California Climate Budget To Include $1 Billion Green Loan Fund

Con­tend­ing that Cal­i­for­nia needs to bet­ter encour­age small play­ers with ideas to address the cli­mate cri­sis, Gov. Gavin New­som plans to include a $1 bil­lion revolv­ing loan pro­gram in his new bud­get Fri­day to seed recy­cling, low-car­bon trans­porta­tion and cli­mate-smart agri­cul­ture projects, accord­ing to a sum­ma­ry doc­u­ment obtained by CalMatters.

The Cli­mate Cat­a­lyst Revolv­ing Loan Fund, which would grow over four years, would offer low-inter­est lend­ing to small busi­ness­es and orga­ni­za­tions that have green ideas but may not be estab­lished or con­nect­ed enough to com­pete for ven­ture cap­i­tal funding.

“Cal­i­for­nia is the world cap­i­tal of inno­va­tion,” 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, clean­er economy.”

The Gold­en State has set ambi­tious goals for the world’s fifth largest econ­o­my to go “car­bon neu­tral” by 2045. That means cre­at­ing new tech­nolo­gies to reduce the release of car­bon diox­ide and oth­er emis­sions, as well as find­ing ways to cap­ture green­house gas so the state’s net release is zero.

Cal­i­for­nia already is pour­ing bil­lions of dol­lars from the pro­ceeds from cap and trade into a dizzy­ing range of pub­lic cli­mate projects, from clean vehi­cle rebates to high speed rail. 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, fills a dif­fer­ent role, accord­ing to Kirsten Snow Spald­ing, direc­tor of the investor net­work for Ceres, a non-prof­it advo­ca­cy orga­ni­za­tion with a focus on dri­ving invest­ment in envi­ron­men­tal sus­tain­abil­i­ty. While cap and trade dol­lars have helped pay for sig­nif­i­cant projects in tar­get­ed com­mu­ni­ties, she said, this new mon­ey could help bring infra­struc­ture projects, for exam­ple, far enough along for oth­er investors to feel com­fort­able step­ping in.

“For insti­tu­tion­al investors, there’s some risk in invest­ing in cli­mate solu­tions,” Spald­ing said. “Hav­ing the revolv­ing loan fund will help incen­tivize pri­vate mon­ey to flow into infra­struc­ture and projects.”

Ira Ehren­preis, man­ag­ing part­ner at ven­ture cap­i­tal firm DBL Part­ners, said the pro­pos­al could help bridge a gap in fund­ing for cli­mate inno­va­tions that have reached ear­ly lev­els of com­mer­cial­iza­tion, but aren’t yet mature enough to attract ven­ture capital.

Read full arti­cle at Capra​dio​.org