18 Jun US President Obama turbo charges green energy investment
On June 16 2015, US President Obama announced more than $4 billion in private sector commitments and Executive actions to “turbo charge” investment in clean energy. In the announcement from the White House, the plummeting cost of solar energy systems (50% reduction) over the past 5 years was linked to past investments which have allowed consumers to benefit from major advances in solar PV systems, wind power, batteries, energy efficient lighting and fuel cells.
The announcement was timed to coincide with a Clean Energy Investment Summit where Joe Biden will highlight more than $4 billion of commitments by institutional investors, major foundations and other long term investors to fund climate change solutions. The White House will also announce a number of Executive actions to encourage private sector investment including the following:
- A Clean Energy Impact Investment Centre at the US Department of Energy (DOE) to make information about climate and energy programs accessible and easier for the public and mission driven investors to understand
- Facilitating investments by charitable foundations in clean energy technologies as a result of new Treasury Department guidance on impact investing
- Improving financing options from the US Small Business Administration for private investment funds that are seeking long term capital.
Long term investors can be a catalyst in terms of accelerating the transition to a low carbon economy, according to the White House. Philanthropists can fund innovation projects at the very early stages while investors can assist at the scale-up stage.
In addition to making information about climate and energy programs more accessible, the Clean Energy Impact Centre may also provide points of contact and subject matter experts within some relevant DOE programs. Other roles are expected to include sharing research and analysis on developments in clean energy technology, providing information on energy and climate programs at other Government agencies and offering a mechanism for identifying the need for new technology analysis from the DOE.
According to the White House, the Treasury Department is committed to two actions that will facilitate charitable foundations’ investment in clean energy technologies. Firstly, Treasury will publish new guidance which will clarify that foundations can make “mission related” investments (MRIs) in companies that advance the foundation’s charitable purposes. Secondly, Treasury will finalise rules that will provide examples of permissible program related investments (PRIs) by foundations.
The US Small Business Administration (SBA) is focused on strengthening financing options for private funds that invest in clean energy technology companies and other early stage innovative small businesses. The Early Stage Small Business Investment Company (SBIC) program allows privately managed funds to provide more long term capital to high growth companies with no new cost to taxpayers.
A consortium of long term investors is committing to building a new non-profit investment intermediary that can identify, screen and assess high potential companies and projects for commercial investment that could also produce profitable climate change solutions. They are initially allocating $1.2 billion and have a goal to mobilize $2.5 billion over 5 years, and will focus on opportunities that don’t fit existing fund structures.