Building Blocks of a Just Transition: Green Banks and Residential Building Decarbonization in New York

Abstract

The existential threat of climate change has given rise to financial solutions aimed at transitioning global systems away from fossil fuels and towards clean energy. Green banks are one such solution as a specialty finance vehicle aimed at using public funds to induce private investment in climate energy projects such as residential building decarbonization. Given the recent increased investment and policy attention on green banks, we should assess whether the green bank model delivers their professed goals of socially equitable outcomes, market creation, and greenhouse gas emission reductions in line with Net Zero national policy. This thesis seeks to understand the political and organizational dynamics of green bank models in the context of the Inflation Reduction Act and identify the existing project deployment gaps remaining for residential building decarbonization projects. Through a case study approach of New York Green Bank and New York Energy Efficiency Corporation, this study investigates green bank 1) additionality; 2) organizational structure; 3) scale; and 4) demand as considerations for green bank formulation to drive building decarbonization investments. These case studies combined with expert interviews provide strategy and programmatic recommendations for policymakers considering whether to create or expand a green bank in the wake of massive federal investment through the Inflation Reduction Act.