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Sustainable Finance

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We facilitate forward-looking, durable finance solutions for U.S.-based and international climate and environmental objectives through in-depth policy analysis, research, and consulting.

Solutions to accelerate the flow of capital toward climate-resilient investments

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As CEO, Trenton navigates the strategic direction of SCA while continuing to provide clients with subject-matter expertise on the ins and outs of executing sustainable infrastructure projects. Trenton’s long-standing and vast experience in the financial services industry allows him to identify the parties and partners best suited for collaboration to create a more profitable, inclusive, and climate-resilient future.

Trenton Allen

<blockquote class="wp-block-quote">&#8220;If the current trends persist, communities across the West will have to make very difficult decisions related to not only electricity production and water availability but the economic challenge of replacing these much-needed life resources as well.&#8221;<cite>Trenton Allen</cite></blockquote>

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Expert Voices: Sustainable Capital Advisors’ Trenton Allen

<blockquote class="wp-block-quote">“We can deploy a significant amount of capital to existing sustainable technologies. I believe that there are structures that could accommodate those, so you can get the return and have the right counterparties. We’ve done it before in other markets, we can do it again.&#8221;<cite>Trenton Allen</cite></blockquote>

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Green financing is flooding climate-focused sectors

<blockquote class="wp-block-quote">&#8220;[The important thing for an investor potentially interested in renewable energy projects is to] always go back to thinking about what it is that you’re trying to achieve [and to] be mindful of that goal in regards to the dollars that you’re looking to deploy, then try to align that with the companies and other financial products that exist.”<cite>Trenton Allen</cite></blockquote>

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Pros and Cons of Investing in Renewable Energy

<blockquote class="wp-block-quote">&#8220;Green financing has always existed in some respects, such as when municipalities would issue bonds for storm water remediation. What’s different now is, under the green-bond structure, investors can isolate and track the environmental component of the proceeds’ use adding that by offering green bonds, issuers might be able to increase their investor base, and perhaps demand for their particular bonds, which may reduce their overall funding costs.&#8221;<cite>Trenton Allen</cite></blockquote>

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Understanding Green Bonds

<h2 class="has-medium-font-size" id="summary">Summary</h2>



The building industry is transforming as energy efficiency, lower maintenance costs, and green technologies create safer, healthier, more productive work environments. My guest today, Trenton Allen, Managing Director &amp; CEO of Sustainable Capital Advisors, explains how Public and private partnerships are driving $300 billion in sustainable urban infrastructure opportunities over the next 5 years. Allen has recently been appointed to the Secretary of Energy Advisory Board, which provides advice and recommendations to the U.S. Secretary of Energy. He and I talk about the incredible impact this kind of development will have in driving economic development across the U.S., like providing thousands of jobs in sustainable construction and retrofits as well as maintenance and operations. Allen explains some of the financial mechanisms that are used, like tax credits, cash in lieu of grants, and direct capital investment.

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As CEO, Trenton navigates the strategic direction of SCA while continuing to provide clients with subject-matter expertise on the ins and outs of executing sustainable infrastructure projects. Trenton’s long-standing and vast experience in the financial services industry allows him to identify the parties and partners that are best suited for collaboration to create a more profitable, inclusive, and climate-resilient future. 

Paul is a nationally recognized expert on sustainable investing, and the host of the popular Sustainable Finance Podcast, a weekly program featuring conversations with thought leaders in the field. His guests include cleantech entrepreneurs and VC investors; CEOs leading the low-carbon economy transition; creators of the ESG indices and analytics platforms everyone is using; and NGO executives bridging the public/private partnership funding chasm through digital banking and blockchain-based technologies.

Sustainable Finance Podcast

Public & Private Partnerships Drive $300B in Sustainable Infrastructure

<h2 class="has-medium-font-size" id="summary">Summary</h2>



The Experts Only Podcast explores solutions to climate change by talking to industry leaders about the intersection of energy, innovation, and finance.

