1、April 2023 Delivering transformative impact from US green bank financing Copyright 2023 McKinsey&Company.All rights reserved.This publication is not intended to be used as the basis for trading in the shares of any company or for undertaking any other complex or significant financial transaction wit

2、hout consulting appropriate professional advisers.No part of this publication may be copied or redistributed in any form without the prior written consent of McKinsey&Company.All photography Getty Images.Preface/3Executive summary/41.Green legislation sparks new green-investment opportunity/72.Ident

3、ifying technologies to make the most of green bank financing/113.Amplifying impact through strategy and design/214.Principles for deploying green bank financing/29Contents1Delivering transformative impact from US green bank financing2Delivering transformative impact from US green bank financingThis

4、report offers an analysis of potential climate,health,and economic benefits from US green bank financing under the new Greenhouse Gas Reduction Fund(GHGRF),an Inflation Reduction Act of 2022(IRA)initiative.In particular,the analysis focuses on funds disbursed through the GHGRF and their projected ca

5、pacity to enable favorable effects,including private investment.Because the GHGRF includes a mandate to promote beneficial outcomes in disadvantaged communities and advance environmental justice in the United States,this report views potential impacts through that lens.A set of 11 climate technologi

6、es that could be supported by the GHGRF are assessed as part of the analysis.Their potential impacts are measured in terms of expected greenhouse-gas(GHG)emissions reductions,job creation,cost savings,and health benefits for disadvantaged communities and across the United States as a whole.For each

7、technology,McKinsey modeled estimated public-and private-capital deployment,the associated technology adoption rates,and the potential impact on the above-mentioned metrics.Established,recognized methodologies were applied to estimate emissions reductions and job creation from deploying these climat

8、e technologies,drawing on publicly available data.All emissions impact analyses align with overarching standards for estimating avoided and reduced emissions resulting from renewable-power generation,fuel-switching savings,and energy efficiency savings.The potential impact on job creation was develo

9、ped using an employment multiplier approach consistent with International Labour Organization guidance on estimating job-creating impacts from green and sustainability investments;specific factors were drawn from ranges based on US Bureau of Labor Statistics data.Cost savings include benefits from I

10、RA financial incentives and were calculated from specific user costs for incumbent versus alternative low-carbon technologies.The Environmental Protection Agencys CO-Benefits Risk Assessment(COBRA)health impacts screening and mapping tool was used to calculate health impacts.Additional detail on app

11、roaches is included in this report,and a methodological annex is available on request.Kevin Buehler,Senior partnerJason Eis,PartnerNick Kingsmill,Consultant at Vivid Economics,a McKinsey company Cindy Levy,Senior partner PrefaceAcknowledgmentsThe report was led by Kevin Buehler,Jason Eis,and Cindy L

12、evy.The team was led by Nick Kingsmill,alongside Ishan Banerjee,Ana Barbedo,Daniel Blitz,Alexander Vanderhoof,and Rob Youngs.This report is independent,reflects the views of the authors,and has not been commissioned or influenced by any business,government,or other institution.We gratefully acknowle

13、dge the invaluable time and expertise provided by Vaneesha Dutra and Curtis Kidd Telemaque of the Howard University HPS Center for Financial Excellence,and Whitney Mann,a manager at the RMI Center for Climate-Aligned Finance,who independently reviewed the analysis and report.We also thank Oswaldo Ac

14、osta,Beth Bafford,Paul De Sa,Jeff Diehl,Michael Gergen,Ilmi Granoff,Alfred Griffin,Eli Hopson,Reed Hundt,Bert Hunter,Adam Kent,Henry Litman,Alekhya Mukkavilli,Leo Park,and Doug Sims for providing input and feedback.We are grateful to our colleagues from McKinsey Sustainability and from McKinseys Ban

15、king,Private Equity&Principal Investors,and Electric Power&Natural Gas Practices,who provided valuable insights.This report was edited by Max Berley,Lynn Zott,and the team at Leff Communications.We thank Gwyn Herbein and Anna Massey from McKinsey Publishing for supporting the publishing process.3Del

16、ivering transformative impact from US green bank financingFor well over a decade,green bank financing has channeled public dollars into private investments in green energy and climate transition in nations around the world and at the state and local levels in the United States.It is also the model c

17、hosen to disburse$20 billion of the$27 billion authorized in the Greenhouse Gas Reduction Fund(GHGRF),an Inflation Reduction Act of 2022(IRA)initiative.1 As the analysis in this report illustrates,well-coordinated and strategically targeted green bank financing could advance environmental justice th

18、rough investment in disadvantaged communities.The analysis also shows this financing can help mobilize hundreds of billions in investment dollars toward achieving net-zero greenhouse-gas(GHG)emissions by 2050.To reach net zero by 2050,the United States could need an estimated$27 trillion in climate

19、investment.2 Green bank financing could play a significant role in catalyzing this investment over the next decade.This report focuses specifically on the estimated need for and impact of investment in 11 key technologies across three themeshousehold and community decarbonization,business decarboniz

20、ation,and energy system transformation.Aiding these particular investments could advance the GHGRFs dual goals of reducing emissions and benefiting disadvantaged communities while also fulfilling its mission to provide“additionality”through investments that would not have occurred without its fundin

21、g.As set out in this report,these 11 technologies will need substantial volumes of financing to realize their potential along the countrys net-zero pathway.1 The GHGRF includes a further$7 billion for states,municipalities,and tribal governments to finance zero-emission technologies in low-income an

22、d disadvantaged communities.For more,see“About the Greenhouse Gas Reduction Fund,”US Environment Protection Agency,updated February 14,2023.2“Navigating Americas net-zero frontier:A guide for business leaders,”McKinsey,May 5,2022.Over a decade,they would need an estimated$200 billion invested in dis

23、advantaged communities and more than$1 trillion in total investment:$215 billion to decarbonize and deploy solar in households and communities$100 billion for businesses to deploy solar,decarbonize heating,and develop electric-vehicle charging infrastructure$700 billion to boost offshore wind power,

24、deploy long-duration energy storage and transmission,and support the conversion of coal plants to new usesBuilding to$1 trillion will take time.This analysis estimates that green bank financing could mobilize more than 12 times the GHGRFs public investment over ten years through appropriate,balanced

25、 leverage and private co-investment.This means that$20 billion in GHGRF funding,leveraged into$250billion in combined public financing and private co-investment,could kick-start critical systemwide change.This$250 billion could empower innovation and creativity in channeling investment to communitie

26、s that struggle to access finance,deliver transformational impact in disadvantaged communities,and contribute up to one-sixth of the emissions reductions needed over the next ten years on the pathway to 2050 US emissions goals.According to this analysis,in a ten-year period,targeting this volume of

27、leveraged green bank financing toward the 11 identified technologies could create 380,000 direct jobs,realize$30 billion in cost savings(over the expected lifetime of new investments),and avoid thousands of early deaths by reducing air pollution in disadvantaged communities.These benefits accompany

28、broader benefits across the United States as a wholeincluding 850 metric megatons of GHG emissions reductions(CO2),one million direct jobs,and$100 billion in cost savingshelping the United States Executive summary4Delivering transformative impact from US green bank financingmake strong progress towa

29、rd its climate ambitions.Realizing this scale of impact will also require careful governance and management to avoid mismanagement of funds,reduce frictions or waste,and avoid the crowding out of private investmentall of which could divert funding from its intended goals and reduce the impact potent

30、ial of GHGRF support.Five principles are critical to ensure and expedite the potential for GHGRF-funded investments to help realize national climate and environmental justice ambitions:1.Target investment based on measurable impact potential.Defining comparable impact metrics and deliberately target

31、ing financing to communities and technologies that deliver the greatest emissions reductions and equitable gains can amplify the effectiveness per dollar invested.2.Gain optimal leverage of private capital from GHGRF funding.Employing deep financing expertise to raise capital and achieve substantial

32、 private cofinancing from the initial GHGRF funding,while remaining conscious of specific challenges in disadvantaged communities,can drive greater scale for direct green bank financing.3.Catalyze markets at scale by flexibly deploying a mix of financing approaches.Disciplined approaches that incorp

33、orate continual market feedback and strategic review and that adjust to changing conditions and market needs can foster the catalyzation of sustainable,full-scale private financing in the future.Sharing learnings from successful financing approaches and investment performance can also boost knowledg

34、e and aid replication across regions.4.Galvanize a distributed financing network aligned with a national vision.Tapping into existing institutions local knowledge and expertise to reach customers and stimulate demand and uptake can enable broader and faster distribution of investment,especially to n

