California Financial Needle in Right Direction for Climate Crisis
California State Treasurer Fiona Ma says when it comes to addressing the climate crisis, California is "moving the financial needle" in the right direction. She commended Governor Gavin Newsom in calling today for the inclusion of a $1 billion climate catalyst fund in his 2020-21 budget.
"California has been the leader in combatting climate change since AB32 was signed into law in 2006," Treasurer Ma said. "As the State’s Banker, I’m happy that we will invest in companies that spur newer, greener tech solutions to combat fires, floods and blackouts in California. The $1 billion low-interest revolving loan fund sends a message to the world that California is stepping up even more to help Mother Nature."
As chair of the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), which assists the state in meeting its greenhouse gas goals and works with the private market, Treasurer Ma has witnessed first-hand the positive effects of offering funding for climate-friendly projects. https://www.treasurer.ca.gov/caeatfa
CAEATFA operates the CA Hub for Energy Efficiency Financing Program, which works with private capital to help homeowners and small businesses lower their energy use and operating costs while increasing the health and comfort of California buildings. This effort also has been instrumental in spurring California’s private green market. Over its lifetime, CAEATFA has provided more than $825 million in sales tax exclusions for over 200 green projects that are helping California meet its energy goals, including solar manufacturing, geothermal, renewable fuels, and biogas production.
Treasurer Ma also chairs the California Pollution Control Financing Authority (CPCFA), which has had great success providing $16.2 billion in low-cost innovative financing to California businesses since 1972 with an objective of making California more economically prosperous and environmentally clean. CPCFA was the first statewide financing authority to sign the Green Bond Pledge, vowing to meet climate bond principles in all of its projects. https://www.treasurer.ca.gov/cpcfa
CPCFA is committed to promoting access to capital through the delivery of financing options. For example, CPCFA awarded $73.7 million in tax-exempt green bond financing last summer to CalPlant I, LLC, a company that will turn rice straw into medium density fiberboard at its Willows plant in the Sacramento Valley. Fiberboard is used in manufacturing flooring, furniture, doors, shelves and other products.
"This is the decade, the 2020s, when we have to stop climate change," the Treasurer said. "As the chair of two green financing authorities, we have seen increased competition for our incentives and funding tools over the past two years. The Climate Catalyst Fund announced today will help move the needle faster."
Treasurer Ma said she was also pleased to hear the governor emphasize the use of a $4.3 billion climate resilience bond to harden the state’s water resources infrastructure — a proposal consistent with the philosophy behind her California Green Bond Market Development Committee.
The Treasurer chaired the inaugural meeting of the California Green Bond Market Development Committee last June at the Center for Environmental Public Policy at UC Berkeley’s Goldman School of Public Policy. The focus of the committee is to promote development of the strategy and tactics necessary to lead California to a functioning green bond market that will be a model for other states and countries.
"California has been a green finance pioneer in the U.S. market," agreed Sean Kidney, CEO of the Climate Bonds Initiative. "This marks a new phase of forward facing national leadership to develop scientifically rigorous investment models that address infrastructure needs in a climate impacted future. International investors and global funds are increasingly looking for quality, long term green infrastructure opportunities that incorporate climate factors. That's precisely the direction Treasurer Ma wants the Californian and other US markets to move towards."
Institutional investors have shown an increased demand for climate-friendly investments that are more efficient and which have demonstrable benefits for our climate. A recent study asserts that governmental issuers who sell bonds to finance climate-friendly projects may enjoy a competitive advantage in the marketplace for their bonds when those bonds are identified and certified as "green." In a time when socially conscious investors are demanding more "green" investments Treasurer Ma believes California has the opportunity to demonstrate its leadership in this critical part of the climate response.