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Host Jon Powers interviews the world’s foremost experts on climate solutions through the lens of  energy, innovation, and finance.

Experts Only

Episode #101

As Senior Vice President, Victor leverages his experience across the public, private and not-for-profit sectors to deliver policy, capital markets advisory and financial structuring expertise to advance climate change and environmental justice efforts.

Victor Rojas

<blockquote class="wp-block-quote">&#8220;Climate First, which has $52 million of assets, has yet to make a loan under the brand-new program, but it’s currently in talks with potentially interested parties, LaRoe said.One of the main challenges for financial institutions that develop similar programs will be finding ways to measure and verify the impact of their financing activities, said Victor Rojas, a senior vice president at the consulting firm Sustainable Capital Advisors. Still, he believes the idea of climate adaptation financing is gaining momentum.&#8221;<cite>Laura Felix, Staff Writer at American Banker</cite></blockquote>

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One bank’s response to climate change: Financing condo retrofits

<blockquote class="wp-block-quote">&#8220;DOE is laser-focused on its core missions of delivering climate change solutions, strengthening our Nation’s nuclear security, and managing our agency’s environmental legacy. I am enthused to welcome these stellar individuals to the SEAB. Their deep and diverse expertise will advise DOE on its core missions and will help steer our efforts to supercharge the clean energy revolution.&#8221; <cite>Secretary Jennifer Granholm</cite></blockquote>

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Trenton Allen appointed to the U.S. Department of Energy (DOE) SEAB

<blockquote class="wp-block-quote">&#8220;It is a rare occurrence when the public health crisis from which we are slowly emerging, the climate crisis on which we appear to be finally focusing and the economic recovery which we are all intent in fostering intersect in such a dynamic manner…Units of government at every level are required to do more with less, fully leveraging scarce amounts of public capital and crafting financing tools and non-financial policy supports that can animate engagement of the private capital that will be required to address critical issues of climate change, environmental justice and resilience.&#8221;<cite>Victor Rojas</cite></blockquote>

Power Moves: CleanChoice Energy CTO Anthony Hoang hopes to use tech to boost decarbonization in the District

<blockquote class="wp-block-quote">&#8220;The sustainability data is used primarily for internal use to make the investment case, to reduce energy costs. But then you’ll see capital markets providing funding for increased energy efficiency. Data, both historical and real time, can help really establish this market.&#8221;<cite>Trenton Allen</cite></blockquote>

Tomorrow’s Sustainable Buildings Need Today’s Staff To Get Schooled

<blockquote class="wp-block-quote">&#8220;Getting a market-rate return is something impact investors are comfortable with, but a lower return makes it harder to attract enough investors. It&#8217;s not impossible but you’re narrowing the number of investors you have access to.&#8221;<cite>Trenton Allen</cite></blockquote>

An Argument for Investing Where the Return Is Social Change

Beverly Chan

As the world’s top polluting country embarks on a green revolution, its bold environmental commitments are placing it on the forefront of climate action. Already the largest producer and exporter of renewable technologies including solar panels, wind turbines and electric vehicles, China is sprinting to lead on sustainable finance—but on its own terms. In only 5 years, China has created the world’s largest carbon trading exchange, accelerated issuance of green bonds, and spurred innovative mechanisms to structure its own sustainable finance model, by launching national and local policies aimed at developing a green financial system. However, there are still many gaps to fill in China’s green schemes; especially when it comes to attracting international investors, getting foreign governments on board with their plans, and alleviating global concerns with its Belt-Road Initiative (BRI).



