A green bank is a government-funded bank that fights climate change through projects with the potential to reduce the global carbon footprint and increase the use of renewable energy sources.

The newly formed Green Bank of Colorado focuses on green banks that channel public and private funds into clean energy initiatives. The organisation, which consists of nine green banks, invests its funds in renewable energy projects and lends to projects such as wind, solar and geothermal energy, as well as solar and wind farms. Green banks, such as the newly formed Colorado GreenBank, are focused on leveraging resources for these projects through a combination of public-private partnerships, private-sector partnerships, and government funding.

Reed Hundt and Ken Berlin, part of the Obama-Biden transition team, launched the idea of a green bank in 2008 to finance more clean energy projects. The Green New Deal (GND) is a plan to restructure the national economy and reduce the impact of pollution. Green banks like Colorado GreenBank and Green Bank of Colorado are the biggest financial steps that could set in motion the goals of this GreenNew Deal.

Since then, similar ideas have been put before the US Senate, the House of Representatives, and even the White House and Congress.

But when the bill failed to pass the Senate in 2009, advocates of a green banking system decided to create green banks at the state level instead. In short, a “green bank” is an investment bank that aims to accelerate the transition to clean energy and combat climate change. Although no green banker is exactly the same, the idea behind the state-created financial institutions is to dramatically expand the clean-energy market.

Instead of providing grants to encourage clean energy investment, green banks are using attractive interest rates and other incentives to mobilize private-sector money. These innovative banks draw on the extensive expertise of both the public and private sectors, provide a mutually supportive market and help demonstrate the return on investment in clean energy.

A Green Bank is a dedicated financial institution that uses innovative financing to combine resilience to clean energy with capital and to support investments in renewable energy and energy efficiency.

Although green banks do not accept deposits like traditional banks, the same federal rules apply. Green banks are broadly divided into two categories: non-profit and state institutions. The types of services they provide, such as loans, loans for renewable energy projects and financing, vary considerably from one State to another.

New York State has established the New York Green Bank as part of a new initiative to accelerate renewable energy production, and has now set targets for the state’s first green bank in the United States. The state’s legislation created green banks as financial authorities to promote the use of clean energy at the state level.

Michigan’s state green bank, known as Michigan Saves, was one of the first green banks to be established as a 501 (c) (3) nonprofit, having received its initial allocation of installment funds from the Michigan Public Services Commission, which regulates utilities in the state. It works with private lenders, including cooperatives and banks. The loan’s loss reserves act as loss reserves that lenders use to provide loans for installing solar panels on residential and commercial properties.

The Bank’s ability to lend and invest is maintained by deposits with retail banks. Simply put, bank capital flows from fossil-fuel companies to finance polluting projects, rather than to fossil fuels.

Although it is important for a green bank to have its own balance sheet, it cannot lend capital directly to fossil-fuel companies. There is a great opportunity for citizens to influence banking, and there are certainly also concerned citizens who can support such a vision.

Green banks are also focused on leveraging their capital to facilitate private access to the clean energy market by using limited public dollars to leverage private investment in clean energy. Private lenders can provide financing to developers to cover the cost of renewable-energy projects, such as rebates for solar, wind, and wind farms. However, there is a problem with the current system of financing clean energy, which has led to insufficient investment from private lenders.

Even if they can finance the upfront costs, they often do not have the time or the wherewithal to take on the process.

Consider the Energy Investment Partnership (EIP), also known as “green banks,” which are changing the game in terms of access to finance.

Green banks are a mechanism that allows public and private companies to provide capital for renewable energy projects such as wind, solar and geothermal. These funds will enable green banks to finance innovative clean energy projects and attract media attention and seed capital to develop their products and services. To kick-start the clean-energy boom, states need fast-start capital.

By 2020, green banks around the world will have invested more than $20 billion in new technologies, from solar farms to electrification of vehicles. Green light for promising new technologies helps green light projects that can secure more funding from private and government sources. These projects help countries that are signatories to the Paris Agreement and subject to nationally determined contribution targets (CO2), such as the United States, Canada and Australia.