A global leader on renewable energy and climate action, the state of California administers no fewer than 40 programs designed to finance clean energy projects, from demand response to electric vehicles. The problem? According to Tim McRae of the Silicon Valley Leadership Group, the programs are siloed and hidden in disparate pockets of state government, with no central office to coordinate and guide investors to the best option for them. To streamline financing for clean energy initiatives and entice private capital to participate in fulfilling California's ambitious climate goals, SVLG proposed the creation of a Clean Energy Financing Clearinghouse: a one-stop shop for public investment in clean energy technologies. In this interview, McRae explains how California could leverage private investment and the federal Opportunity Zone program for climate action and social equity.
"The governor has high hopes that we can use the Opportunity Zones opportunity to drive clean energy and affordable housing investment in Opportunity Zones in California." —Tim McRae
The Silicon Valley Leadership Group co-sponsored AB 383 to establish a Clean Energy Financing Clearinghouse—described as a “one-stop shop” to coordinate government investment in clean energy technologies and connect companies with investment opportunities. What was at issue in this legislation, and what was SVLG’s reason for promoting it?
Tim McRae: The Silicon Valley Leadership Group is a leading business voice in support of California’s ambitious clean energy and greenhouse gas goals. Last year, we supported SB 100 to promote renewable and non-carbon sources of energy. The year before, we supported cap and trade. Before that, we supported SB 32 and AB 32 to set ambitious greenhouse gas emissions reductions goals. This year, we sponsored AB 383 because we believe that, to meet our ambitious climate goals as well as continue our economic growth, California needs significant amounts of both public and private financing in clean energy.
Why does the Silicon Valley Leadership Group care? First, we represent the companies behind many technologies that provide clean energy solutions, and which financing could help more consumers afford. Second, we represent private capital interests who could partner with existing public programs in a variety of ways. And third, Silicon Valley views climate change as a problem to be solved, and we want to play a role in helping to solve it.
The state has quite a few financing programs for clean energy writ large—from energy efficiency to renewable energy to demand response to electric vehicles. The Senate Office of Research has identified at least 40 of these programs sprinkled throughout state government. The problem is that they are completely siloed. They don’t communicate or connect with one another. This means that there’s no one place in state government where you can go to best understand how all these programs work together. As an investor, if I wanted to get financing for, say, a multi-family energy efficiency project, there would be no easy way to figure out where I should go or which program would be best for me.
The proposal in AB 383 was simple: that California should better coordinate our existing programs. That coordination could set us up for a crucial second step: attracting private capital partners and leveraging their significant dollars to create a much bigger pool of money to address our clean energy needs.
How does the goal of better leveraging public funds for clean energy link with the Newsom administration’s vision for Opportunity Zone investment in California?
The governor announced in his inaugural address that he wants to drive investment in clean energy and affordable housing into California’s Opportunity Zones, which are designated low-income census tracts where the Trump tax package allows private capital to avoid capital gains taxes on certain investments.
The idea of driving private clean energy financing into areas that need this sort of investment is wonderful. And to achieve it, it would be helpful to know what investments the state is already making in those areas through its existing programs. That way, we could calculate the delta between existing investment and needed investment, and strategize the best places to drive private money. I believe that if there were a coordinator for the existing programs in state government, as proposed in AB 383, that office would be well suited to play a dual role by interfacing with private capital to leverage investment in Opportunity Zones.
Last August, the California Air Resources Board partnered with the non-profit GRID Alternatives to pilot a one-stop-shop for streamlined access to clean transportation incentives for low-income residents. Meanwhile, the Los Angeles County Economic Development Corporation has suggested that the Clean Energy Clearinghouse described in AB 383 could house a California Green Mobility Commission that would oversee the “green mobility” industry. Comment on the value of these possible organizational alignments.
We would certainly welcome the creation of something like a Green Mobility Commission. The more alignment and coordination, and the more folks buying into this effort, the better. We need different areas of government—local and state—all working together to try to achieve our common climate goals.
Our proposal is very similar to CARB’s pilot program, but it has a broader reach: all clean energy technology, rather than just alternative transportation fuels. We want to create a state office that oversees all programs relating not only to alternative fuels, but also to energy efficiency; solar, wind, and geothermal renewable energy; energy storage; demand response; and more. We think all those different programs should be housed in a single place in state government, especially since a single project can often span several of those categories.
