State and Local Climate and Energy Program
Key Objectives for State and Local Governments
- Developing an Action Plan
- Developing a GHG Inventory
- Identifying and Evaluating Policy Options
- Designing and Implementing Programs
- Clean Energy Financing Programs
- Leading by Example in Government Operations
- Engaging Stakeholders
- Determining Results
- Assisting Local Governments
Many states and communities are establishing their own clean energy financing programs, and they’re doing it to achieve many of the following objectives:
- Help underserved sectors. Programs can be designed for residential, small business, multi-family and other sectors to provide financing to credit-worthy property owners who may not qualify for private-sector loans.
- Support private-sector lending by providing loan loss reserves or other credit enhancements. These enhancements encourage lenders to qualify more borrowers and to offer loan terms that work for energy improvement projects.
- Collect loan loss data from the programs they develop and support. According to the American Council for an Energy Efficiency Economy (ACEEE), clean energy lending is a low-risk investment . Additional data will help private lenders justify offering a lower interest rate for clean energy loans.
- Generate demand for clean energy loans. Some lenders that have tried to market clean energy on their own have concluded that there is too little demand to justify the effort. State and local governments can work with clean-energy program administrators to develop a comprehensive marketing and installation process that can create broad demand.
- Link program participants to private-sector solutions. State and local programs can cultivate relationships with local lenders and other potential partners to encourage further market transformation.
- Provide program continuity to extend financing programs started under the American Recovery and Reinvestment Act (ARRA). With these funds expiring in 2012 or 2013, one option to continue program lending is to use loan repayments to make new loans. State and local governments can explore other sources of funding, including: bonds, such as Qualified Energy Conservation Bonds (QECBs); service benefit charges; and state treasury funds. Funding can take a year or more to arrange, so planning ahead is crucial.