35、ationally prioritized disadvantaged communities.5.Mobilize GHGRF funding quickly through a range of established mechanisms.Rapidly deploying GHGRF fundingfor example,by using existing project pipelines and managing liquidity across multiple facilitiescan accelerate the virtuous circle of direct inve

36、stment,private-capital leverage,capital recycling,and the“learning by doing”that drives market transformation at the scale and pace needed to achieve US climate targets.These principles are reinforced by the quantitative assessment and analysis of GHGRF fundings potential and are critical components

37、 of its capacity to help achieve White House climate objectives to reduce emissions,create jobs,reduce costs,build green infrastructure,improve health,and advance environmental justice.By including environmental-justice objectives in the GHGRF and setting the net-zero deadline for 2050,the United St

38、ates has set the stage for investors to expand the potential of green bank financing with bold yet balanced and deliberate tactics.Climate transition,as well as equity in the distribution of its benefits,is an essential mission that calls for specialized knowledge,proven approaches,and scrupulous as

39、sessment and reflection.The analysis in this report illustrates the strong potential for green bank financing to accomplish climate and environmental-justice goals and to spark wider-ranging private investment and publicprivate collaborations in the United States.5Delivering transformative impact fr

40、om US green bank financing6Delivering transformative impact from US green bank financingThe United States has reached a pivotal moment in climate transition and environmental justice,brought about by recent momentum in green legislation and investment.Since 2021,the US government has passed three pi

41、eces of legislation aimed at shifting capital flows into green technologies.The American Rescue Plan Act of 2021 provides funding to mass transit systems and to state and local governments for infrastructure improvements to water and sewage services.3 The Infrastructure Investment and Jobs Act of 20

42、21 allocates funding for infrastructure projects such as electric-vehicle(EV)charging infrastructure,transmission and distribution upgrades,and electrification and efficiency in buildings.Most recently,the Inflation Reduction Act of 2022(IRA)directs new federal spending toward climate objectives.4 T

43、he IRA could provide nearly$400 billion or more in investments and incentives for technologies and initiatives that address climate change and environmental justice,based on data released by the Congressional Budget Office(CBO)and the Joint Committee on Taxation(JCT).5 Some of the programs direct fe

44、deral funding to a loan authoritythe Department of Energys Loan Programs Officeproviding almost$400 billion in potential 3 American Rescue Plan Act of 2021,Pub.L.No.117-2,135 Stat.4,2021.4“Fact sheet:President Bidens leadership to tackle the climate at home and abroad galvanizes unprecedented moment

45、um at start of U.N.Climate Conference(COP27),”White House,November 7,2022.5“The Inflation Reduction Act drives significant emissions reductions and positions America to reach our climate goals,”US Department of Energy,August 2022.6“The Inflation Reduction Act:Heres whats in it,”McKinsey,October 24,2

46、022.7 Ryan Jones et al.,Preliminary report:The climate and energy impacts of the Inflation Reduction Act of 2022,Princeton University ZERO Lab,August 2022.8 Inflation Reduction Act of 2022,Pub.L.No.117-169,136 Stat.1818,2022.additional investment.6 The IRA seeks to direct and catalyze investments in

47、to addressing climate,along with its objectives for healthcare and the federal deficit.The US Congressional Research Service(CRS)estimates the IRA,in combination with other policies,could help reduce 2030 carbon emissions to 40 percent below 2005 levels with a combination of tax breaks,subsidies,and

48、 funding for large-scale climate investments(see sidebar“US emissions goals”).7 The IRA could also drive more investment than estimated by the CBO in the event of larger-scale uptake of incentives and tax credits,faster market transformation,and greater cost reductions than suggested in the initial

49、CRS analysis.The IRA includes$27 billion earmarked for climate financing as part of the Greenhouse Gas Reduction Fund(GHGRF),of which$20 billion is intended to promote green bank financing and amplify and create incentives for investment in disadvantaged communities.This funding seeks to provide fin

50、ancial and technical assistance for projects that reduce or prevent GHG emissions and other forms of air pollution.At least 40 percent of this$20 billion is targeted to low-income and disadvantaged communities.8 The GHGRF also includes$7 billion for states,municipalities,and tribal governments to fi

51、nance zero-emission technologies in low-income and disadvantaged communities.Green banks have operated at state and local levels across the United States and at the national level in several countries,including Australia,India,Japan,South Africa,and the United Kingdom.Green bank financing uses publi

52、c funding to mitigate barriers to climate investment,crowd in private financing,and enable and accelerate the deployment of climate technologies,services,and new business models.By using financial solutions to address specific,deal-level barriers;reducing risk and building confidence in novel 1.Gree

53、n legislation sparks new green-investment opportunity7Delivering transformative impact from US green bank financingUS emissions goalsThe United States will need to invest up to$900billion annuallyfour times its current average annual clean-energy investmentover the coming decades to meet its climate

54、 and environmental-justice objectives.1 The United States has committed to reaching net-zero greenhouse-gas(GHG)emissions by 2050 and reducing its GHG emissions to 50 percent of 2005 levels by 2030.2 Meeting this 2030 target calls for an annual emissions reduction of 6.0 percent,more than six times

55、the 0.8 percent average annual reduction during the last decade,3 and an average annual investment of$900 billion,or 4.0percent of 2021 US GDP.1 “Navigating Americas net-zero frontier:A guide for business leaders,”McKinsey,May 5,2022;World Energy Investment 2022,International Energy Agency,June 2022

56、.2 The long-term strategy of the United States:Pathways to net-zero greenhouse gas emissions by 2050,US Department of State and the US Executive Office of the President,November 2021.3 “Navigating Americas net-zero frontier,”May 5,2022.green investments;lowering financing costs;and bolstering broade

57、r financial market development,green bank financing can mobilize investment.9 This includes helping enable private investment and flexibly drawing down and redirecting financing to new areas once private investors are ready and able to invest without public assistance.Nonprofit organizations that me

58、et GHGRF eligibility requirements may apply for up to$20 billion in funds to deploy green bank financing that mobilizes 9 Green investment banks:Scaling up private investment in low-carbon,climate-resilient infrastructure,OECD,May 31,2016.10 Inflation Reduction Act of 2022.11“Environmental justice,”

59、US Environmental Protection Agency,updated January 10,2023.12 Brenda Mallory,Gina McCarthy,and Shalanda D.Young,“Memorandum for the heads of departments and agencies,”Executive Office of the President,July 20,2021.13 Joseph R.Biden,“Executive Order on tackling the climate crisis at home and abroad,”

60、White House,January 27,2021.private investment.10 Recipients may invest directly at the national or subnational level and indirectly through intermediaries at the regional,state,and community level;they may also provide other forms of financial and technical assistance.Advancing environmental justic

61、eEnvironmental justice refers to the fair treatment and involvement of all groups in the development,implementation,and enforcement of environmental policy,law,and regulation.11 Disadvantaged communities commonly include people of color,low-income people,and members of other groups that face social

62、and economic disadvantages more broadly.The communities themselves are historically underserved by public and private services and overburdened by environmental hazards(see sidebar“Identifying disadvantaged communities”).12 Environmental justice is a key component of recent federal climate action,as

63、 embodied in Executive Order 14008,signed in January 2021.13 The order instructed all US cabinet secretaries and the US attorney general to make achieving environmental justice part of their departments missions.The GHGRFs mandate to allocate at least 40 percent of the$20 billion for green bank fina

64、ncing to benefit disadvantaged communities is an outgrowth of this directive.Advancing environmental justice goals alongside emission reduction objectives requires investing in disadvantaged communities that have historically faced difficulty accessing financing.Lack of access to financial services

65、is both a symptom and a source of disadvantage because economic mobility is predicated on the ability to use savings,investments,loans,and insurance.Supporting disadvantaged communities requires improving financial inclusion and delivering investments 8Delivering transformative impact from US green

66、bank financingIdentifying disadvantaged communitiesThis analysis identifies disadvantaged communities(DACs)using the working definition developed by the Department of Energy(DOE)to support implementation of the White Houses Justice40 Initiative.This approach draws on a review of established indexes

67、of disadvantage and external and interagency engagement,defining DACs at the census tract level based on their cumulative burden across 36 burden indicators in four categories:fossil-fuel dependence,energy burden,environmental and climate hazards,and socioeconomic vulnerabilities.Cumulative burden i

68、s calculated as the sum of percentile values across each of the 36 burden indicators at the census tract level.Each tract is ranked by cumulative-burden score.Census tracts in the top 20 percent and in which at least 30 percent of households are classified as low-income are identified as DACs.This m

