A bank to finance clean energy projects proposed by the US Senate may offer letters of credit (L/Cs) as well as other financing instruments for energy efficient power solutions.

But critics suggest the proposed scope of the bank should be reduced to limit taxpayers' exposure.

Financing solutions

The Clean Energy Deployment Administration (CEDA), as the bank may be known, would provide several federally backed financing solutions.

These are expected to include L/Cs, loan guarantees and direct loans.

Project support

The bank would support projects for energy production, transmission and storage, as well as initiatives for the development and implementation of technologies that would reduce greenhouse gases or energy consumption.

CEDA would also support renewable energy initiatives, nuclear programmes and coal carbon capture and storage projects.

Credit limits

Under the current proposals, there are no restrictions on the size of a project CEDA may extend credit to, nor is there a cap on the amount of credit the bank may extend.

Critics of the proposed bank say that there should a cap the amount of credit support that the bank can issue to limit taxpayer exposure.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.