Portland, Maine, could launch a ​‘trust fund’ to fight climate change

This story was originally published by Energy News Network.

A climate trust fund proposed in Portland, Maine, would use money from the sale of city-owned renewable energy credits to kickstart further efforts to cut local carbon emissions.

Portland is among the hundreds of U.S. cities that have adopted ambitious climate goals in recent years. Now, in search of sustained funding to meet those targets, many cities are turning to novel fiscal approaches, such as the one approved in Portland last week by the first of two city council committees.

The ordinance, if passed by the full council, would establish a new climate fund next year using money primarily from the sale of renewable energy credits, or RECs, from city-backed solar projects, such as at the Portland International Jetport and on the former city landfill.

The money could help pay for consulting work on emissions-cutting or resiliency projects, climate grant–related costs or local matches, community micro-grant programs for climate-friendly improvements, or other expenses for the city sustainability office.

“This is a new source of funding that can get invested in other city projects to, again, save more money,” said Bill Weber of Portland Climate Action Team, a local Sierra Club offshoot that’s been pushing for the city to make progress on its climate plan. The city, along with neighboring South Portland, adopted a shared target in 2020 of cutting emissions 80% from 2017 levels by 2050.

Proceeds from the sale of RECs would amount to about $300,000 to $400,000 a year, according to a memo from Portland Sustainability Director Troy Moon. That’s not enough to entirely fund major construction projects, Moon wrote, but it ​“could provide leverage to launch such projects.”

The fund would also include money from ​“penalties paid for violations of sustainability-related ordinances, private donations, proceeds from grants, and voluntary appropriations made by the Council,” he wrote.

“Seed money for larger savings”

Weber described the proposed fund as ​“seed money for larger savings.” He suggested a study of solar potential across city schools’ rooftops as one hypothetical use, with results that could be used to attract developers, choose priority projects, and speed along their implementation.

“A lot of these projects will pay for themselves over time, but you need to do some engineering,” he said.

Peyton Siler Jones, the Portland-based interim director of sustainability with the National League of Cities, said creative approaches are essential to creating long-term funding streams for local climate work.

“Figuring out how to have those savings not just go to the general fund, but go to a special climate fund to continue to implement climate projects, is one example of an innovative solution,” she said. ​“It’s exciting to see that being something that can be scaled and replicated in smaller communities.”

Siler Jones said Portland’s fund could be used to pay a consultant to write grants that could bring in federal funding. Or, she suggested as a hypothetical example, it could pay sustainability-related cost differentials on an affordable housing project — helping the developer by covering the extra cost of building materials to install heat pumps or funding a subcontractor to oversee climate-friendly engineering.

While she wasn’t sure whether this idea is happening anywhere currently, she said the general principle of dedicating city funding to climate efforts is becoming more popular. Boston now puts at least 10% of all new capital funding toward ​“open space, infrastructure, and facilities projects that are climate resilient or contribute to making the City more environmentally friendly,” according to the city’s website.

Washington, D.C., has a long-running sustainable energy trust fund seeded with fees on electric, gas, and fuel-oil companies, as well as the sale of credits from the Regional Greenhouse Gas Initiative. And in Ann Arbor, Michigan, millions in annual proceeds from a 20-year property tax increase adopted in 2022 go toward community climate projects.

Selling energy credits to spur larger gains

The idea of using REC sales to seed the fund, as proposed in Portland, involves a complicated tradeoff.

The credits are an annual return for Portland’s investment in a given renewable energy project, essentially letting the city own proof of the progress on local emissions goals made by that investment. Selling those credits means selling that proof, and therefore that small piece of progress, in a given year.

“We have to be really clear that if we’re making the sale, we’re not using renewable energy per se,” Moon told city councilors before a committee vote on the proposed fund last week. ​“But … there’s an opportunity to use those RECs to fund climate action that may otherwise not be able to happen, and that also provides other benefits, like resilience and cleaner air and improved infrastructure.”

In comments to the council’s sustainability committee on the proposed fund, Weber argued that it’s imperative not to sell RECs to benefit anything other than continued, more substantial emissions cuts, meaning, he said, that the money should not be used for sustainability office salaries or resilience work.

“From my perspective a ​‘trust’ represents a sacred commitment that is made to future generations,” Weber wrote. ​“Spending the revenue from the RECs on anything that doesn’t generate a material return on that investment breaks the trust.”

Before voting to advance the proposed fund last week, Portland City Councilor Anna Bullett said she agreed that this funding should remain set aside for clear progress on city climate goals, not necessarily more general operations.

“We’re already paying for everyone’s salaries as is,” she said. ​“Let’s try to protect that money that we already budget for every year and not backfill it with this instead.”