Green Wombat

In what could be a big boost for green tech entrepreneurs,
Bank of America (BAC) this morning launched a $20 billion program to fight global warming over the next decade by financing companies creating low-emissions technology, lending money for green building projects and creating the ability for customers to trade carbon credits. The bank will spend $18 billion on commercial green lending and finance while another $2 billion will be spent on consumer programs and efforts to reduce the greenhouse gas emissions and environmental impact of its own operations. Green Wombat is waiting on a reply from BofA whether it will use its pot of green cash to finance solar power plants, wind farms and other utility-scale renewable energy projects. But the fact that the U.S.’s second-largest bank has decided there is money to be made off green lending is, potentially, a huge boon for startups that have found it tough going obtaining financing for capital-intensive renewable energy technologies. While Silicon Valley venture capitalists have pumped billions into green startups over the past couple years, they traditionally do not finance factories or 250-megawatt solar power plants. The bank’s move also could create opportunities for green companies without access to Sand Hill Road VCs. "Today, we have a tremendous opportunity to support our customer’s efforts to build an environmentally sustainable economy – through innovative home and office construction, new manufacturing technology, changes in transportation, and new ways to supply our energy," said Bank of America CEO Kenneth D. Lewis in a statement.

BofA will change its underwriting criteria for commercial loans to include environmental factors, such as whether a business creates "sustainable products, services and technologies." In other words, a company that makes less carbon-intensive widgets will score higher on a loan application than one whose production process consumes more fossil fuels. If other banks adopt green underwriting, the impact could be significant.

For consumers, Bank of America later this year will offer an "eco-friendly" credit card – a percentage of each purchase will be donated to an environmental organization to invest in greenhouse gas reduction projects. Home buyers can apply for a "green mortgage" with a reduced interest rate or a rebate if their new house meets energy efficiency standards. "Bank of America intends to commit its own capital to promote "green" investment solutions for its clients," the company said, referring to investments that promote reforestation, wildlife management, "responsible development" and carbon sequestration.

The bank itself will spend $1.4 billion to ensure all new offices and
bank branches meet green building standards and spend $100 million on
energy efficiency measures in older facilities. Earlier this year Bank
of America offered $3,000 rebate to any of its 185,000 employees that buy a fuel-efficient hybrid car.