Monday, December 21, 2015

U S DOE Highlights California Green Finance Programs

Innovative California green finance programs are praised in a new U S Department of Energy report on innovative "Energy Investment Partnerships" (EIPs).

The report, “Energy Investment Partnerships: How State and Local Governments Are Engaging Private Capital to Drive Clean Energy Investments," illustrates how states and entities are driving clean energy deployment through leveraging private capital.

DOE Report on Innovative Local/State Finance Programs

Programs of the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) and the California Infrastructure and Economic Development Bank (IBank) were among those of eight states singled out as "mobilizing the public and private capital necessary to transition to a low carbon economy."

“By leveraging private dollars, states with EIPs can generate an impact well beyond what would be possible with public funds alone,” said Energy Secretary Ernest Moniz. “To reduce carbon emissions and address the impacts of climate change and extreme weather, we need innovative financing solutions that will increase energy efficiency, bring more low carbon generation on line, and make our infrastructure more resilient.”

"We need innovative financing solutions" Energy Secretary Ernest Moniz
(photo by Michael Paparian)
CAEATFA is described as "unique among California state agency clean energy participants, as it does not have the burdens of energy regulation functions and is able to be proactive and innovative with its financing approaches."  CAEATFA is chaired by state Treasurer John Chiang and led by Executive Director Deana Carrillo.

CAEATFA programs discussed include the PACE loss reserve program and the California Hub for Energy Efficiency Financing (CHEEF).  The PACE program provides support in the event of a default of a PACE loan.  So far, nearly 40,000 loans totaling over $800 million have been enrolled.  The CHEEF program was set up by the state Public Utilities Commission.  Under CHEEF, CAEATFA will oversee and coordinate a $65 million pilot program to deliver energy efficiency projects for homes and businesses through regulated utilities.

The IBank is described as "uniquely suited to help the state meet the GHG (greenhouse gas) reduction goals by offering practical and sustainable solutions via leveraged, risk adjusted, financial assistance for public clean energy, water, and environmental projects throughout California."  The IBank is chaired by retired banker Mike Rossi and led by Executive Director Tevia Barnes.

The recently established IBank California Lending for Energy and Environmental Needs (CLEEN) program is discussed in the DOE report.  CLEEN taps IBank financial resources, including loans and bond issuances, to assist local government agencies, schools (including charter schools), non-profits, universities and hospitals.  Loans can be used for a variety of energy conservation, renewable energy, transportation and related projects.  LED lighting is a technology the IBank is specifically targeting for assistance.  CLEEN and the first LED lighting loan issued under the program is discussed in a prior California Green Finance post here.

“With the ambitious mandate set by Governor Brown to reduce greenhouse gas emissions by 40 percent below 1990 levels by 2030, California applauds the U.S. Department of Energy’s efforts to highlight the state and local programs throughout California that advance clean energy by leveraging significant private capital.” said Panorea Avdis, Director of the Governor’s Office of Business and Economic Development.

“California has over 2-dozen state and local clean energy investment programs that reflect the diversity of our state’s efforts, including investments in state and local government, residential, commercial and transportation sectors," said Avdis. "The Report on Energy Investment Partnership vividly demonstrates the range of thoughtful and innovative approaches to financing the State's transition to low-carbon energy systems, which at the same time drive economic growth and create new jobs.”

In addition to the state and local programs, the report provide a summary of innovative financing approaches that can be enhanced with government agency involvement.  The report is available here.

Wednesday, December 16, 2015

Tesla: New $39 Million Benefit from California Sales Tax Exclusion

Tesla Motors is the latest company to benefit from a California program to allow renewable energy manufacturers to avoid paying sales tax on manufacturing equipment.  On Tuesday, December 16, the California Alternative Energy and Advanced Transportation Authority (CAEATFA) granted the benefit under their sales tax exclusion program for alternative energy, advanced transportation and advanced manufacturing facilities.

Tesla expects to purchase up to $463 million to expand manufacturing and related facilities in four California locations (Fremont, Hawthorne, Palo Alto and Lathrop).  The company will avoid paying about $39 million in sales taxes on the planned equipment purchases.

Tesla charging in Maastricht, Nethlerlands October, 2015
The funds will be used to ramp up manufacturing capacity from 77,000 to 195,000 Model S and Model X vehicles per year. According to CAETFA, Tesla is planning to use the new equipment to expand its body shop, stamping line, vehicle assembly, plastics shop, production control, tooling and prototyping.  As as result of the expanded manufacturing, 1,384 new jobs are expected to be created.

