Gov. Maura Healey has announced the launch of the Massachusetts Community Climate Bank, the nation’s first green bank dedicated to affordable housing.
This landmark initiative, seeded with $50 million in state funds from the Department of Environmental Protection, is designed to maximize investment in the reduction of greenhouse gas emissions from the building sector.
One of the Climate Bank’s primary goals is to attract private sector capital and federal funds available under the Inflation Reduction Act to finance building retrofits aligned with the state’s long-term climate objectives and new construction of decarbonized buildings. The bank will focus on the affordable housing market, where residents bear a disproportionate burden in energy costs and climate impacts, to promote an equitable energy transition and to meet the needs of environmental justice populations. Over time, the bank will diversify investments to include other decarbonization measures that benefit communities.
The Massachusetts Community Climate Bank is located within MassHousing, the state’s affordable housing finance and investment bank. Massachusetts is the first in the nation to locate its Climate Bank within its Housing Finance Agency and to focus its strategy on affordable housing. The Climate Bank will work in partnership with the Massachusetts Clean Energy Center (MassCEC) and MassDevelopment. This collaboration will ensure that each entity’s capabilities are leveraged to support the identification, development, financing and execution of clean energy projects, beginning with the affordable housing sector.
“The Massachusetts Community Climate Bank will be our financial engine for moving forward on our climate goals, relieving the pressure of high housing costs, and creating good jobs and healthier communities,” said Healey. “This first-of-its kind initiative is going to make our state more competitive, affordable, and equitable – and it’s going to show that in Massachusetts, we can lead the world by leading with our values and leaving no community behind. We’re grateful to our partners at MassHousing, MassCEC, MassDevelopment, our Congressional delegation, the Legislature, the City of Boston and the Boston Green Ribbon Commission for their collaboration to make the Massachusetts Community Climate Bank a reality.”
“The Massachusetts Community Climate Bank has enormous potential,” said Lt. Gov. Kim Driscoll. “It can support deep energy retrofits and investments in energy efficiency technologies, eliminating emissions and cutting residents’ energy costs for years to come. It can help nonprofit developers access capital that makes net-zero development possible, serving hundreds of families. It can help the state rehab and retrofit older affordable housing that’s in need of repair by getting access to new federal climate funds. Each step of the way, it’ll power our mission to make Massachusetts the world’s climate leader by bringing all the benefits of a green and resilient economy to all the people of our state.”
“Decarbonizing the Commonwealth’s housing stock is a critical component of our work to build cleaner, healthier communities, while meeting our ambitious climate goals,” saidMassHousing Executive Director Chrystal Kornegay. “The Massachusetts Community Climate Bank will allow us to pursue this important work at scale, accelerating our progress toward a net zero future, and centering equity for low- and moderate-income households and Environmental Justice communities.”
Low- to moderate-income residents tend to pay a disproportionate share of their income on energy costs, have less control of their residences and have fewer resources to invest in measures that will reduce their emissions and control their energy bills. The Climate Bank expects to provide low-cost capital and innovative deal structures to integrate clean energy and efficient technologies into affordable housing development and preservation and mortgage products for home improvements.
The Climate Bank will accelerate the pace and deepen the impact of building decarbonization projects by lending directly to building owners and by attracting and de-risking lending and investment by private lenders through innovative finance products. It expects to integrate clean energy into MassHousing’s lending for affordable housing, create programs for similar affordable housing projects, and engage capital markets more broadly to invest in affordable housing decarbonization.
The Climate Bank aims to take advantage of the periodic cycle of affordable housing refinance to finance heat pumps, building envelopes (i.e., efficiency upgrades to windows and walls), heat pump water heaters, high-efficiency appliances, and solar panels as a part of the same process as other affordable housing renovation measures.
The Climate Bank will also position Massachusetts to compete for funding from the National Clean Investment Fund under the Inflation Reduction Act and to anchor engagement with other federal finance opportunities, such as the United States Department of Energy Loan Program Office, both key elements of the Biden Administration’s initiative to advance a just energy transition focused on equity and environmental justice.
In Massachusetts, the building sector is responsible for over a quarter of total greenhouse gas emissions. In Massachusetts cities, where many environmental justice populations live, buildings can be responsible for as much as 70 percent of total greenhouse gas emissions. Unlike cars, buildings last for decades, making the need to retrofit existing buildings especially important to achieve statewide decarbonization goals. According to the 2050 Massachusetts Roadmap report, over 80 percent of the buildings that will exist in 2050 are already built.
Massachusetts’ Clean Energy and Climate Plan calls for a 49 percent reduction in greenhouse gas emissions from residential heating by 2030, and a 95 percent reduction by 2050. The Massachusetts Community Climate Bank is an integral part of the strategy to achieve these emissions reductions.