69、ethodology identifies 18.6 percent of US census tracts as DACs.11 For more information on DOE-defined DACs,see“Justice40 Initiative,”Office of Economic Impact and Diversity,accessed October 17,2022.at a local level.GHGRF funding creates new opportunities to innovate approaches to channeling investme

70、nt toward disadvantaged communities that have struggled to access capital and finance.Within the context of the GHGRFs dual mission to advance climate impact and environmental justice,this report examines green bank financing across three key themes and 11 technologies and assesses the potential res

71、ulting environmental,economic,and social impacts.More broadly,it explores and illustrates the potential impact of GHGRF-enabled green bank financing to drive change in disadvantaged communities and across the United States.9Delivering transformative impact from US green bank financing10Delivering tr

72、ansformative impact from US green bank financingConcentrating GHGRF-enabled financing on technologies and groups that would otherwise lack access to financing,especially in low-income and disadvantaged communities,can help deliver on its aims.Specifically,using this financing to mobilize low-carbon

73、technology investments that would not have happened without this financing can help avoid crowding out the private sector and enhance the impact of GHGRF funding.And GHGRF-enabled financing can boost its overall efficacy by addressing barriers to investment such as insufficient household income,limi

74、ted access to finance,high up-front technology costs,long payback periods,coordination challenges,first-mover costs,and a lack of recompense for“public good”investments.GHGRF-enabled financing can foster additionality using two general approaches:Support communities and groups that face challenges i

75、n accessing financing and investing in climate technologies.Extending access to financing for climate-related investment to groups that could not otherwise obtain funding can enhance the additionality of funding and investments.This could involve extending financing access to households and business

76、es in disadvantaged communities for new decarbonization technologies such as heat pumps or rooftop solar.Additionality gains could also be realized by reducing up-front costs for households that would otherwise be unable to afford to purchase and install new technologies.Support projects,technologie

77、s,and new business models that cannot currently access financing but could become scalable and investable in the future.By investing in projects and technologies that cannot access private finance or by co-investing to enable private investment,GHGRF-enabled financing can help develop and deploy new

78、 technologies and markets.In addition to enabling climate impacts,broad deployment of technologies can help drive down costs,establish new markets,and facilitate even wider deployment over time.This market development can also provide indirect benefits to disadvantaged communities,along with direct

79、climate and socioeconomic benefits from investments in these communities.Examples of this include supporting high-cost emerging technologies such as offshore wind power generation or alleviating coordination and infrastructure investment challenges that stop small businesses from investing in EVs.Fr

80、amed by these two approaches to additionality,this reports analysis considers the potential impact from GHGRF-enabled financing associated with investments across a set of themes and technologies.Given the GHGRFs emphasis on using funding to advance environmental justice,the analysis also considers

81、deployment approaches that prioritize disadvantaged communities and address both business and household or community decarbonization.In addition,the analysis considers the impact potential associated with targeted assistance for broader investments in energy system transformation,where GHGRF-enabled

82、 financing could complement existing initiatives.This complementary aid could involve using specific financing approaches or focusing on enabling investment and impact in disadvantaged communities.To inform this analysis,11 climate mitigation technologies across three themes were identified with inp

83、ut from a coalition of lenders and investors focused on green investment and disadvantaged communities.These themes and technologies represent areas in which GHGRF financing could 2.Identifying technologies to make the most of green bank financing11Delivering transformative impact from US green bank

84、 financingdrive additional investment,advance the GHGRFs mission to create additional impact,and help overcome considerable adoption challenges.14 In some cases,assistance for a given technology may be best suited to a particular time in its development;similarly,financing might be best suited for d

85、eployment to benefit specific groups.GHGRF-enabled financing could extend its 14 The selection of climate mitigation technologies reflects the GHGRFs focus on reducing GHG emissions.There are also substantial investment needs for climate adaptation and for nature and biodiversity preservation across

86、 the United States and in disadvantaged communities,which are not considered in this analysis.reach for some technologies by piggybacking on government incentives for consumers and businesses.However,in cases where technologies are substantively supported by existing state or federal government init

87、iatives,care should be taken not to duplicate efforts.In these situations,the added value of complementary assistance alongside government programs or via investment in disadvantaged communities should be carefully Exhibit 1Web GHGRF Impact(Green Banking&US Funding)ReportExhibit of Theme1Greenhouse

88、Gas Reduction Fund.Funding from the Greenhouse Gas Reduction Fund could support additional impact and beneft disadvantaged communities.McKinsey&CompanyTechnologyRationale for GHGRF1 supportHousehold and community decarbonizationBusiness decarbonizationHigh additionality potential for supporting disa

89、dvantaged communities by defraying high up-front costs that make this technology otherwise unafordable and helping to ease coordination issues for community-wide investmentsHigh additionality potential in disadvantaged communities and business-es more broadly,including defraying high up-front costs,

90、helping scale the speed of deployment,and overcoming coordination challenges across small businessesHigh additionality potential if targeted toward critical interconnections and areas of historical underinvestment to overcome issues of fnancial viability and coordinationAdditionality potential for i

91、nvestments focused on early-stage market making to improve economic viability in the face of current high costs and demonstrate feasibility on permitting and planningHigh additionality potential for investments targeted at areas faced with historical underinvestment and with high synergy with other

92、sectors;battery storage could be used to eliminate inefcient peaker power plants located disproportionately in disadvantaged communitiesHigh additionality potential for investments focused on disadvantaged communities and deployed to complement additional eforts to support coal conversion;for exampl

93、e,investments could help lower customers costs from converting coal installations while complementing existing conversion initiatives Residential rooftop solar and battery Residential heat pumps Heat pump water heaters Community solar Commercial heat pumps Commercial rooftop solar and battery Fleet

94、depot electric-vehicle chargers Transmission Coal conversion Long-duration energy storage Ofshore windEnergy system transformation12Delivering transformative impact from US green bank financingconsidered;financing should be scoped and designed to augment those programs and the collective impact.Exam

95、ples of such government programs include the IRA Energy Infrastructure Reinvestment Program,which helps fund coal plant conversion for new uses;the Department of Energy Grid Deployment Offices various programs to aid investment in transmission;and the funding for energy storage demonstration project

96、s included in the Infrastructure Investment and Jobs Act of 2021.GHGRF-enabled financing could be used to aid investment and contribute to growth across a wider set of investments and technologies than those included in this report.And in practice,the focus of GHGRF-enabled financing across themes a

97、nd the specific technologies that receive investment Exhibit 2Reaching net zero could require an estimated investment of$1 trillion across 11 technologies over ten years,including$200 billion in disadvantaged communities.McKinsey&CompanyCumulative investment need 202332,1$billionNote:Figures may not

98、 sum to total,because of rounding.Investment and cost estimates focus only on technology deployments that are eligible for Infation Reduction Act incentives.1Estimated;for Infation Reduction Act incentiveeligible deployment only.2Increase in annual rate of deployment needed to align with net-zero pa

99、thway or align with national targets.3Includes battery storage.4Electric-vehicle.Disadvantaged communities(DAC)Rest of populationAnnual deployment rate increase needed2xxHousehold and community decarbonizationResidential rooftop solar3 Residential heat pumpsHeat pump water heatersCommunity solarBusi

100、ness decarbonization Commercial heat pumpsCommercial rooftop solar3Fleet depot EV4 chargersEnergy system transformationTransmissionOfshore windEnergy storageCoal conversion700$42 billion for DAC$215 billion total$19 billion for DAC$100 billion total$135 billion for DAC$700 bill

101、ion total0.4x2.5x100.0 x2.0 x13.0 x1.5x5.0 x2.0 x100.0 x2.0 x13Delivering transformative impact from US green bank financingwill vary as needs for and barriers to investment evolve.Financing will also be dependent on any further guidance from the Environmental Protection Agency(EPA)on priorities for

102、 technologies,sectors,or groups.Nonetheless,examining these technologies and the rationale for using green bank financing to facilitate their deployment can provide lessons on how GHGRF-enabled financing can bolster broader impact.Detailed below are the 11 technologies included in this analysis,orga

103、nized within three themeshousehold and community decarbonization,business decarbonization,and energy system transformation.Household and community decarbonization Residential rooftop solar and battery:solar photovoltaic panels that generate electricity in combination with a residential battery Resid

104、ential heat pumps:electric heat pumps that heat and cool residential buildings using refrigerant and electricity to transfer heat from outdoor air or the ground to the inside of a building,replacing fossil-fuel systems Heat pump water heaters:water heating systems that use refrigerant and electricit

105、y to transfer heat from outdoor air or the ground to water in a storage tank;they can be combined with space-heating heat pumps,replacing fossil-fuel systems Community solar:solar photovoltaic panels that supply electricity to multiple individual or business customers;community solar can be located

