Need for Renewable Financing

Matt Yglesias? makes the pitch for a Green Bank. For inspiration, look no farther than KfW Construction Bank in Germany. Setup by the US as part of the Marshall Plan to help finance reconstruction following WWII, KfW has become the preeminent green bank in Germany, providing cheap financing to local German banks (and even large multi-nationals) for the purpose of financing green energy projects (Germany's EEG is among the best designed and most effective green energy subsidy programs worldwide).

When the credit markets imploded, putting the squeeze on green energy project finance, KfW increased the size of project they were willing to finance in an attempt to restart the market.

In theory, the US DoT Grant program (created as part of the stimulus) would provide something similar, acting as a mechanism to turn tax credits (or totally inefficient and favorite way to finance crap) into upfront payments. The problem is that each project will need to apply for grants individually...hello bureaucracy.

The beauty of the KfW is that it gives the local banks the ability to finance local projects, using cheap local federal financing to do so.

Of course, all of this is too obvious, so we will probably never do anything like it.