In its ambitious efforts to reverse the environmental destruction caused by decades of unbridled economic growth, China pushed forward an official mandate in 2015 to include a green finance system into its five-year strategic plan. As such, China has become the first in the world to release a broad framework for green finance policy. By producing a national roadmap for reform involving financial and environmental stakeholders in China’s governance systems, the central government has been successful in directing large flows of public and private capital into sustainable infrastructure projects. For example, in 2016, China became the world’s largest issuer of green bonds, issuing 40% of global green bonds worth $32.4 billion. Similarly, in 2017, China announced the launch of its carbon trading market, which aims to cover 8 billion tons of CO2 emissions—making it the biggest in the world. The carbon trading market has an initial focus on the coal-fired power industry, with the first trade expected in 2020. To prepare for the national launch, policymakers developed pilot trading platforms across seven regions (including: Beijing, Guangdong, Shanghai, Hubei, Chongqing, Shenzhen and Tianjin), which guided the design and roll out of the national market. The central government also set up five additional pilot zones to promote green finance on the local level by experimenting with different mechanisms and models. In Zhejiang, for example, the city of Huzhou pioneered a tech platform for green finance that, along with other credit policy incentives, increased its green credit volume 9% higher than the national average of 13%.



Despite the progress, however, observers identify significant hurdles that hold back China’s greenhouse gas (GHG) emissions reductions. A major point of contention lies in China’s varying standards of green finance. According to Climate Bonds Initiative, only $31.2 billion of the $42.8 billion of Chinese green bonds from last year met global guidelines for climate-friendly investing – as most of the international community do not view “clean coal” as a sustainable investment. This lack of harmonization will hinder foreign direct investments (FDI) into China, especially as many international financiers are reducing their coal portfolio.



China also lacks a national consensus in defining green projects. As bureaus and departments on varying levels of government hold different standards for categories such as sustainable agriculture and green technology, the effort to mainstream the green finance movement in China is hindered. Until China’s financial regulatory bodies release further uniformed measures, it will be difficult and more costly to identify green projects.



Furthermore, countries like the U.S. are deeply concerned with China’s involvement in financing fossil fuel projects under BRI, namely coal. So far, most Chinese funding for BRI infrastructure have gone towards fossil fuel. From 2014 to 2017, China Development Bank and China Eximbank invested $37 billion in fossil fuel projects overseas, totaling 61% of BRI energy projects financed exclusively by the two largest Chinese lending institutions. And of the $25 billion in syndicated BRI loans from Chinese banks in the same period, 54% ($14 billion) was used to finance fossil fuel projects including coal, oil, and gas, while only 30% ($9.1 billion) was used for renewable energy. With another $14.6 billion proposed for coal projects, China’s financing activity for coal-fired capacity overseas continues to raise concerns over its green finance agenda.



China has made a valiant head start in the move towards greening its financial system. However, tensions between China’s green finance initiatives and its foreign loan portfolio present key challenges to mobilizing foreign investments and global support for its sustainability efforts. To continue leading in sustainable achievements, a standardized, official, classification system for green projects is needed along with harmonizing foreign energy investments with domestic policies. Establishing such rules and regulations to enforce environmental criteria will go a long way in strengthening China’s new green finance mechanisms and attracting international investors.

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Taking stock of China’s approach to sustainable finance

Grace Boroughs

In the context of climate change, the war over the future of electricity generation has long been about coal. Yet, as coal continues to be phased out—due to uneconomical and ageing infrastructure—the time has come for the debate to shift toward natural gas. This less carbon-intensive fossil fuel is often touted as the “next best” thing in the United States. But even though natural gas has moved U.S. part way toward lower carbon emissions, it is now in the way of a deeply decarbonized future.



Though often skewed by subsidies, energy investments follow economics. This is why less profitable coal plants have steadily closed, despite the recent federal&nbsp;<a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/52794479?utm_source=Sailthru&amp;utm_medium=email&amp;utm_campaign=Issue:%202019-07-17%20Utility%20Dive%20Newsletter%20%5Bissue:21936%5D&amp;utm_term=Utility%20Dive">rollback</a>&nbsp;of emissions regulations. In a recent interview with UtilityDive.com, a Duke Energy spokesperson said, “As we retire old coal, in most cases we will replace that with natural gas.” Consequently, utilities’ sustainability plans appear to show great progress on the path to carbon-free electricity.