With the benefit approved this week, Tesla has received over $120 million in sales tax exclusions for manufacturing equipment under the CAEATFA program.  Many other companies, ranging from anaerobic digestion to landfill gas to photovoltaic manufacturing and others have successfully utilized the program (details on the program here).  CAEATFA is one of the financing authorities chaired by State Treasurer John Chiang.

Tesla expects to purchase equipment and tooling for components ranging from body tooling to plastics to paint.  Below is the anticipated cost of the various types of equipment.

Wednesday, November 18, 2015

California IBank Issues First CLEEN Loan

The California Infrastructure and Economic Development Bank (IBank) has approved the first loan under their new California Lending for Energy and Environmental Needs (CLEEN) program.

The City of Huntington Beach will receive a $7.7 million low-interest loan to retrofit more than 11 thousand existing streetlights with new low energy LED lights.  The expected annual savings from the LED project will be over $400,000 and 3.5 million kilowatt-hours, thus freeing up funds for other services. The loan was unanimously approved by the IBank Board on November 17.

The CLEEN program was established in 2014 to finance energy efficiency and environmental projects in support of California’s greenhouse gas reduction goals. The program taps IBank financial resources, including loans and bond issuances, to assist local government agencies, schools (including charter schools), non-profits, universities and hospitals.  Loans can be used for a variety of energy conservation, renewable energy, transportation and related projects.  LED lighting is a technology the IBank is specifically targeting for assistance.

“California is the nation’s leader in mitigating climate change and increasing energy efficiency,” said Mike Rossi, IBank Board Chairman and Senior Advisor to Governor Brown. “IBank’s CLEEN Center will help the state further accelerate energy innovation by offering financing for projects that will create a more sustainable future.”

The CLEEN criteria and guidelines can be found here.  An application for CLEEN financing can be found here.  The IBank advises those interested in applying for CLEEN Center financing to contact IBank about their projects, by e-mail at or by telephone at (916) 341-6600, before submitting an application.

Wednesday, October 28, 2015

California Climate Investment Plan Draft Released

The California Air Resources Board has released a new draft of the investment plan for proceeds of cap-and-trade auctions.  The plan will serve as a guide for the several billion dollars in auction revenue expected from 2016 to 2019.  Revenues will be used for a variety of public investments and incentives for consumer and business actions.

Hearings on the plan will take place in early November and comments will be accepted until November 13. A new draft will be released in early December, followed by a hearing before the Air Resources Board on December 17-18.  The plan will be submitted to the legislature in January.

The draft document (linked here) includes detailed background and a series of graphics that provide an excellent overview of the California climate program and related uses of auction proceeds.  Below are some examples:

Source: (10//27/2015 Draft) Cap-and-Trade Auction Proceeds Second
Investment Plan: Fiscal Years 2016-17 through 2018-19
   Source: (10//27/2015 Draft) Cap-and-Trade Auction Proceeds Second
Investment Plan: Fiscal Years 2016-17 through 2018-19

Source: (10//27/2015 Draft) Cap-and-Trade Auction Proceeds Second
Investment Plan: Fiscal Years 2016-17 through 2018-19

Source: (10//27/2015 Draft) Cap-and-Trade Auction Proceeds Second
Investment Plan: Fiscal Years 2016-17 through 2018-19

Source: (10//27/2015 Draft) Cap-and-Trade Auction Proceeds Second
Investment Plan: Fiscal Years 2016-17 through 2018-19

Monday, October 19, 2015

Karma (formerly Fisker) Electric Vehicle Factory Receives California Incentive

(NOTE:  This post was updated on Tuesday, October 20 following action on the Karma application)

Karma Automotive (formerly Fisker) received a $3.2 million tax benefit this week from the state of California for their new manufacturing facility in the Riverside County community of Moreno Valley.

Karma will manufacture plug-in hybrid vehicles at their new facility.  They plan to have 176 permanent full time employees when the plant is in operation.  Construction work is expected to involve 29 workers.  A job fair to attract workers was held earlier this month.

According to their representatives at the hearing on their application, they chose California for manufacturing because it was a "natural choice" based on the California commitment to natural resource protection.  They will be manufacturing a car that will go about 50 miles on an electric charge.  A gasoline engine will allow the car to go an additional 250 miles.

The tax benefit comes from the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), chaired by state Treasurer John Chiang.  CAEATFA is able to give qualified facilities an exemption from paying state sales and use tax for manufacturing equipment.  Karma is expected spend about $38 million on qualified manufacturing equipment and avoid paying $3.2 million in sales tax on that equipment through the CAEATFA exemption.

The tax benefit was unanimously approved by the CAEATFA five member board, upon a motion from the representative of the State Controller and a second from the representative of the state Director of Finance.  Other members include the Chair of the California Energy Commission, President of the Public Utilities Commission and the state Treasurer.