106、on-site(such as in multihousehold buildings with a shared rooftop)or off-site,or scaled to provide broader utility-level serviceBusiness decarbonization Commercial heat pumps:electric heat pumps that heat and cool commercial buildings using refrigerant and electricity to transfer heat from outdoor a

107、ir or the ground to the inside of a building,replacing fossil-fuel systems Commercial rooftop solar and battery:solar photovoltaic panels that generate electricity stored in a small battery for a single commercial unit Fleet depot EV chargers:chargers for commercial EVs,placed in fleet depots to sup

108、port small-business fleet decarbonizationEnergy system transformation Transmission:high-voltage transmission lines that carry electricity over long distances from electricity generation plants to substations,and distribution lines that prepare electricity delivery to end users Offshore wind:wind tur

109、bines installed offshore that generate electricity;these offshore turbines are larger than land wind turbines and can capture strong ocean winds Long-duration energy storage:battery electricity storage that provides flexibility and reliability to energy systems Coal conversion:early retirement of co

110、al generation assets through financingExhibit 1 indicates where and how GHGRF funding could support additionality and impact for each theme or technology.Outcomes could be related to addressing financial or cost constraints or helping overcome nonfinancial barriers such as coordination challenges.Gr

111、een bank tools such as technical assistance can be as important as financial tools in unlocking and enabling investmentfor example,by providing information for homeowners,building capacity in installers,or helping investors develop new financing models.Assessing investment needsAccording to this ana

112、lysis,realizing national climate goals and further US progress along the path to net zero will require an estimated$1 trillion or more in investment over the next decade across the 11 technologies identified,including around$200 billion in disadvantaged communities(Exhibit 2).14Delivering transforma

113、tive impact from US green bank financingOver the next ten years,this analysis indicates that the four technologies identified to target household and community decarbonization would need$215billion to align with a net-zero pathway;business decarbonization technologies are projected to require more t

114、han$100 billion.Among household and community decarbonization technologies,heat pumps and residential solar represent the areas of greatest estimated investment need,while heat pump water heaters represent the largest projected increase in the annual rate of deployment needed to meet the investment.

115、Cumulative estimated community solar investment need is$30 billion,$6billion of which is in disadvantaged communities.Projected increases needed in the annual deployment rate for business decarbonization technologies are considerable:13 times for commercial heat pumps and five times for fleet depot

116、chargers.Energy system technologies such as transmission,offshore wind,and long-duration energy storage will need$600 billion or more in investment by 2032,and converting coal generation capacity by the end of the decade will require an additional$100 billion.The scale of this investment need relati

117、ve to household and business decarbonization reflects the greater scope and larger project sizes for new national power-generation and energy-transmission systems.Because of their size and scope,these investments can also help enable wide-scale transformation of the energy system and the deployment

118、of other technologies,such as renewable-power generation.(For more on this analysiss approach to estimating investment need,see sidebar“Sizing the investment need:Sources and methodology.”)Understanding impact potentialThis analysis projects that investments in the 11 identified technologies can del

119、iver substantial 15 This analysis focuses on direct and indirect jobs for installation,manufacturing,and maintenance.However,new jobs may also create new opportunities for training,retraining,and workforce development and may imply reductions in jobs in legacy fossil-fuel sectors.A broader assessmen

120、t of economic impact could also explore the job quality,wages,and types of employment and entrepreneurship opportunities linked to different technologies and investments.16 Investments may also protect households and businesses against future cost increases due to increases in the cost of fossil fue

121、l.This analysis therefore only focuses on a subset of total potential cost savings.benefits to disadvantaged communities and across the United States.Low-carbon technologies and green bank financing approaches can strengthen communities across many dimensions,including climate mitigation,economic be

122、nefits,access to technologies,improved health outcomes,increased investment volumes,and greater access to finance.While many metrics are available to assess and compare impact across technologies and themes,this assessment focuses on four impact categories across major climate and social goals:Emiss

123、ions.Investments can help reduce emissions directly by replacing GHG-emitting technologies or fossil fuelbased electricity generation,or indirectly by enabling emission reductions across the energy system,as in the case of EV charging infrastructure or transmission infrastructure.Job creation.The de

124、ployment of these new technologies can help create new jobs directly within targeted communities,in areas such as installation,construction,operation,and maintenance,and throughout the technology value chain.Deploying these technologies can also help create jobs indirectly across the United States.1

125、5Cost savings.Deploying these technologies can help reduce energy costs for households and businesses when considering the cost of capital,fuel,and operation relative to the higher-emitting technologies they replace.16 Health.Investments in these technologies can help improve health outcomes via red

126、uctions in air pollution and the resulting declines in deaths and illnesses,such as asthma and heart disease,that are linked to pollution.Across the 11 identified technologies,this analysis shows significant differences in the patterns of impact per dollar of investment.Assessing the impact potentia

127、l across technologies for a 15Delivering transformative impact from US green bank financinggiven volume of equal investment helps build understanding of the relative concentrations of impacts across different technologies.This understanding can help achieve a balanced prioritization of investment op

128、portunities to address the GHGRFs multiple objectives.It can also inform capital allocation decisions across the technologies that lead to different impacts Sizing the investment need:Sources and methodologyThe investment need for the identified 11 key technologies is sized based on projected techno

129、logy deployment over the next ten years and costed using established public technology-level estimates.Total deployment is based primarily on projected needs under a specific net-zero pathway,the Princeton Net Zero America(PNZA)1“high electrification”pathway,which assumes full electrification of tra

130、nsport and buildings by 2050 with no constraint on increased deployment of renewable energy or other energy supply changes.For some technologies,deployment projections drew on additional sources or targets.These include the following:Community solar.Projections used National Renewable Energy Laborat

131、ory(NREL)data,calibrated to PNZA solar growth projections.2 Fleet depot electric-vehicle(EV)chargers.EV charging analysis was conducted by McKinsey.Offshore wind.Projections used the 2030 offshore-wind development targets set by the White House.3 Long-duration energy storage(LDES).Projections used t

132、he Bloomberg New Energy Finance market assessment and LDES Council market development estimates.4 Coal conversion:Bespoke analysis was conducted using Environmental Protection Agency power plant data to identify low-performing plants.5 Technology costs were drawn from a unified source where possible

133、 to support consistency across the analysis.The analysis drew primarily on cost estimates from the NREL 2022 Electricity Annual Technology Baseline,using a“moderate”(versus“conservative”or“advanced”)future-cost-reduction pathway.All cost data is adjusted to 2021 US dollars and accounts for labor cos

134、t differentials across states for installation cost components.For some technologies,the analysis drew on additional cost estimates:Fleet depot EV chargers.McKinsey conducted the EV charging analysis.Transmission.Cost estimates were obtained from PNZA.6 Long-duration energy storage.Cost estimates we

135、re obtained from NREL and the LDES Council.7 Coal conversion.Bespoke analysis was based on independent analysis that identified the value of coal assets considered“on the books”of regulated utilities that could be retired,8 combined with unit costs of decommissioning based on costs from analogous re

136、verse-auction conversion approaches in Europe.91“Net-Zero America:Potential pathways,infrastructure,and impacts,”Princeton University,2021.2 Paige Jadun et al.,“Electrification futures study technology data,”National Renewable Energy Laboratory(NREL),updated September 16,2022;“Net-Zero America,”2021

137、.3“Fact sheet:Biden-Harris Administration announces new actions to expand U.S.offshore wind energy,”White House,September 15,2022.4“Global energy storage market to grow 15-fold by 2030,”BloombergNEF,October 12,2022;“Net-zero power:Long duration energy storage for a renewable grid,”Long Duration Ener

138、gy Storage Council and McKinsey,November 22,2021.5 Emissions&Generation Resource Integrated Database(eGRID),Environmental Protection Agency,updated January 31,2023.6“Net-Zero America,”2021.7“Utility-scale battery storage,”NREL,updated July 21,2022;“Net-zero heat:Long-duration energy storage to accel

139、erate energy system decarbonization,”LDES Council and McKinsey,November 9,2022.8 Christian Fong,“Securitization in action,”Rocky Mountain Institute,May 24,2022;Emissions&Generation Resource Integrated Database(eGRID),updated January 31,2023.9 Hanns Koenig et al.,“Coal phase-out in Germany:The role o

140、f coal exit auctions,”Aurora Energy Research,June 2022.16Delivering transformative impact from US green bank financingand that target different users and communities.Moreover,understanding relative impacts can bolster the case for technology deployment at a local level by demonstrating relevant loca

