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A state-funded climate financing authority will begin ramping up lending in Minnesota this year after hiring its first executive director in October.
The Minnesota Climate Innovation Finance Authority, established by state legislators as part of a flurry of climate and clean energy bills in 2023, is charged with annually lending at least $25 million to stimulate clean energy development and greenhouse gas emissions reduction projects.
The timing — as the Trump administration sows chaos and confusion around federal grant funding — is coincidental, but could help some projects withstand the uncertainty.
Kari Groth Swan, the state authority’s executive director, said she hopes to use her background in banking and community development to help connect promising projects with state and private money.
She recently spoke with the Energy News Network about the launch of the program, which has already drawn dozens of applications.
What kind of projects are eligible?
The finance authority seeks to fund projects that help Minnesota meet its climate action goals, including the Climate Action Framework. The green bank has received applications for district hydrothermal energy, solar gardens, new energy-efficient construction, electric vehicle charging stations, air source heat pumps, battery manufacturing, and the Solar on Schools program.
How does it work?
The funding process is similar to what conventional lenders use. Applicants provide two years of financials, a narrative, a project budget, a list of commitments from other funders, and other financial information.
“We’re not funding ideas,” Swan said. “We’re funding viable, actionable projects that can get done and create jobs.”
A governing board appointed by Gov. Tim Walz makes the final lending decisions. The board includes representatives of state agencies, industry organizations, tribal nations, labor unions and people from other professions.
Why does the state need a green bank?
Green banks are mission-driven to promote clean energy projects, and have technical expertise in energy lending. Minnesota’s green bank intentionally focuses on underserved markets unlikely to receive all their capital from private lenders. By deploying a lending institution rather than relying on grants for clean energy projects, the state creates a revolving fund as loans are repaid.
The finance authority won’t ever be the primary lender on a project, but having the state involved helps move projects forward, Swan said. The green bank has a pipeline of $25 million in loan applications from projects worth over $265 million.
Swan said the first wave of applicants came fully formed and with significant capital in place. The second wave might need some additional advocacy with lenders. “I will be out talking to the traditional lenders, saying, ‘Here’s an example of a project and here’s what the capital stack looks like. Will you partner with us?’”
How large are the loans?
A wide range of loan amounts are available. The green bank requires a minimum loan amount of $250,000, and while the first three loans it issued were all over $1 million, Swan expects a greater variety of loan amounts now that the bank is fully operational. In addition, no loan can exceed 10% of the amount the bank loans annually. The bank may also fund nonprofit lenders who could provide capital to smaller clean energy projects.
How much money is available?
By statute, the bank must lend at least $25 million annually. The Legislature allocated $45 million in 2024 to get the green bank going. Last year, the state competitiveness fund provided $60 million and the federal government added $25 million.
What other requirements are there?
Half of the loans must meet guidelines for environmental justice communities based on the U.S. Department of Energy’s current definition. To qualify, a community’s non-White population must be at least 40%, and 35% of the population must have an income at or below 200% of the poverty level.
How could President Trump’s attacks on federal clean energy affect the program?
Swan thinks federal investment tax credits for clean energy will survive under Trump, adding that unwinding them quickly will be challenging because they’re part of the tax code. But the Trump administration has already signaled a willingness to usurp Congress’ constitutional spending authority when it comes to clean energy, which could mean a greater need for money but also fewer projects ready to fund in Minnesota.
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