Money is the lifeblood of the economy. Where money flows, economic muscle grows. Money, like energy, is essential to human survival on this planet. No nation knows this as well as the United States, especially considering 2020’s $21 trillion in gross domestic product.
Moreover, concluded in the latest IPCC report on climate change, the survival of the human race is in dire jeopardy, especially as the world continues to run the biggest atmospheric “doping” scandal of all time. In the midst of this pickle, the report provides a glimmer of hope: “The science is clear that if emissions are slashed then temperatures will stop rising in a decade or two and the increases in deadly extreme events will be strongly limited,” writes the report’s authors.
The United States, with about 4 percent of the world’s population, has consistently consumed 25 percent of the world’s energy. As of 2020, merely 12 percent of total U.S. energy consumption stemmed from renewable energy sources; that explains the annual whopping 6.6 million metric tons of carbon dioxide equivalent (CO2e) emissions.
Clearly, more than ever, it is the imperative of the U.S. to rapidly deploy renewables in the race to a zero-emission economy. Can U.S. investors and consumers flex their money muscles to help save the world?
Progressive finance, as defined by Keith Mestrich and Mark Pinsky, relies on a balance of public and private gains based on public and private risk sharing. This contrasts conservative finance as it aims to leverage private gains off public risk sharing. Progressive finance is a path that can result in a positive impact on investors; consumers alike could follow to ensure an equitable and inclusive transition to renewables. As the authors’ write, “The ways we choose to organize money tells others about us. And we learn about ourselves.”
Investors and consumers have the potential to make the renewable transition a just one, but there will be a long road ahead.
Over the past decade large U.S. banks have fled from rural as well as low- and moderate-income (LMI) communities. Local residents are left to deal with this blow as these closings mean sharp declines in local business lending.
The act of closing the doors on rural and LMI communities is a trend that is also reflected within the growing U.S. solar market. When renewable power investments are left in the hands of a few large institutional investors, solar “redlining” begins to occur. Solar redlining occurs when community-based projects are overlooked for utility-scale projects. This trend excludes the majority of U.S. communities, especially communities of color. A renewable power system of “haves” and “have nots” is boiling to a head, further dividing the nation with racial and economic lines.
Provided federal tax incentives, well-paid organizations and individuals benefit tremendously from investing in solar projects. Coupling a dollar for dollar tax credit and accelerated depreciation deductions, taxpayers are capable of investing in a revenue generating (solar) asset with nearly 50 percent of their investment earned back in year one. This is such a sweet deal that only few banks, corporations and individuals can take advantage of. However, these incentives are leading to exclusive projects often found in, predictably, exclusive neighborhoods. How can the majority of individuals contribute and benefit to an energy grid powered by renewables? For starters, investors and consumers can look towards community solar.
Over the past few years across the U.S., community solar has started to thrive. These projects energize the homes of many, from renters to small business owners to farmers. Customers who participate in these programs earn credits on their utility bills, all the while supporting the production of renewables. Community solar is an innovative practice that brings energy savings and paves the way for a just energy transition while including those who may not have the capabilities to install solar panels on their respective rooftops. For LMI residents, even the slightest of energy savings go a long way. The reality is, many residents are unaware of the savings and whether or not they qualify. Click here to find out.
Through community solar, corporations, community banks and high-net worth individuals can help invest in underserved neighborhoods. Starbucks, for example, announced the completion of a multi-year community solar plan in New York State, generating up to 90 megawatts of capacity. Starbucks announced, “The projects are expected to supply solar energy for local Starbucks stores and up to 24,000 households, small businesses, nonprofits, churches, universities and stores in multiple geographies.
Leveraging the financial tools, regulations, and wallets can help grow a resilient and equitable energy market across the entire country. Wealthy or not, there are ways to contribute. Community development financial institutions (CDFI’s) harness individuals’ savings and help to revive economic life into underserved communities. City First Broadway, a black owned CDFI that serves five states, does just that.
As already mentioned, high-income earners, corporations and banks of all kinds can take advantage of federal incentives while receiving steady flows of cash over-time. Now, with new innovative business models, all communities can benefit in the process. Sunwealth, a clean-energy investment firm, is one example for a company that provides the opportunity to profit off of clean energy projects while generating meaningful returns for communities. Partnerships between the government, investors, businesses, and community members can result in projects like the 1.8 megawatts of rooftop solar installed in Queens, New York.
Avoiding an exclusive energy transition that only benefits the few is one that behooves citizens to take action for a myriad of reasons. Think of this effect similar to a gym-rat who only hammers bicep curls; the muscles becomes lopsided. When investments in renewables flow to only a few parts of the economy, it is easy to see the effects of a poorly planned transition, especially one that overlooks he ordinary working class families. No matter the size of our wallet, we can all act accordingly as we prioritize our investments, savings and spending. If we do this with a long-term impact for everyone in mind; we’ll all be stronger in the end.
Image credit: Pixabay