The United States' businesses will reopen, in many cases weaker and in some cases smarter, after the Covid-19 crisis fades. But millions of Americans will need new jobs.
Can these jobs arise in creating clean power? The Coalition for Green Capital argues that at least five million of them can. It's pressed for a $35 billion public investment in a National Climate Bank, and has recently polled Americans around support for government stimulus for such jobs.
Transmission lines, electric vehicle charging stations, onshore wind come up among the products that Coalition Executive Director Jeffrey Schub says can come to market quickly. Schub says laid-off electricians, engineers, construction workers, marketers, salespeople and logistics experts can all get to work promptly and profitably- so long as financing comes together.
When the United States reopens for business, all at once or in spells, more than 20 million people who held jobs before the pandemic will need new ones. The Coalition for Green Capital sees more than 10 million openings in the industries that draw financing from green banks. We Zoomed with executive director Jeffrey Schub on how politics, polls and promises can converge around the National Climate Bank the Coalition has sought for years. Below, we've edited the interview for clarity and length. We'll be looking more at green banks' potential to lead the United States economy from its standstill in the weeks ahead.
CBEY: Where can we situate green banks in the four rounds of pandemic-related legislation moving through Congress?
Schub: First and foremost, this is about disaster relief. The spirit and structure of the bill we call Covid-3 was quite good. The mechanics are tricky in ways that could have been foreseen. It appeared for a moment that Covid-4 might have been an infrastructure bill, but Speaker Pelosi wisely realized that we’re still in the depths and need more relief. Our sense is that by late June or July, Americans will be ready to restart the economy and get on with their lives. Now is the time to think about how we want that economy to function. The question policymakers face is: do we want to reanimate the status quo or build back bigger and better?
We just did polling that showed that 83% of Americans want jobs of the future, and for 73% that includes support for the government creating jobs in the clean power sector. That's a lot.
Now is the time to be thinking proactively about where that government investment should be going, and what are ways to get back to work quickly with a broad range of skillsets. Clean energy is a place where you can put a lot of skills to work. .
CBEY: Where’s the bridge from this polling to sustained, strategic action to capitalize these kinds of projects?
Schub: There are a couple ways to think about it - in the most blunt political way, if you imagine legislation is passed in this Congress, there’s going to be negotiation. The Speaker wisely realizes she has a role. If the leaders in the Senate and White House want bailouts for airlines and oil companies and refuse to spend a dime on enfranchisement for voters with vote-by-mail, they’ll have to give something up. You can imagine Republicans seeing value in the idea.If you put climate as the lead purpose, you're not going to get them, but if you put safe, high-paying jobs as the lead purpose, you might.
Then there’s a universe where maybe there’s a Covid-4 bill that’s disaster relief and a Covid-5 that’s disaster relief, and maybe there’s not stimulus until 2021. We can all make our political guesses but it’s not unreasonable for those in the House to say things in the Senate and White House might be different in 2021, maybe we keep our powder dry.
Now, in the past year, in anticipation, we’ve done everything we can to present this as something that can be bipartisan. The National Climate Bank bill creates a climate bank that’s an independent not-for-profit that’s effectively different from government. The government will not have a say. The Secretary of Energy is not on the board, the Secretary of the Treasury is not on the board. Republicans love that. Around the world if you see green banks connected to government, markets are reluctant to get involved. Maybe Republicans don’t trust government to make good decisions about capital allocation, and that’s fine. The oher thing we hold onto is that the very first green bank legislation in 2009 passed with overwhelming bipartisan support. The votes for were 51-6 in the House committee, 15-8 in Senate.
CBEY: That was a very different Republican party.
Schub: Yeah, it was, but some people on Capitol Hill stay over time- a lot of people remember it. When you say it was supported by Senator Murkowski [of Alaska], that is important to a lot of people. I’m not saying we’re all going to be singing "Kum Ba Ya," but there is precedent for support.
CBEY: What forms of capital do your members need most, where, and where can one look for them?