141、l impact as well as broader benefits from reductions in GHG emissions.There is substantial variation in impact potential across and within the sets of prioritized technologies(Exhibit 3).This analysis reveals nuanced profiles for impact across different themes and technologies(see sidebar“Calculatin

142、g investment impacts:Sources Exhibit 3Web GHGRF Impact(Green Banking&US Funding)ReportExhibit of Decarbonization yields markedly greater predicted emissions reductions in energy system technologies while ofering improved cost savings.McKinsey&CompanyNote:Figures are rounded.All numbers are cumulativ

143、e.1Includes battery storage.2Electric-vehicle.3The health impact of reducing fossil-fuel peaker plants is high in the surrounding area of the plants.4Infation Reduction Act incentives are included in calculations(except for feet depot chargers).5Cost and emissions reductions are from heating,not coo

144、ling.6Enabled impact(all others are direct impact).7Greenhouse-gas.8Metric megatons of CO2.Source:McKinsey Sustainability InsightsCommunity decarbonization outcomes assuming$1 billion investment per technology(202332)Disadvantaged communitiesRest of populationHousehold and community decarbonizationR

145、esidential rooftop solar1Residential heat pumpsHeat pump water heatersCommunity solarBusiness decarbonization Commercial heat pumpsCommercial rooftop solar1Fleet depot EV2 chargersEnergy system transformationTransmissionOfshore windEnergy storage3Coal conversionJobs supported,thousandsCost savings,4

146、$millionsGHG7 emissions reduction,MtCO28Health improvementsN/AN/AN/A66465354441,6003602505320120585010,0006N/A4301.00.15115.060.14.50.50.251.520.0610.062.517Delivering transformative impact from US green bank financingCalculating investment impacts:Sources and methodologyGreenhouse-gas emissions red

147、uctionsCO2 impact is calculated based on the reduction in emissions from displacing high-emitting alternatives with new low-carbon investments.This general approach is customized for individual technologies based on their unique profiles:Residential and commercial rooftop photovoltaics,community sol

148、ar,and offshore wind.Each megawatt of deployed capacity replaces the same quantity of grid transmission generation.Reductions in greenhouse-gas(GHG)emissions are calculated by multiplying state grid emission-intensity factors by new renewable generation.1 Residential heat pumps,heat pump water heate

149、rs,and commercial heat pumps.Each technology deployed replaces a natural-gas counterpart.Total emissions are calculated by multiplying natural-gas emissions factors by the replaced natural-gas stock and subtracting added electricity emissions,assuming the national grid evolves to 70 percent renewabl

150、e generation.Fleet depot electric-vehicle chargers.Abatement is the product of enabled internal-combustion-engine(ICE)vehicle retirements and per-vehicle emissions intensities.Abatement is calculated from aggregate fleet levels,Environmental Protection Agency(EPA)ICE vehicle emissions,and EPA vehicl

151、e stocks.Added grid emissions from EV electricity usage are accounted for using state emissions-intensity data and a projection that the national grid will evolve to 70 percent renewable generation by 2030.Transmission.The analysis uses the forecasts from the Princeton Net Zero America(PNZA)report t

152、o estimate the quantity of solar and wind enabled by this new transmission infrastructure.2 The calculation of enabled emission reductions mirrors the emission-reduction calculations from solar and wind technologies.Battery storage.Battery storage deployment replaces inefficient fuel oil peaker plan

153、ts for the supply of short-term power with GHG abatement identified based on plant-level EPA annual emissions data,assuming storage capacity is powered by renewables.3 Coal conversion.Total annual emissions of specific retired coal plants are identified using EPA data.4 Any direct replacements in ge

154、neration capacity are assumed to be nonemitting.Job creationTechnology-specific jobs in direct manufacturing,installation,and construction are modeled using capital expenditures and associated sectoral job multipliers based on US Department of Labor data.5 Cost savingsIn most cases,savings are calcu

155、lated based on the differences in the levelized costs of technologies,which consider capital,operations and maintenance,and energy costs.However,offshore wind calculations are based on the cost of equivalent fossil fuels used in electricity generation,and solar-technology calculations use the cost o

156、f electricity from the grid,their closest substitutes.Additional savings based on Inflation Reduction Act of 2022 incentives are accounted for when applicable.6 Health improvementsFollowing a similar approach to GHG-emission reductions,health improvements are quantified by multiplying air-pollutant

157、emissions factors by pollutant reductions for each technology.Particulate emission reductions are converted to changes in the incidence of mortality,heart attacks,asthma,and lost workdays,using the EPAs CO-Benefits Risk Assessment(COBRA)health impacts screening and mapping tool.7 1 Emissions&Generat

158、ion Resource Integrated Database(eGRID),Environmental Protection Agency,updated January 31,2023.2“Net-Zero America:Potential pathways,infrastructure,and impacts,”Princeton University,2021.3 Emissions&Generation Resource Integrated Database,updated January 31,2023.4 Ibid.5 Josh Bivens,“Updated employ

159、ment multipliers for the U.S.economy,”Economic Policy Institute,January 23,2019.6 Levelized cost of heating(LCOH)for consumers,for selected space and water heating technologies and countries,International Energy Agency,updated October 26,2022.7“CO-Benefits Risk Assessment health impacts screening an

160、d mapping tool(COBRA),”EPA,updated January 25,2023.18Delivering transformative impact from US green bank financingand methodology”).Household and community technologies such as rooftop solar and heat pumps may not offer the potentially high emissions reductions that some other technologies do.Howeve

161、r,investments in these technologies,particularly in disadvantaged communities,can provide material cost savings to households and bolster job creation in targeted communities.They can also help households and communities own and manage their electricity access and usage and are an essential componen

162、t of long-term emissions reductions from systemwide electrification.Investments in technologies such as fleet depot EV chargers,transmission,energy storage,and coal conversion have the potential to create jobs,enable other decarbonization technology deployments,and provide indirect benefits.These te

163、chnologies are central to enabling the deployment of critical technologies such as EVs and intermittent renewable-power generation from solar and wind.They are also essential to establishing the energy system required for large-scale climate transition.Energy storage impactsassessed in this report b

164、ased on the ability to support conversion of fossil-fuel power generation in disadvantaged communitiescould also be significantly greater if the role of energy storage in broader system decarbonization is considered.Larger-scale power sector technology investments can offer high-potential emissions

165、reductions,in addition to significant job creation and health improvements.Offshore wind and large-scale community solar can provide potential emissions reductions that are substantially greater than many other technologies and can also provide considerable cost savings for consumers.By reducing air

166、 pollutants from power generation,these technologies can also enable health improvements within communities.19Delivering transformative impact from US green bank financing20Delivering transformative impact from US green bank financingThis analysis shows that through careful design and deployment,ini

167、tial green bank financing can enable substantially greater volumes of overall investment.There are a variety of ways in which green bank financing can support impact beyond initial capitalization,and a range of investment tools and approaches that can be employed(see sidebar“Green banking approaches

168、 to mobilize private investment”).Borrowing against equity or balance sheets can help increase the overall amount of deployable financing,for example,and repayments and other revenues can be reinvested into new lending.Several financing approaches that can help crowd in private investment well above

169、 public financing volumes are also available.Scaling investmentAccording to this modeling,green bank investments can also spur broader market shifts by demonstrating the viability of investment opportunities and helping to bring down real or perceived investment costs and risks for other investors.T

170、he catalytic effect for private investment includes direct mobilization through co-investment in projects that are derisked or enabled by green bank financing tools or technical assistance.But the impact potential goes beyond these specific projects.Green bank investments can identify and validate c

171、ommercial opportunities for other investors and enable early-stage 17 Chiara Broccolini et al.,“Mobilization effects of multilateral development banks,”World Bank Economic Review,May 2021,Volume 35,Number 2.technologies that later develop into viable investments,bringing down risks and costs over ti

172、me through aid for technologies as they mature.Furthermore,green bank investments demonstrate how new financing approaches can work in practice for green technologies and for target customers,including those in low-income and disadvantaged communities.While limited quantified evidence exists of the

173、scale of these broader indirect mobilization effects,estimates that consider the role of public investment in spurring market development in developing and emerging economies suggest that the scale can be substantial.Every dollar of public investment may be able to catalyze$4 in broader private inve

174、stment in the same sector in the year it is invested and up to twice that over three years following the investment.17 This analysis indicates that through ambitious,but achievable,approaches to leverage capital and mobilize investment,$20 billion in initial GHGRF funding could help generate$250 bil

175、lion in total investmentand up to$310 billion if GHGRF recipients can achieve high levels of private mobilization(Exhibit 4).A simplified framework for considering the total mobilization potential of GHGRF green bank financing was considered for the analysis and is based on the following:Balance she