But rather than serving as a bridge to an even lower carbon future, natural gas investments are locking us into a fossil fuel infrastructure that is costly for both consumers and the environment. Since 2017 utility decarbonization commitments have slowed and investments in natural gas-fed infrastructure with 30-to-40-year life spans<a href="https://www.nytimes.com/2019/06/26/climate/natural-gas-renewables-fight.html">&nbsp;have increased</a>. The U.S. Energy Information Administration<a href="https://www.eia.gov/todayinenergy/detail.php?id=34612">&nbsp;predicts</a>&nbsp;that natural gas will continue to be the dominant electricity source into the foreseeable future. The&nbsp;<a href="http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx">29 states</a>&nbsp;&nbsp;that have passed renewable portfolio standards—statewide targets to generate a certain percentage of electricity with renewables—will not meet these goals if natural gas investments increase.



Some utilities are not only failing to address how to replace natural gas but are also proposing or building new natural gas infrastructure. One of these proposals was from Indiana’s&nbsp;<a href="https://www.courierpress.com/story/news/local/2019/04/24/utility-commission-rejects-vectren-natural-gas-power-plant-indiana-posey-county-a-b-brown/3553798002/">Utility Vectren</a>. The Indiana Utility Regulatory Commission rejected the 850-megawatt natural gas-fueled power plant proposed to replace retiring coal plants because Vectren failed to explore renewables as an alternative. The project’s steep cost would leave their electricity consumers at financial risk with stranded assets, and the investment was therefore labeled as “<a href="https://www.courierpress.com/story/news/local/2019/04/24/utility-commission-rejects-vectren-natural-gas-power-plant-indiana-posey-county-a-b-brown/3553798002/">uneconomic</a>.”



Current prices of renewables and storage are not only competitive with natural gas, they are often cheaper, and their costs are predicted to continue to fall with further technological development and market expansion. This&nbsp;<a href="https://www.renewableenergyworld.com/articles/2019/06/new-white-paper-explores-grid-parity-and-the-solar-renaissance.html">grid parity</a>&nbsp;with solar makes an even sounder case for the transition to renewables without the need for natural gas as the&nbsp;<a href="https://www.vox.com/energy-and-environment/2018/7/13/17551878/natural-gas-markets-renewable-energy">“bridge”</a>&nbsp;to propel us there. Another reason for declining futures for the gas market is the shift to heat pumps and more efficient electric heating systems that will decrease the use of natural gas in buildings. Recognizing this, Berkeley, California, voted in July 2019, to ban natural gas heating in new buildings. As the first city to codify this requirement, Berkeley will influence other cities to favor electrification over fossil fuel infrastructure.



So, what is preventing decarbonization? Some utilities say that they are wary of shifting away from natural gas because they fear potential reliability issues with intermittent renewables and the impact on the grid. In an&nbsp;<a href="https://energypolicy.columbia.edu/goals-carbon-free-power">interview&nbsp;</a>with Columbia’s Center on Global Energy Policy, Xcel Energy’s President and CEO Ben Fawk spoke of the utility’s “commitment” to be carbon-free by 2050. But he cautioned against suddenly increasing intermittent energy sources that could negatively affect the grid without a controllable source of energy like natural gas to smooth load peaks.



That argument is becoming outdated. Renewable power generation does require updated grid systems and storage to meet peak demand power loads. The development of better storage technologies, however, can&nbsp;<a href="https://www.vox.com/energy-and-environment/2018/7/13/17551878/natural-gas-markets-renewable-energy">more efficiently</a>&nbsp;smooth out the intermittency of renewables with a shorter lag time than generating with natural gas.



Will the U.S. be able to break up with its number two? The resources, intent and economic incentives are present—what is lacking is clear federal action and leadership. The U.S. can decarbonize fully, and researchers have laid out roadmaps to achieve this. The choice will be up to utilities, cities, states and most importantly the federal government to fully commit and make binding targets that will help make natural gas obsolete.