In addition to the facility itself, Karma plans to install solar photovoltaics in their parking lot and use the power to charge vehicles.

Some background on Fisker/Karma from here and the Los Angeles Times here.

Wednesday, September 9, 2015

Treasurer Chiang Highlights Environmental Project Financial Support

In his latest monthly newsletter, California Treasurer John Chiang highlighted two recent actions to provide support to environmentally related projects and two actions to support economic development.

Excerpt from Treasurer Chiang September 2015 newsletter Source here

Three of the four projects will receive an exclusion from state sales tax for manufacturing equipment from the California Alternative Energy and Advanced Transportation Financing Authority.  CE Obsidian Energy LLC will receive over $14 million in a benefit for equipment related to the processing of geothermal brine at a facility in Imperial County (staff report here).  The other two sales tax exclusions are for advanced manufacturing at aerospace related companies.

The California Pollution Control Financing Authority gave initial approval for a tax-exempt bond of over $12 million for a manure-related anaerobic digestion project in Madera County (staff report here).

Saturday, August 29, 2015

Grants for Natural Gas Efficiency

Energy Commission: $500,000 to $2 million grants for industrial natural gas efficiency commercialization projects

The California Energy Commission has released a solicitation for proposals for industrial natural gas efficiency projects.  According to the solicitation,
"Funded technologies must be past the “proof-of-concept” stage and ready to be demonstrated in industrial settings under “real-world” operational conditions. Projects will accelerate commercialization of natural gas-related, energy efficient industrial, agriculture and water/wastewater processes."
$6.8 million is available for grant awards of between $500,000 and $2 million.  The deadline for submitting applications is October 29, 2015.

More information here.

Wednesday, August 26, 2015

California/Quebec Cap and Trade Auctions Becoming Routine

Cap and Trade auctions for greenhouse gas allowances have become quite routine.  The most recent joint auction, conducted by the California Air Resources Board and the Quebec Ministry of Sustainable Development, Environment and the Fight against Climate Change, was held on August 18.  The next one is scheduled for November 17.  (Information here)

At the August auction, over 73 million 2015 allowances were sold at a price of $12.52.  Qualified bidders were primarily affected utilities and energy companies, ranging from BP and Chevron to PG&E, SMUD and the Modesto Irrigation District.  Morgan Stanley Capital Group was the one financial company I recognized among the bidders.  It is not publicly known which bidders succeeded in receiving allowances or how many allowances they received.  (More detail, including list of qualified bidders here)

Auction proceeds are resulting in substantial resources for Quebec climate-friendly investments, as they are in California.

"The carbon market is the centerpiece of Québec’s strategy for fighting climate change," said Quebec Minister of Sustainable Development, Environment and the Fight against Climate Change David Heurtel.  "In addition to ensuring GHG emission reductions, it is a green fiscal tool that bolsters the re-launching and sustainable development of our economy. By 2020, more than 3.3 billion dollars will have been invested to support Québec’s businesses, municipalities and private citizens in their transition to a low-carbon world."

Wednesday, August 19, 2015

State Loan Support Programs Benefit Green Businesses

I've met a lot of green business owners and entrepreneurs.  A consistent challenge is finding affordable financing.  There are state and federal programs that can help lenders feel more comfortable lending to green businesses, but beyond the SBA, these programs sometimes feel like the best-kept secrets of government business assistance.

I plan to cover some of these programs in this post and future posts.

The programs I mention today have just gotten an infusion of  $57 million from the federal government to support state small business loan programs.  The funds are the final tranche of a total of $168 million given to California as part of the Small Business Jobs Act of 2010.

So far, the State has deployed $106.6 of the $168 million to support small business owners, who reported the program helped them create or retain 47,678 jobs through 2014. The remaining federal funds will be disbursed until exhausted, expected sometime in 2017.

The California funds are being deployed through the Small Business Loan Guarantee Program (SBLGP) and the California Capital Access Program (CalCAP) for loan loss reserve support and a Collateral Support Program.  The Loan Guarantee Program is administered by the IBank, and the other programs are administered by the California Pollution Control Financing Authority. (Disclosure:  I used to run CPCFA)

All three programs can benefit almost any small business, but the Collateral Support Program provides enhanced support for green manufacturing and green businesses.

IBank’s SBLGP helps lenders provide loans to small businesses that may have difficulty accessing capital. IBank partners with Financial Development Corporations to guarantee loans up to 80 percent to encourage lenders to provide funds to small businesses.  Businesses with fewer than 500 employees can receive a loan backed by a guarantee for up to 80% of loan value with a maximum guarantee amount of $2.5 million, maximum loan amount of $20 million and maximum guarantee term of 7 years.