176、et leverage.Raising additional capital on the back of a balance sheet or capital reserves may be able to leverage an additional 50 percent in investment resources over the first ten years of GHGRF-enabled financing.Over time,this could approach leverage levels of large international public lendersar

177、ound$3 of leverage per dollar in assets.Capital recycling.Recycling initial lending through loan redeployment and securitization of loans(selling loans on to other investors)to enable further lending may be able to turn every dollar deployed into nearly$2 in investment over ten years.This would resu

178、lt from a combination of redeploying loan 3.Amplifying impact through strategy and design21Delivering transformative impact from US green bank financingrepayments to new loans and securitizing a portion of loans to expedite additional available lending capital.Private finance mobilization.This is th

179、e use of investment tools and risk mitigation instruments to mobilize private-sector investment at the individual-transaction level.There is a wide range in leverage observed from green bank financing.If GHGRF-enabled financing can match the overall level seen 18 This overall mobilization ratio refl

180、ects total public expenditureincluding a mix of grant finance,loans,and other green bank financing and support approachesand total private co-investment associated with green bank activities.by US green banks,18 it may be able to unlock nearly three additional private dollars for every public dollar

181、 invested.If the funding is designed to build on previous experiences,even greater leverage may be possible,especially in market segments and for technologies that are relatively more profitable.Some green banks and loan funds have seen leverage ratios of$5 and$6 per public dollar.At the same time,G

182、HGRF-enabled financing should be cautious in targeting very high leverage,as Exhibit 4Web GHGRF Impact(Green Banking&US Funding)ReportExhibit of Greenhouse Gas Reduction Fund capitalization of$20 billion could support$250 billion or more in total investment.McKinsey&Company1Greenhouse Gas Reduction

183、Fund.Source:American Green Bank Consortium;Boosting MDBs investing capacity:An independent review of multilateral development banks capital adequacy frameworks,G20 International Financial Architecture Working Group,2022;Chiara Broccolini et al.,“Mobilization efects of multilateral development banks,

184、”World Bank Economic Review,May 2021,Volume 35,Number 2;IMF;McKinsey analysis$20 billionTotal mobilization$250 billion Initial capitalization1.5Balance sheet leveragePossible to leverage an additional 50%in investment resources over the frst ten years of GHGRF1-supported fnancing Multilateral develo

185、pment banks leverage 3x their equity capital,building on decades of investment track record Connecticut Green Bank raised 1.5x its balance sheetTotal leverage and mobilizationTotal investment potential could reach$600 billion including indirect mobilization Total direct investment and direct mobiliz

186、ation range from$250 billion to$310 billion Including indirect mobilization across private investment could double catalyzed investmentCapital recyclingFeasible to redeploy 5-year tenor loans(on average)and securitize 20%of the loan portfolio Green banks in Connecticut,New York,and Washington,DC,hav

187、e an average loan maturity of 7 years Scenario assumes interest and service fees cover loan losses and expenses1.8Private-fnance mobilizationPotential to mobilize 2x3x investment,varying across technologies and the communi-ties targeted American Green Bank Consortium and the Green Finance Institute

188、cite average mobilization ratios of 2.3x3.0 x across banks and programs,or$180 billion Under high-performance matching leaders,leverage ratio of up to 1:5 may be possible for some markets,boosting overall mobilization to$240 billion Substantial indirect mobiliza-tion possible via market cata-lyzatio

189、n,up to 1:4 additional leverage($280 billion)2.6average+=22Delivering transformative impact from US green bank financingGreen banking approaches to mobilize private investmentGreen bank financing can mobilize investment through a range of investment tools.Common approaches and real-world examples of

190、 each are outlined below.Grants.Grant funding is provided without a requirement for repayment through subsidies or rebates and can be particularly effective for assisting the deployment of higher-cost,early-stage technologies or for aiding customers with lower ability to pay.For example,the Rhode Is

191、land Infrastructure Banks Municipal Resilience Program supports municipalities in developing climate resilience strategies and provides grants for implementing climate resilience projects.1 Direct loans and credit enhancement.Loan financingwhether direct lending or partnering with other financial in

192、stitutions through on-lending or credit enhancementis the most common type of financing in green financial institutions and has been widely used to support a range of green investments.For example,the UK Green Investment Bank(GIB)municipal street-lighting program provided municipalities with loans t

193、o upgrade street lighting with more energy-efficient lights.The UK GIB designed the loans fixed rates and terms to match the payback period of the project,providing financing that was better suited to the specifics of green investments.2 Guarantees and derisking tools.Guarantees are a type of risk-h

194、edging method through credit enhancement.They can be provided by many entities to assist private lenders and create incentives for them to invest when they are not confident about a projects financial viability.Various types of guarantees target different forms of risk,including credit,technology,an

195、d political risks.3 Loan loss provisions or offtake agreements can also reduce credit risks linked to defaults or broader market conditions.For example,with almost$12billion in new funding through the Inflation Reduction Act of 2022 and building on funding provided since its establishment in 2005,th

196、e Loan Programs Office,part of the US Department of Energy,provides federal loan guarantees to cover up to 80percent of a qualified projects cost within target themes,including innovative clean energy;advanced-technology-vehicle manufacturing;energy infrastructure on tribal lands;greenhouse-gas capt

197、ure,storage,and use or sequestration;and reinvestment in energy infrastructure that is no longer operational.4 Aggregation and securitization.With aggregation,individual small and medium-size projects are bundled together through techniques such as loan warehousing(originating small assets under a c

198、ommon contract structure).Securitization takes these aggregated assets and turns them into standardized tradeable assets.Aggregation and securitization can reduce transaction costs and open new financing pools for investments in green sectors.5 However,developing and deploying these approaches with

199、suitable oversight and governance to support appropriate transparency and risk management is crucial.For example,the Connecticut Green Bank has aggregated 32 energy efficiency and solar-photovoltaic projects and bundled their collective revenue streams for sale.Using the securitization process,Clean

200、 Funda capital providerpurchased a single class of senior bonds to fund 80 percent of the portfolio purchase price,while the Connecticut Green Bank retained ownership of two tranches of subordinated bonds.After this first transaction,the Connecticut Green Bank attracted further investment through a

201、partnership with Hannon Armstrong to increase the number of projects,which were funded using a special-purpose-vehicle structure.6 1“Municipal Resilience Program,”Rhode Island Infrastructure Bank,accessed November 2022.2 “Low energy streetlighting:Making the switch,”Green Investment Bank,February 20

202、14.3“Loan Guarantee Program 101,”Taxpayers for Common Sense,October 16,2012.4“Inflation Reduction Act of 2022,”US Department of Energy,accessed November 2022.5 Unlocking renewable energy investment:The role of risk mitigation and structured finance,International Renewable Energy Agency,June 2016.6“A

203、ggregation and securitization,”Coalition for Green Capital and Green Bank Network,March 2019.23Delivering transformative impact from US green bank financingcatalytic and additional investment in early-stage technologies or in low-income or disadvantaged communities can be associated with lower priva

204、te co-investment.By spreading GHGRF financing across the portfolio of 11 key technologies,this analysis shows how financing can help realize both substantial climate impact and meaningful investments in disadvantaged communities.Nonetheless,real-world allocation may consider a broad range of factors

205、.In line with the funding allocation proposed by the GHGRF,more than 40 percent of the initial capital allocation is targeted toward disadvantaged communities,chiefly through funding investments in household and community decarbonization technologies.Investments in this market will likely have high

206、additionality because of long-standing barriers to accessing capital and financial services.However,when deciding how to allocate financing across technologies,GHGRF funding recipients will likely consider a wide variety of constraints and objectives.They may establish targets for how investment is

207、split across sectors or technologies or decide to design sector-agnostic financing instruments.Recipients may also face specific constraints on which sectors they can invest in,depending on further EPA guidance.Driving impactBy leveraging initial capital and supporting investment across a portfolio

208、of opportunities,green bank financing can help deliver considerable climate and social impact over ten years,as shown in this analysis(Exhibit 5).Distributing$250 billion in direct and mobilized green bank financing across 11 key technologies can provide and enable significant GHG emission reduction

209、s.Furthermore,deploying these technologies can offer cost savings,job opportunities,and health improvements.Examining these co-benefits offers a more holistic understanding of climate and environmental justice and facilitates prioritization and the targeting of investments.This analysis applies$8.5

210、billion in initial capital to household and community decarbonization to mobilize and leverage$106 billion in total financing.The$4 billion in initial capital for business decarbonization leads to$76 billion in total investment,while the$5.5 billion in initial financing for energy system transformat

