RIIB has a somewhat broader environmental focus than traditional green banks. Green banks typically seek to catalyze private investment in clean energy or energy efficiency projects, using such techniques as credit support, subordinated debt and equity investments, aggregation and securitization, and demonstration projects. RIIB departs from this model in two principal respects.
First, RIIB has historically interacted with a different set of actors: municipalities rather than private institutions. While it accesses funds from the private sector, it does this by issuing revenue bonds—predominantly through the green bond market—or sometimes by borrowing from private lenders. Other green banks may also transact with municipalities but generally not with the same degree of focus as RIIB.
Second, RIIB is very active in other areas of infrastructure finance beyond clean energy, mainly in the water and transportation sectors. It administers the financial side of Rhode Island’s Clean Water and Drinking Water State Revolving Funds.
To be sure, RIIB also engages in some more traditional green bank activities. It administers a C-PACE program, with funding provided by private lenders. It also runs the Efficient Buildings Fund, which makes loans to finance clean energy and energy efficiency projects for public entities including municipalities, quasi-state entities, and public universities and colleges.
Finally, RIIB administers other environmental infrastructure finance programs focused on brownfields remediation, septic system repair or replacement, and septic-to-sewer system conversions.
We spoke with Jeffrey Diehl, Executive Director and CEO of RIIB, about the bank’s approach to state revolving fund financing and its broad overall scope.