rooms where you need it. It’s “no fun” to clean, but being cold and paying more for it can be even more painful.
10. Select ENERGY STAR appliances and products, and check efficiency ratings prior to purchasing.
Whether you own or rent, energy efficiency is everyone’s concern. Please share this information with friends, family and / or your landlord. It might even help some renters get a faster response to a lingering maintenance issue when the building owner understands how it will reduce their monthly costs while adding comfort and value to the property.
In fact many of the improvements are eligible for tax deductions and may help lower income taxes. With the April tax deadline fast approaching, I will explore the tax benefits of buying a home and incorporating energy saving improvements in your 2009 tax return in my next blog entry.
For additional energy saving information, visit the U.S. Department of Energy’s website.
Tags: community development, energy efficiency, environmental sustainability, green banking, green building, ShoreBank, triple bottom line
Posted in Mortgage Lending | No Comments »
Tuesday, February 9th, 2010
Energy finance is clearly a hot topic if a panel on the subject at the Midwest Energy Efficiency Alliance annual conference has an overflow crowd. In years past, the topic might have garnered a couple of dozen of attendees and not the capacity crowd seen last month.
Panelists who were representing a wide array of energy efficiency financing models – from Property Assessed Clean Energy programs (PACE), to on-bill financing options, to governmentally supported private and public financing efforts – illuminated similarities among the programs. These similarities offer the following important lessons for financing programs targeting the residential sector:
1. No model fits all areas. Because no one financing option is perfectly suited for all geographies, incomes, and housing types, a variety models is needed. For instance, although the PACE model is likely to prove quite helpful for many localities, this model may not be feasible for a municipality with elevated levels of foreclosure or a very low tax base, or for one teetering on bankruptcy. Likewise, an on-bill financing program that relies solely upon a utility’s coffers to fund the loans may have too small a capital base to cover a meaningful portion of the units in the utility’s territory. This problem is particularly acute for dense urban areas, such as Chicago, where the capital need is conservatively estimated to be in the billions.
2. Tie the financing to the property or meter. If utility savings are the source of repayment of the loan, the financing should be tied to the property or meter. Otherwise, depending upon the timing of the sale or move, the savings could fall well short of what is needed for repayment, leaving the homeowner or renter to fund the difference. However, equally important, if the financing remains in place after the initial owner or tenant leaves, the improvements should be limited to ones that are not easily removed, such as air-sealing, insulation, HVAC systems, and windows, which will continue to generate savings well after the original owner departs.
3. New sources of liquidity are entering the field. Development Finance Organizations (DFOs), in particular, could represent an important new source of liquidity for energy finance programs. DFOs are public finance entities capable of issuing bonds to support public purpose projects. A development finance entity, for instance, could potentially issue bonds to provide the capital for an on-bill financing program, thereby lessening the need for the utility to find the funds internally or to have to borrow them directly.
As the number of energy finance pilots grows and diversity of program types multiplies, there is an acute need for dialogue among the practitioners about lessons learned, limitations for other locales, and opportunities for collaboration. I applaud the Midwest Energy Efficiency Alliance for beginning this critical conversation.
Tags: energy finance, green banking, Midwest Energy Efficiency Alliance, on-bill financing, ShoreBank, triple bottom line
Posted in Green Collar | No Comments »
Tuesday, January 12th, 2010
One prediction for 2010 is that this year will be seen as a defining time for a new industry – the energy finance “industry.” Through the creation of Property Assessed Clean Energy (PACE) programs, the launch of on-bill financing initiatives, and the development of numerous other types of energy lending offerings, an unprecedented number of new financing options for energy efficiency and alternative energy projects will enter the marketplace.
As I have mentioned previously, most of these new options will by developed and managed by institutions well outside of the formal banking sector. Because most of these new programs involve some type of statutory authorization, more often than not, program design and implementation fall to folks far afield from the financial sector, such as Commerce Commission staff, City Councils, and legislative staff on State Energy Committees.
One consequence is that some basic tenets of lending may not be well articulated in the program designs, statutes, and implementation plans. I will concentrate on four elements that I see as most critical to the energy finance programs and which are often misunderstood:
1. Credit Risk: A fundamental part of any lending program is the borrowers’ capacity and likelihood to repay the debt. In most cases, varying types of borrowers can present different credit risks – a homeowner, for instance, offers very different risk profile than a small business borrower. Groupings that overlook these distinctions can present problems later on as the financing programs attempt to locate the cash needed to fund the loans.