211、ion leads to$68 billion in total financing.The analysis reserves$2billion of the initial$20 billion in GHGRF funding for investment-related technical assistance,nonfinancial activities to build markets,job training for new vocations,and the establishment of new subnational green-financing institutio

212、ns.This$250 billion in investment could,according to this analysis,contribute up to one-sixth of the emissions reductions needed over the next ten years on a pathway to net zero by 2050.Community solar,offshore wind,transmission,and fleet depot EV chargers are the largest contributors to emissions r

213、eductions within this portfolio of 11 key technologies.Rooftop solar also plays an important role by enabling potential increased electrification in commercial and industrial use cases.By targeting emissions in the transportation and power generation sectors,which are the greatest contributors to po

214、llution,these technologies can have a consequential impact on helping achieve US climate goals.At this deployment scale,these technologies could help create an estimated 400,000 direct jobs in disadvantaged communities and more than 1.1 million direct jobs in total.These jobs are distributed across

215、the installation and operation of the technologies,along with other functions.Alongside these direct jobs are more than 3.0 million additional indirect jobs created in supply chains and as a result of increased spending.Ensuring employees with the correct skills are in place when needed across value

216、 chains will require coordinating training and apprenticeships with a particular focus on extending opportunities to members of the disadvantaged communities that the investments target.Because many of these technologies are more energy efficient than their GHG-emitting counterparts,households and b

217、usinesses in disadvantaged communities could benefit from$30 billion in direct cost savings in the medium 24Delivering transformative impact from US green bank financingDistributing$250 billion in direct and mobilized green bank financing across 11 key technologies can provide and enable significant

218、 GHG emission reductions.Furthermore,deploying these technologies can offer cost savings,job opportunities,and health improvements.25Delivering transformative impact from US green bank financingand long term.An additional$20 billion in indirect fuel cost savings could also be realized from EV invest

219、ment enabled by the investment in fleet depot infrastructure.This estimation of lifetime cost savings between technologies considers capital costs,operation and maintenance costs,and fuel costs.It is therefore heavily dependent on forecasts of future energy prices.For example,comparing the cost of i

220、nstalling and running a heat pump with the cost of a natural-gas furnace over product lifetimes requires forecasting electricity and natural-gas prices.These prices can vary substantially depending on future supply,demand,and policies.Considering additional policy benefits,such as IRA tax credits,re

221、veals potential cost savings that can accrue to consumers and businesses from the deployment of these technologies.Exhibit 5Web GHGRF Impact(Green Banking&US Funding)ReportExhibit of Strategically deploying capital can increase social and economic impact while maintaining high overall emissions redu

222、ctions.McKinsey&CompanyAssuming$250 billion in capital deployed1Includes battery storage.2Electric-vehicle.3Enables emissions reductions and cost savings.4DAC is disadvantaged communities.K is thousand,M is million,HH is households,TJ is terajoules,GW is gigawatts,GW/km is gigawatts per kilometer,an

223、d GWh is gigawatt hours.5Metric megatons of CO2.6Direct jobs.7IRA incentives are included in calculations(except for cost estimates of feet depot electric-vehicle charger cost estimates).8For energy storage,the health impact for reducing fossil-fuel peaker plants is high in the surrounding area of t

224、he plants.9Cost and emissions reductions are from heating,not cooling.Disadvantaged communitiesRest of populationHousehold and community decarbonizationResidential rooftop solar1Residential heat pumpsHeat pump water heatersCommunity solarBusiness decarbonization Commercial heat pumpsCommercial rooft

225、op solar1Fleet depot EV2 chargers3Energy system transformationTransmission3Ofshore windEnergy storage1Coal conversionHealth improvements8Jobs supported,6 thousandsCost savings,7$millionsN/AN/AN/A709886451909030,0004,00013,00097,5003,400832,00N/A12,000Total capital allocation,$billion23522

226、01928CumulativeGHGreduction,MtCO25174922530.385449551853195365Deployment,4 DAC vs totalHH:800KHH:6.5MHH:4.0M HH:1.2M GW/km:10GW:2.5GWh:27GW:12TJ:110 GW:9 115K95,00031.6M13.0M8.0M16.4M38029600KDelivering transformative impact from US green bank financingGreen technologies genera

227、te lower(or even zero)emissions of NH3,NOx,PM2.5,SO2,and VOCs19 than incumbent emitting technologies.These air pollutants are linked to a variety of cardiac and respiratory diseases.Based on this reports analysis,the large-scale replacement of polluting technologies with the air-pollution-reducing t

228、echnologies in this portfolio could have consequential effects on health over a decade.Lives saved through reductions in adult and infant mortality,for example,could total approximately 24,000.Hospital admissions for respiratory and cardiovascular conditions could decrease by 19 Ammonia,nitrogen oxi

229、des,particulate matter,sulfur dioxide,and volatile organic compounds.approximately 15,000,while incidences of asthma exacerbation could fall by approximately 400,000.These reductions are in addition to declines in incidences of other illnesses attributable to lower emissions of harmful air pollutant

230、s.By reducing the incidence of these diseases through pollution mitigation,the deployment of technologies that reduce emissions can help improve community health and,consequently,decrease the number of workdays missed by 1.9 million.27Delivering transformative impact from US green bank financingDeli

231、vering transformative impact from US green bank financing28To help realize impact potential on the scale indicated in this analysis,GHGRF-enabled green bank financing would need to be effectively programmed and deployed.If well deployed using a coherent national approach,GHGRF-enabled financing(in c

232、onjunction with the broader IRA,other national and subnational public financing programs,and private-market actors)could play a pivotal role in creating a more inclusive path to net zero.Realizing impact will also require careful governance and management to avoid the mismanagement of funds,to reduc

233、e frictions or waste,and to manage the risk of fraudall of which could divert funding from its intended goal and reduce the impact potential of GHGRF support.In our estimation,five key impact principles that draw upon green bank experiences should be considered to help fulfill this potential.20 Revi

234、ewing these principles offers an opportunity to reflect on the mission of the GHGRF while considering some concrete examples of making the most of publicly funded investment.20 An earlier version of this chapter appeared in Sustainability Blog,“Principles to catalyze impact from green bank financing

235、,”blog entry by Ana Barbedo,Jason Eis,Nick Kingsmill,and Cindy Levy,McKinsey,December 4,2022.21 Michael Goggin,Rob Gramlich,and Michael Skelly,Transmission projects ready to go:Plugging into Americas untapped renewable resources,Americans for a Clean Energy Grid,April 2019.1.Target investment based

236、on measurable impact potentialThis analysis illustrates that defining comparable impact metrics and smartly targeting financing to achieve emissions reductions and equitable environmental-justice goals can amplify the effectiveness of financial support.For GHGRF recipients,these impact metrics can s

237、erve as explicit performance indicators to inform capital allocation decisions across technologies and communities.There may be trade-offs between different goals within individual investment opportunities,but by targeting multiple goals in aggregate across the portfolio of investments identified,GH

238、GRF funding can help achieve beneficial outcomes.Targeting financing to technologies and communities with the greatest potential for emissions reductions could mean addressing region-specific challenges.Decarbonizing older buildings in the Northeast and decarbonizing coal-dependent power production

239、in the Northeast and Midwest are just two examples of such projects.Other targets for financing could include technologies such as transportation electrification,which enables sectorwide transformation and is needed across the country.Coordinating and enabling cross-state projects that may particula

240、rly benefit from at-scale capital,such as deploying transmission lines needed to deploy renewables,is yet another potential target for financing.21 Disadvantaged communities bear outsize climate burdens,face specific investment challenges,and are particularly underserved by traditional financial 4.P

241、rinciples for deploying green bank financing29Delivering transformative impact from US green bank financinginstitutions.22 In these communities,financing could be targeted toward funding for explicit allocation objectives,such as Clevelands GO Green Energy Fund,which targets low-income communities.2

242、3 Alternatively,financing could target the propagation of replicable investment models,such as the Solar for All programs in many US states that help low-and middle-income households install solar power.24 2.Gain optimal leverage of private capital from GHGRF fundingDeploying initial funding using f

243、inancing expertise to generate appropriate and responsible leverage can help increase the overall capital deployed as well as its impact,this analysis shows.Private cofinancing,capital recycling,and a well-balanced portfolio can all help foster investment at greater scales.Striking the right balance

244、 of targeting private-sector leverage,additionality,and impact for beneficiaries will be important for achieving overall GHGRF goals.Optimal leverage can vary based on technology maturity,community needs,and the availability of complementary grant-based programs.In addition,lower leverage ratios may

