What if it were possible for a legislative body to establish, by wide, bipartisan majorities in both of its houses, an infrastructure bank that would help overcome the first-cost barrier to investing in energy efficiency and renewable energy projects?
Nah, you say. These days, it might seem hard to get partisans in Congress to agree on a set of facts about where the sun rises.
Not talking about Congress just yet. I'm talking about Connecticut. The state's legislature this year approved by unanimous vote in the state Senate and a 139-8 vote in the state House a Clean Energy Finance and Investment Authority, which was fed with $48 million in startup capital. It's a first in the United States - a quasi-public state organization that can leverage private capital to make low-interest loans for efficiency and clean energy projects. For efficiency, loans will cover up to the full cost of an upgrade.
There is a lot of low-hanging energy efficiency fruit, such as energy-efficient light bulbs, which come in all flavors, including incandescent. Whoops, I promised the editor I wouldn't bring up the light bulb topic for the third week in a row. Some of the efficiency fruit, however, is high up in the tree. A residential upgrade, including insulation, sealing, and an efficient furnace, could run you $10,000 or so. You'd need a financial ladder to get that fruit. A low-interest loan could serve as that ladder.
Now, scale up the idea nationally. How could a clean energy investment authority be capitalized if Congress could summon the will to establish one?
One idea making the rounds is offering a tax break for U.S. corporations to repatriate profits they're holding overseas in order to avoid U.S. corporate income taxes. Here's the deal - no taxes on repatriated profits, in exchange for depositing repatriated profits with a national investment authority that would be in the business of making low-interest loans for infrastructure, including energy projects. It wouldn't be a gift to the feds, but a place to park money that could earn a return and avoid a big tax bite.
Another idea is legislation sponsored by two quite dissimilar senators - Texas Republican Kay Bailey Hutchison and Massachusetts Democrat John Kerry - that would capitalize an American Infrastructure Financing Authority with $10 billion to make loan guarantees and loans for up to 50 percent of the cost of energy, water, and transportation projects that are worth at least $100 million (except in rural areas, where the minimum would be $25 million).
Borrowers would need private funds to cover the other 50 percent. Projects would have to be regionally or nationally significant. In addiiton, the authority would charge fees and interest rate premiums in order to become self-sufficient.
As the debt limit talks make painfully clear, there is little political appetite for the feds to splash out big money on chunky projects, regardless of need. An investment authority or bank could be a way to get around budget politics and partisan squabbling in order to raise cash for infrastructure investments that cannot be forever postponed or avoided.
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