2. Liquidity: Financing programs involve providing cash to pay the upfront costs to install energy saving (or energy producing) measures. The cash has to come from somewhere – ARRA funds, utility borrowings, municipal coffers, banks, CDFIs, the credit markets, etc. In many cases, the initial funds may be quite limited, so the sources of cash are very likely to change as the program scales up. Understanding how these funds are to be obtained throughout the program’s life is a critical feature of the program design. It’s also important to realize that any lending program of notable scale inevitably involves integration with the capital markets – where else will the billions in cash come from?
3. Demand: Even if borrowers with very low risk can be found and cash made available to them at advantageous terms, the targeted borrower still has to elect to borrow the funds (and install the energy saving measures). The notion that attractive capital will inevitably lead to demand for the loan product is highly questionable (see Marrion Fullers’ excellent synopsis of lending programs at http://www.sentech.org/energysummit/documents/3_Fuller_Summary.pdf).
4. Contractor Training and Certification: While financing programs are explicitly about delivering capital in the least costly and most flexible way, providing debt is not the primary purpose of these lending programs – the purpose is to deliver energy savings/production. Without trained and certified contractors and a mechanism for measurement and verification of the expected energy savings/ production, these financing programs cannot achieve their primary objective – even with full repayment of the loans.
Good programs, such as those developed by my colleagues in Portland, AFC First, Renewable Funding, and many others, have these elements front and center in their program design. Hopefully, other new entrants will follow their lead.
Tags: green banking, on-bill financing, Property Assessed Clean Energy, ShoreBank, triple bottom line
Posted in Green Collar | 3 Comments »
Tuesday, December 1st, 2009
I am often asked to describe an innovative “energy loan” product created by ShoreBank. My answer may seem surprising. In my opinion, one of our most innovative “energy loan” products is the same conventional single-family mortgage product we’ve offered to customers for more than 30 years!
My retort is contrary to what most people think. For many in the energy efficiency industry, “energy loans” have features that distinguish them from conventional loans. “Energy loans” may have different underwriting guidelines (such as higher debt-to-income or loan-to-value limits), more generous terms (such as longer amortization periods) or, may be originated and serviced by unconventional “lenders,” such as utilities or municipalities.
This existential question about what makes an “energy loan” was the focus of a panel at last month’s Behavior, Energy, and Climate Change Conference. Interestingly, a common theme among myself and my fellow panelists was the idea that “energy loans” are not categorically different from other loan products we each have offered for decades. What is different is how we engage with customers to guide them towards choosing more energy efficient products. We all recognized that our existing loan products could be used for energy projects. We didn’t need to create novel loan products – but we did need to create novel lending programs.
For each of the panelists, “energy lending” involves developing ways to prod our customers into choosing energy efficient products. For instance, AFC First Financial Corp (AFC), one of the largest non-bank lenders for energy efficiency projects, discovered it had to focus on educating contractors. Contractors interact with customers at key times, such as when a customer’s furnace stops operating and he or she needs a new one immediately. According to AFC, 80% of consumer choices are reactionary. As a result, AFC needs to be sure consumers are making smart choices at these critical moments. Although having a flexible loan available to consummate the deal and a reduced interest rate for an energy efficient model can help to steer the consumer towards a more efficient product, without the contractor making the consumer aware of the benefits of the efficient model at this decisive time, the consumer is not likely to choose the ENERGY STAR qualified furnace over a conventional one, irrespective of the financing options. So, AFC spends a lot of time working with its contractor network to ensure contractors are able to accurately and articulately explain why efficient models are better choices.
For ShoreBank, our energy lending programs similarly focus on ensuring that our customers choose more efficient products. For example, we provide a free energy audit at the time of loan application to help customers understand the benefits of completing air sealing, adding insulation, and choosing ENERGY STAR qualified windows, HVAC systems, and appliances
The key is to drive consumer behavior towards more efficient outcomes, not necessarily to create “energy loan” products. While the current financial crisis has necessitated a need for unconventional approaches to lending (whether for energy efficiency projects or more mundane credit needs), I hope this crisis does not cause us to focus too much attention on the creation of new “energy loan” products at the expense of creating more effective “energy lending” programs.