245、 be likely when investing in less established technologies or disadvantaged communities.Financing approaches may also need to balance short-term private leverage against longer-term market catalyzation goals.Strategic use of co-investment and risk-reducing instruments(such as guarantees)to help dire

246、ctly crowd in private investment could include a range of risk mitigation strategies.Concessional terms for unsecured lending and underwriting real or perceived risks in the absence of a market track record are two possible strategies.For example,in 2020,US green banks mobilized$1.7 billion in total

247、 22 Climate change and social vulnerability in the United States:A focus on six impacts,EPA,September 2021.23 Peter Krouse,“Cleveland-based green bank in line for federal dollars to fight climate change in disadvantaged communities,”C,August 24,2022.24 For more,see“Solar for All,”New York State,acce

248、ssed March 6,2023;“Solar for All,”Washington,DC,Department of Energy&Environment,accessed March 6,2023;“Illinois Solar for All,”Elevate,accessed March 6,2023.25 Green banks in the United States:2021 U.S.green bank annual industry report,American Green Bank Consortium and Coalition for Green Capital,

249、May 2021.26“GEMS(Green Energy Market Securitization)Program frequently asked questions,”Hawaii State Energy Office,November 2014.27 CEFC Investment Policies,Clean Energy Finance Corporation,April 2021.clean-energy investments using$440 million of their own financing.25 Efficient capital management a

250、nd securitization of loans(for sale to private partners)can help free up capital for new lending.Capital management,for example,can minimize undeployed capital and facilitate the aggregation and securitization of smaller loans.Such programs and tactics can also pave the way for future securitization

251、s in that asset class after scale is reached.The Hawaii Green Infrastructure Authoritys Green Energy Market Securitization Program,which reduces the cost of clean-energy loans to consumers through a rate reduction bond structure,is one real-world example of this approach.26 Balancing less risky inve

252、stments against riskier ones within a portfolio can help promote financial stability while bolstering early-stage and emerging technologies and disadvantaged communities.A balanced approach can potentially enable debt issuance while affording room for lower returns or higher losses in some segments

253、of the portfolio.One application of this approach is the lending portfolio of Australias Clean Energy Finance Corporation,which includes commercial-rate senior loans whose proceeds are used expressly to cross-subsidize other concessional-rate lending programs.27 3.Catalyze markets at scale by flexib

254、ly deploying a mix of financing approachesDisciplined investment approaches that incorporate continual market feedback and strategic review and learning from and adjusting to changing conditions and market needs can help realize high additionality from GHGRF support.By focusing on innovative and lea

255、ding investment approaches,deploying 30Delivering transformative impact from US green bank financingspecialized knowledge,and removing specific barriers to private financing,this financing can also help create more favorable conditions for pure private financing in the medium and long term.Using spe

256、cific financing approaches can help alleviate technology-specific challenges,which can include technology performance risks,construction and operational cost risks,lack of liquidity,regulatory uncertainty,and market immaturity.The UK Green Investment Bank,for example,invested in a series of offshore

257、 wind projects across key stages in the deployment journey to tackle a broad set of evolving risks,accelerating competitive private financing of the sector.28 Certain approaches can help disadvantaged communities overcome a range of barriers to accessing finance.Barriers related to credit history,fo

258、r example,can include lack of collateral,mismatches between ability to pay and investment costs,and small ticket size.Various state and local green banks assist the rollout of residential solar panels with on-bill payments rather than traditional loans,for example,and have used targeted funding to b

259、ring down the costs of technology or borrowing.29 Employing systematic learning and flexibility in how financing is allocated can aid reprioritization of investment toward approaches with the greatest demonstrated impact and need for additional public support.This involves ending financing where the

260、 private sector has stepped in.In 2015,for example,the Connecticut Green Bank withdrew direct-investment assistance for commercial property assessed clean energy(C-PACE)as the market matured and private investors filled the banks role.30 Sharing lessons around investment performance and where differ

261、ent financing approaches are successful could contribute to learning across 28 The Green Investment Bank,National Audit Office,December 12,2017;The role and impact of the EIB and GIB on UK infrastructure investment,Vivid Economics,May 2018.29“Clean energy finance:On-bill programs,”EPA,September 2019

262、.30“Greenworks Lendinga financier of commercial property assessed clean energy(C-PACE)loansannounced that it has closed four C-PACE transactions totaling$1 million,”PACENation,August 31,2015.31“Webinar series:Unlocking clean energy investment in the commercial and industrial sectors,”Green Bank Netw

263、ork,June 2018.32 Audit of the Community Development Financial Institutions Funds financial statements for fiscal years 2021 and 2020,US Department of the Treasury Office of Inspector General,December 15,2021.the green-investment community,enable further market development,and foster greater overall

264、levels of private investment.4.Galvanize a distributed financing network aligned with a national visionDrawing on local knowledge and expertise in existing institutions,coordinating best practices,and building publicly available resources to reach customers and accelerate demand can aid the effectiv

265、e deployment of key technologies,especially to disadvantaged communities.Working directly or in partnership with local institutions and intermediaries that have established relationships with end customers and supply chains could involve local community development financial institutions(CDFIs)as we

266、ll as commercial financial institutions and businesses.Building demand will require a range of interventions,such as grants or other funding for customer engagement and awareness building.For example,local green banks such as Michigan Saves have long-standing relationships with local contractor netw

267、orks,landowners,and credit unions;they have also garnered community trust and have accumulated experience driving deal flow.31 Options to build skills and knowledge across local ecosystems to help increase their effectiveness could include standardized green-financing procedures and documents,replic

268、able supplier agreements,and common metrics and technology infrastructure to monitor and evaluate impact.For example,the CDFI Fund provides financial awards for technical assistance of up to$125,000 to build the capacity of CDFIs through hiring,training,and other activities.32 31Delivering transform

269、ative impact from US green bank financing5.Mobilize GHGRF funding quickly through a range of established mechanismsRapidly deploying GHGRF funding can jump-start investment and accelerate the learning-by-doing needed to propel market transformation.Expeditiously defining robust criteria and guidance

270、 for targeting and disbursing those funds can help facilitate effective mobilization while ensuring communities that need more time to roll out investment at scale are not left behind.One way to expedite mobilization is to focus funding initially on more advanced technologies and on helping existing

271、 intermediaries fund established pipelines of projects.In 2021,its first year of operation,the UK Infrastructure Bank focused investment on a mix of direct project lending and cornerstone investment in smaller funds that were ready to receive capital.33 In the United States,33 Strategic plan,UK Infr

272、astructure Bank,June 2022.34“About GEFF,”European Bank for Reconstruction and Development and Green Energy Financing Facility,accessed November 29,2022.alongside broader IRA incentive programs,green bank financing could potentially mobilize an array of intermediaries,such as retailers with existing

273、customer campaigns.Offering funding commitments,such as lines of credit or conditional grants,can enable partner intermediaries to advance financing opportunities promptly without tying up capital before projects are ready for financing.Various multilateral development banks have built finance facil

274、ities in the past two decades,demonstrating the capacity for such facilities to mobilize a sizable network relatively quickly.For example,the Green Economy Finance Facility(part of the European Bank for Reconstruction and Development)reaches more than 140 local financial institutions across 26countr

275、ies.34 32Delivering transformative impact from US green bank financingBy including environmental-justice objectives in the GHGRF and setting the net-zero deadline for 2050,the United States has set the stage for investors to expand the potential of green bank financing with bold yet balanced and del

276、iberate tactics.Climate transition and equity in the distribution of its benefits is an essential mission that calls for heavy reliance on specialized knowledge,proven approaches,and scrupulous assessment and reflection.This report provides estimates for possible impact from GHGRF green bank financi

277、ng based on an analysis of a specific set of technologies and parameters.The analysis illustrates the strong potential for green bank financing to accomplish climate goals and spark wider-ranging private investment and publicprivate collaborations in the United States.It also acknowledges the need f

278、or flexibility and agility to maintain progress in the face of anticipated and unforeseen circumstances and events.An approach that balances the potentially competing interests of increasing investment leverage,serving disadvantaged communities,and reducing GHG emissions is the ideal.However,the rea

279、l-world outcomes of that approach will almost certainly involve compromises as new systems and markets evolve and priorities and needs adapt.Progress never occurs in a straight line.Nonetheless,given the potential shown in this analysis for green bank financing to help realize cost savings for busin

280、esses and energy consumers,decarbonize US power systems,create jobs,and engender lasting social,health,economic,and environmental benefits in disadvantaged communities,there is tremendous promise in the paradigm.33Delivering transformative impact from US green bank financingApril 2023McK McKinsey McKinsey