In June 2011, the state of Connecticut enacted legislation creating the Connecticut Clean Energy Finance and Investment Authority, the first full-scale clean energy finance institution — or "green bank" — in the nation.

Legislation under consideration in the Hawaii Legislature (House Bill 1033) would create a clean economy fund that would give Hawaii the same ability as Connecticut’s green bank to leverage both public and private capital, scale-up clean energy deployment and reduce energy rates for residents and businesses. Also, the new fund would be empowered to help finance the clean economy nationwide.

Several key elements of the green bank model enacted in Connecticut and under consideration in Hawaii separate it from traditional clean energy funding programs. First, green banks are able to access federal funds — including unspent stimulus dollars that are set to expire in 2012 — and deploy those resources in a unique way that attracts private capital to extend the level of investment in clean energy.

The green bank model also serves to lower the cost of private financing. Whether it’s rooftop solar projects, energy efficiency upgrades to homes and businesses or commercial-scale wind developments, greater access to low-cost capital is critical to the success of clean energy projects. Hawaii’s clean economy fund will help to bridge the gap between where local banks are able to lend and the rate needed for a clean energy project to succeed. Reducing the cost of capital through public-private partnerships around financing is a unique alternative approach to addressing the conventional model of government subsidies.

In addition, unlike programs that simply provide grants for clean energy projects — an approach that restricts the number of projects that can be financed — a green bank enables states to access substantial pools of outside investment capital, greatly increasing the deployment of energy efficiency and renewable energy projects. We are finding that the banks in Connecticut are supportive of a clean energy finance-focused entity to partner with through strategic investments and credit enhancements, including the possibility of earning Community Reinvestment Act credits.

Partnering with traditional lenders offers a further opportunity to leverage scarce public resources to fund the full spectrum of clean energy projects while offering new business opportunities for private-sector businesses. By working with outside lenders to carefully vet all loans in accordance with traditional banking standards, this partnership-based approach also helps to minimize risk to taxpayers. Local banks can serve as loan administrators, providing another business opportunity and providing residents with the familiarity of having their loan serviced by a local lender.

Indeed, because of the many advantages for traditional financial institutions a "green bank" offers, the Connecticut Clean Energy Finance and Investment Authority enjoys growing relationships with the banking community, partnering to provide low-cost capital and encouraging investment in the clean energy economy.

The idea that Connecticut can continue to pay back its taxpayers by managing their limited resources through financing clean energy instead of subsidizing it, is a powerful and necessary approach if we are ever to scale-up our deployment efforts and realize the promise of a clean energy economy. By creating a clean economy fund, Hawaii can bring these same benefits to your beautiful state, and help to lead the rest of our nation toward a cleaner, brighter future.