Tags: energy efficiency, green banking, green loan, ShoreBank, triple bottom line
Posted in Green Collar | No Comments »
Tuesday, November 10th, 2009
Like many in the energy efficiency industry, I believe the United States is on the cusp of a major transformation in how we think about energy, but not for the reasons usually given. To paraphrase Thomas Jefferson, “every [industry] needs a new revolution” – and I believe the American Recovery and Reinvestment Act (ARRA) may just do the trick!
My sense is that one of the most important impacts of ARRA will be the expansion of the participants in, and beneficiaries of, energy efficiency funding and programs. These new actors and interest groups, I hope, will bring needed changes that will make the industry more effective, broad-based, and transformational.
As I referenced in my blog post last month, my concerns reflect very deep seated reservations about the governance and oversight of efficiency programs and funding – especially, in regards to how the goals, evaluation metrics, and allocation processes are determined.
My hope is that ARRA funds will radically transform the equation because:
- A primary goal of ARRA programs is job growth, not to the exclusion of energy savings, but certainly valued equally to the Kwh and BTUs saved.
- ARRA has led to a proliferation of new actors within the energy efficiency industry. In the world of finance, for instance, there are now non-profits, community development financial institutions (CDFIs) (such as our affiliate, ShoreBank Enterprise Cascadia), utilities, governmental agencies, and many others that offer novel types of loans for energy saving improvements.
These unconventional lenders bring new energy and new concerns to the field of energy efficiency. For instance, for my colleagues in Portland, while reducing energy consumption is a priority, so too are creating social equity, job opportunities for disadvantaged populations, and proliferation in access to responsible credit for under-served communities. Reconciling this larger set of goals against the historical focus on energy savings alone will be an important challenge going forward.
My hope is that all of the energy unleashed by ARRA funding will lead to a radical transformation in the energy efficiency space. Underserved communities will be better represented in the sector and, in turn, begin to demand greater inclusion in utility sponsored programs. By doing so, they could become allies for the energy efficiency community and greater advocates for these programs and funding. That would be a welcome change, indeed!
Tags: American Recovery and Reinvestment Act, green banking, ShoreBank, ShoreBank Enterprise Cascadia, triple bottom line
Posted in Green Collar | No Comments »
Tuesday, November 3rd, 2009
Most people think the Census Bureau only springs to life in years ending in zero to conduct its decennial head count. Not so. Among its numerous publications is an annual report on poverty in America. The 2008 report was published a few weeks ago.
Poverty, sadly, never seems to go away, even in the world’s richest country. Our poverty rate last year rose to 13.2%, encompassing 39.8 million people, among the highest numbers in about a dozen years. In addition, more than 17 million people had an income of less than one-half the poverty threshold, and 6.3 million children lived in such low-income households.
Stark as these figures are, they present a snapshot of a moment in time rather than an assessment of the dynamics of poverty. In contrast to many parts of the developing world, poverty in America tends not to be a long-term condition. Over the four-year period from 2003 through 2007, just 1.8% of the American population was chronically poor. On the other hand, almost a third of the population could be classified as living below the poverty level for at least two months. More than a quarter of households classified in the bottom 20% by income moved up between 2004 and 2007, while a similar percentage moved down from the top 20%.
What makes us different from other nations? Mobility. The Census Bureau notes that its statistics “yield insights into…the economic mobility of US residents.” Compared to the millions trapped in generations-long poverty in the urban shantytowns and isolated rural villages of the developing world, poverty in America is relatively dynamic. If there is hope for a better future among those living in despair, it is our nation’s track record of economic mobility.
Though poverty here may not always be a life sentence, having almost 40 million people in poverty at any time remains a national disgrace. It is more than the populations of Connecticut, Mississippi, Arkansas, Iowa, Kansas, Utah, Nevada, New Mexico, West Virginia, Nebraska, Idaho, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, North Dakota, Wyoming, and the District of Columbia combined. It is time to move more people to action.
Tags: community development, economic predictors, green banking, ShoreBank, triple bottom line
Posted in Banking Industry | No Comments »