The idea is to have one place where people can figure out how these programs work together or differently, and perhaps whether they can be combined. We believe that this is how we can best drive private capital to promote growth and provide equitable solutions for economically distressed areas, at the same time as helping California meet its ambitious goals for greenhouse gas emissions reductions.
From the point of view of a future investor or entrepreneur, what are the current policy obstacles to developing and scaling new clean energy technologies in California, especially in underserved areas of the state?
We work with clean energy investors and entrepreneurs not only in California, but throughout the country. What we have found, both in California and beyond, is that there are massive clean energy markets that remain untapped and underserved due to a lack of financing and go-to-market products. There is a need to connect large pools of private capital to underserved energy markets, and that problem won’t be solved unless we make it somebody’s job to solve it.
If we had infinite time, the market would figure this out. But we don’t have infinite time. The climate crisis is upon us; there are some pretty dire predictions about what could happen, even within the next 10 years, if we don’t act. California is already doing quite a lot. If we could better coordinate all the efforts we’re already doing, it would help accelerate the adoption of clean technologies in areas that don’t already have them.
When you go to underserved areas of the state—like the Central Valley, East Palo Alto, parts of Riverside and Imperial Counties or other areas that are designated Opportunity Zones—you don’t find the clean energy technologies adoption that you find in the richer, whiter, coastal areas of California. It would be helpful to have a quarterback in state government looking out for that.
For example, rooftop solar hasn’t been able to penetrate some of the browner and more economically distressed areas of the states because folks there just can’t afford it. But if the state wanted to direct private financing to those areas, we could provide incentives people with lower FICO scores to adopt rooftop solar. The public financing programs could work with private financiers to install arrays for families that may have lower overall credit scores, say, but have excellent credit histories of paying their energy bills. In other words, we think that a coordinated state program could help private markets figure out how to reach underserved areas in a dedicated way.
Like most bills that made it to the State Senate Appropriations Committee this session, AB 383 failed to pass out of committee. What’s next for the bill and its objectives?
We are working with the Newsom administration to see if this is something they could find another way to do. We’ve met with Kate Gordon, the governor’s chief climate advisor and director of the Office of Planning and Research, as well as Lenny Mendonca, the governor’s chief economic adviser and director of the Office of Business and Economic Development, and we’re encouraged by the conversations we’ve had with them so far. They recognize that this would be really helpful to achieve the goals that the governor has set out, so we’re continuing to work with them to figure out exactly what that could look like.
I’m encouraged by the conversations we’re having with the administration, but this is really a conversation we need to have with both the administration and the legislature. They are likely going to come together within soon to decide on the state budget, and this is something that we hope they would both prioritize.
I know that the governor has high hopes that we can use the Opportunity Zones opportunity to drive clean energy and affordable housing investment in Opportunity Zones in California. This is an idea that could really help animate that conversation and make the government as effective as it can be in achieving those goals.
Prior to joining the Silicon Valley Leadership Group, you served as an advisor on climate change policy for the British government and a lobbyist in Sacramento. How do those experiences inform your approach to climate change and investment in underserved California communities?
I have worked on solutions to climate change for more than 20 years. That includes more than six years living and working in Sacramento for an environmental non-profit, The Planning and Conservation League, as well as a stint in San Francisco as the Western US Climate Change & Energy Advisor for the British government. It also includes jobs I’ve had in private clean energy businesses, such as a wind energy development company. All those experiences have helped me learn about what it will actually take to address climate change, and given me perspective on what is needed at the regional, state, and eventually federal and international levels to make things work.
Unfortunately, the federal level is not a great place to be operating these days since the Trump administration decided to pull out of the Paris Accord. The most hope is pouring into proposals that could be picked up in 2021 by a potentially more favorable Congress and President. But in the meantime, at the local level and throughout California, we have to be able to demonstrate what works.
That could include successful state programs that exist today, the combination of multiple existing state programs, or working with private capital to find the delta between what has worked at the state level and what is still needed where it could be beneficial to invest. We need to elevate all these examples to show that there is a clean energy future, there is a solution to our greenhouse gas issues, and there is still time to invest in the projects that will make that happen.
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