The CalCAP loan loss reserve program helps participating lenders build a pooled loss reserve for enrolled loans.  Businesses with fewer than 500 employees can use the enrolled loans for a broad range of business purposes, including working capital.  The maximum covered amount is $2.5 million on loans up to $5 million.  This program has attracted a lot of micro-loans.  About 80% of the enrolled loans are under $40,000 and some lenders are providing loans as low as $500.

The Collateral Support Program may be a very attractive option for green businesses.  The program as already benefitted an anaerobic digestion facility and other green businesses.  For green businesses, participating lenders can receive a cash deposit of up to $2.5 million to serve a collateral for covered loans of $50,000 to $20 million.  The collateral amount can be up to 40% of loan value with an extra 10% in economically distressed areas.  Eligible business have 750 or fewer employees.  Loans can be used for working capital or as "bridge loans" before other loans become available.  Non-green businesses have lower lending amounts and some different terms.  Details are available in the Collateral Support Program Summary.

These programs are generally intended to assist businesses that lenders feel are decent credit risks buy that might fall on the edge or just outside of the normal lending criteria for that lender.  Green businesses, especially those without a long track record, often fall in this category.

Friday, August 14, 2015

Mapping California Climate Investments

California is the leading sub-national government in the world in climate solution investments.

Using Cap and Trade revenues and other resources, California climate spending includes research and development, financial incentives and direct deployment of renewable energy, advanced transportation, efficiency, emission reductions, and land use and building practices.

Two websites have emerged in recent weeks to track California climate investments.

California Climate Investment Map

The state of California has put together a robust new website (link here) that brings together information on a dozen different climate and energy programs into a single searchable application, allowing users to view the locations of individual projects and providing a summary of climate and energy investments for each of the state’s 120 legislative districts. Currently, the site is tracking nearly $6 billion in climate-related investments, including programs in agriculture, energy, transportation, natural resources, sustainable communities and waste reduction. The site will continue to add data on additional programs.

Source:  California Climate Investments Map

The Climate Investment Map illustrates the growing investments from these programs at the local and regional level. Initially, the site is prioritizing for inclusion climate and energy programs with the largest budgets and readily accessible data. Among the programs included are the following:

  • California Solar Initiative – Overseen by the California Public Utilities Commission, the initiative provides incentives for solar systems installations to customers of the state’s investor-owned utilities.
  • The California Clean Energy Jobs Act (Proposition 39) – Administered by the California Energy Commission, Prop 39 provides funding to local schools to improve energy efficiency and create clean-energy jobs.
  • Clean Vehicle Rebate Project – Administered by the Air Resources Board, the program is designed to promote the purchase of zero-emission vehicles.

“This data will help local and state leaders as well as all Californians see where the state’s climate investments are located,” said California Energy Commission Chair Robert B. Weisenmiller. “The data will help us evaluate the effectiveness of our efforts as these investments are critical to meet California's greenhouse gas reduction targets.”

The website will be continually updated with new programs, with a particular focus on those recently funded with proceeds from California’s cap-and-trade program. The site will also incorporate other ways of viewing the data geographically – including by city and county, by census tracts and other boundaries. 

Climate Benefits for California

Transform is aggregating data from various state agencies into an interactive map (link here) showing climate related investments in sustainable communities, energy, transportation, resources and waste.

Source:  Climate Benefits for California
The data is searchable by program, geography, year and can be restricted to projects benefitting disadvantaged communities.

According to Ryan Wiggins of Transform, "One of our primary goals in creating is to give people an easy way to understand the positive impact of climate investments in their legislative districts, county, region, and the state as a whole." 

Like the California state map, the Climate Benefits map and related tools will be regularly updated.

(for more on California climate change issues, see my Climate Dispatch blog at )

Tuesday, July 28, 2015

Green Muni Bonds Playbook Issued

Local government issuances of green bonds are accelerating and a new report provides a "playbook" to assist issuers tap into the marketplace.  Playbook here.

Climate and Green Bonds have taken off worldwide.  According the the Climate Bonds Initiative, Green Bonds issuances are now about $600 billion (background).

Recent green bond issuances have included bonds for water projects in Asheville, North Carolina and Washington D.C.  Other localities are considering green bonds for green energy and energy efficiency projects.  Some states, including Massachusetts and California have issued green bonds for a variety of projects.  The states have seen new purchasers buying bonds of durations that are attractive to the issuers.

Source:  Green City Bond Playbook 

Green Muni Bond issuances are occurring worldwide.  Johannesburg, South Africa issued a bond (about $140 million US) in early 2014 for alternative energy projects (background here).

Additional information:
World Bank Green Bond Background
California Treasurer Green Bond Background
Green Bond Principles
Bank of America $600 million green bond issuances