Exclusive: California climate budget to include billion dollar green loan fund
The four-year proposal would kick-start innovation in recycling, transit, agriculture and other sectors that could help the state tackle climate change.
Saying California needs to better encourage small players with ideas for dealing with the climate crisis, Gov. Gavin Newsom plans to include a billion dollar revolving loan program in his new budget on Friday for seed recycling , low-carbon transport and climate-smart agriculture projects, according to a position paper obtained by CalMatters.
The Climate Catalyst Revolving Loan Fund, which would grow over four years, would provide low-interest loans to small businesses and organizations that have green ideas but may not be sufficiently established or connected to compete for capital funding- risk.
“California is the innovation capital of the world,” Newsom said in a statement. “But as we grow we must demand that the benefits of this growth be widely shared by workers and small businesses – not just those with access to huge amounts of capital. This fund aims to level the playing field as we build a greener and cleaner economy. “
The Golden State has set ambitious goals for the world’s fifth-largest economy “carbon neutral” by 2045. This means creating new technologies to reduce carbon dioxide emissions and other emissions, as well as finding ways to capture greenhouse gases so that the state’s net emissions are zero.
California is already sinking billion dollars of cap and trade proceeds in dizzying array of public climate projects, of discounts on high-speed rail vehicles. The state is also a hotbed of venture capitalists, socially responsible lenders and others who operate in the private sector, investing billions in green products and businesses.
The governor’s proposal, however, fulfills a different role, according to Kirsten snow spalding, director of the investor network for Ceres, a nonprofit advocacy organization focused on investing in environmental sustainability. While cap-and-trade dollars have helped fund important projects in targeted communities, she said, this new money could help move infrastructure projects forward, for example, far enough that other investors feel comfortable stepping in.
“For institutional investors, there is some risk in investing in climate solutions,” Spalding said. “Having the revolving loan fund will help attract private money to flow into infrastructure and projects. ”
Ira Ehrenpreis, managing partner at venture capital firm DBL Partners, said the proposal could help close a funding gap for climate innovations that have reached early levels of commercialization but are not yet mature enough to attract capital -risk.
“There is a gap to allow them to attract the kind of capital to reach on a large scale and in a timeframe that would actually help our planet,” he said. “What we need is a marriage of technological innovation and political innovation – it is a marriage of the two.”
Newsom is asking for up-front funding of $ 250 million in the new budget that starts in July. Additional funds would be put into the fund over the next four years until it reaches $ 1 billion.
The fund would be administered by the controlled governor Infrastructure and Economic Development Bank, which provides public funding assistance for economic development projects. The budget summary indicates that the Administration’s Strategic Growth Board and the Ministry of Labor would provide strategic direction.
Projects would be chosen based on their ability to meet California’s environmental goals and the need to access low-cost borrowing. Applicants will also need to show how their projects will create quality, well-paying jobs for the workers they hire.