Schub: The initial analysis we had done in the fall was: the National Climate Bank Act calls for $35 billion of public funding from Congress, deposited into the bank chunked out over five yrs. Our analysis in the fall was that this could generate $1 trillion from three kinds of leverage.
One is project-level leverage, as you'd see with a traditional green bank. The second is capital recycling- a dollar goes out, is repaid, can be re-lent again. The third is balance-sheet leverage, meaning the bank could actually borrow money on a balance sheet.
For purposes of the current situation, the element we’re reconsidering is the recycling piece just because things have to move quickly. It takes longer to recycle money through projects. Figuring out jobs impact is the thing we’re working on. Our back of the envelope map based on figures from state green banks is that the number of green jobs created could be as high as five million [this year].
So let’s say 25 million people lose their jobs. Probably about 20 million people are going to be looking for jobs in new sectors.
Most clean energy construction can happen right away once it’s safe to do so. Do I think people are going to be inviting contractors into their homes to put solar panels on their roofs in July? Probably not. Can we build transmission lines right away? Yeah, that’s safe and outdoors. Can we build onshore wind? That’s safe in a virus environment.
CBEY: Is there another source of those $35 billion?
Schub: It’s worth talking about history. In 2009 we fought valiantly for a national green bank, there wasn’t a thought of states creating theirs. We were lucky to have Dan Esty, who took a state job in Connecticut on the condition that he create a green bank. We said, hey, the federal government has closed up shop on this, let’s work at the state level. There were banks established in Rhode Island and inMontgomery County, Maryland. We have met with 35 or 40 states and it was never said this is not a good idea. The only issue was they didn’t have the money- most states did not recover as well from the 2008 financial crisis as many think.
So it's only in the past year or two or three that we looked at private debt. The questions are, how concessionary does the debt need to be? There’s something there with well-capitalized entities.
The place we tried hardest and came up wanting was in philanthropy. There is a high level of conversation about program-related investment and mission-related investment from foundations for green banks, but the number that have the capital is astonishingly small.
So let’s suppose the 2020 election turns out in a way that makes it clear that there will not be action from the Federal government on climate in the next four years. You would say, well, we're already out of time to stop dangerous climate change, but we need to do what we can. Well, the collective size of philanthropy is $1 trillion- they can do this. They have, in other countries, used capital. The most recent effort is called the Climate Finance Partnership, a really smart and clever structure created by a grant from the Hewlett Foundation, the Grantham Foundation, and the governments of France and Germany, totaling $40 million. They're going to raise another $60 million in concessionary and grant capital from public and private sources, hand that to BlackRock which is going to raise another $400-500 million to finance clean energy. There is a world in which they could do something like that in the United States, but it would take that terrible outcome of the Presidential election. I say this with love and gratitude to foundations. To the question of whether the federal government is the last hope, well, the philanthropic community is the last hope.
CBEY: What can happen with green capital to forge a pathway out of this mess in the next few months?
Schub: The pathway comes back to industries that won’t come back anytime soon- dining, entertainment, travel. Most clean energy construction can happen right away once it’s safe to do so. Do I think people are going to be inviting contractors into their homes to put solar panels on their roofs in July? Probably not. Can we build transmission lines right away? Yeah, that’s safe and outdoors. Can we build onshore wind? That’s safe in a virus environment. This might sound quaint, but how many millions of Americans can we put to work planting trees on former mines in Kentucky or somewhere? It’s not customer-dependent. You can do it without customers, but you do need customers if you want to open a restaurant.
These jobs are agnostic as to density, and there is a section in the first act that prioritizes investment for just transition communities.
CBEY: What is your immediate way forward?
We’re getting our ducks in a row to do the jobs analysis, do the polling, develop the use cases, get a communications campaign ready whenever stimulus comes. It might be in July, it might be in October, it might not be until next January. We know we need to raise awareness so that when and where recovery starts, it starts from a place of: where do we build better? And who’s going to say we shouldn’t put five million people back to work when there’s 20m people looking for work? The polling is what it is.