The State of Vermont is once again flirting with a policy idea that sounds clean, modern, and forward-thinking, but becomes a lot murkier the moment you follow the money.

S.174, introduced by Sen. Anne Watson (D/P – Washington District) and currently before the Senate Committee on Natural Resources and Energy, would direct the State Treasurer to study whether Vermont should establish a so-called “green bank,” or something like one. Supporters say it could help finance energy and climate-related projects. Skeptics see another mechanism for redirecting taxpayer dollars toward private transactions, justified by promises of future savings that may or may not ever show up. In effect, Watson’s proposal would use taxpayer funds to study whether taxpayers should assume financial risks that private lenders have already chosen not to take on.

Before Vermonters are asked to fund even a study, it’s worth slowing down and asking: what is a green bank, who benefits from it, and how would taxpayers know whether they’re getting a fair deal?

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What S.174 Actually Does (and Does Not Do)

First, the basics.

S.174 does not create a green bank. It authorizes a Treasurer-led study to examine green bank models used in other states and determine whether Vermont should adopt one.

The bill directs the Treasurer to consider two main options:

1. Creating a stand-alone green bank, or
2. Giving “green bank-like authority” to existing state entities.

The Treasurer would then report back to the Legislature by the end of 2026 with findings and recommendations.

There is no dollar amount specified in the bill for this study, but during testimony the Treasurer’s office indicated it would require a one-time appropriation to hire staff and conduct the work.

So, at this stage, Vermont is being asked to spend public money to decide whether it should spend more public money later.

What’s a Green Bank?

Despite the name, a green bank is not a normal bank.

It doesn’t take deposits. It doesn’t offer checking accounts. It doesn’t exist to make profits for shareholders.

A green bank is better understood as a state-backed financing tool designed to make certain private projects easier to finance. Its job is not to lend money directly in most cases, but to reduce risk or cost so private lenders will say yes to loans they might otherwise avoid.

In plain English:

A green bank doesn’t make the loan.
It makes the loan easier for a private bank to approve.

It can do this in several ways:

• guaranteeing part of a loan if the borrower defaults,
• covering the “first loss” so private lenders are protected,
• lowering interest rates with public subsidies,
• bundling lots of small loans together so they’re worth a bank’s time.

By design, green banks exist to benefit private borrowers and private lenders. The argument for taxpayers is that these private benefits supposedly lead to public benefits down the road.

That’s where things get controversial.

The Famous “$1 Unlocks $8.62” Claim

Supporters often point to examples from other states — most notably Connecticut — where green banks claim to have “leveraged” private capital at impressive ratios. One commonly cited figure is that every $1 of public support unlocks $8+ in private investment.

This sounds great until you translate it into human terms.

What it actually means is this:

• A taxpayer contributes $1 to a public program.
• That $1 reduces risk for lenders.
• Private banks then lend $8.62 to someone else.
• That someone else gets the upgrade, the loan, or the project.

What it does not mean is that the taxpayer gets $8.62 back.

From a taxpayer’s perspective, this is a hard sell. One dollar out of your pocket is used to support $8.62 worth of private transactions that benefit other people. Any public return is indirect, theoretical, or delayed.

That doesn’t automatically make it bad policy — but it absolutely means the burden of proof is on the state to show what taxpayers actually get in return.

Treasury vs. the Vermont Bankers Association

During legislative discussion, two perspectives emerged clearly.

The Treasurer’s Office

The Treasurer’s office has taken a cautious posture. Deputy Treasurer David Sher told lawmakers they would be willing to conduct the study outlined in S.174, provided there is a one-time appropriation to do it properly. The office emphasized it was not prejudging the outcome.

Treasury also noted that Vermont already engages in climate-related financing through intermediaries — meaning private or quasi-public institutions — often using guarantees to manage risk.

Christopher D’Elia and the Vermont Bankers Association

Christopher D’Elia, President and Treasurer of the Vermont Bankers Association, was more blunt.

D’Elia opposed the idea of a stand-alone green bank, arguing that Vermont already has a functioning ecosystem of banks, credit unions, and finance authorities capable of lending for these projects. He warned that creating a new entity would require time, staffing, and bureaucracy — all of which cost money — without clear evidence it would solve a real problem.

His core argument was simple:

If capital is available and institutions already exist to finance these projects, why build another layer?

That question has not yet been convincingly answered.

The Broader Context: Climate Policy and Cost

This debate doesn’t exist in a vacuum.

Vermont’s climate policy landscape already includes the Global Warming Solutions Act, proposed clean heat standards, fuel tax discussions, and repeated claims that present-day costs will lead to future savings — through avoided damage, reduced emissions, or increased resilience.

At the same time, Vermont contributes a tiny fraction of global greenhouse gas emissions, while global emissions trends are driven overwhelmingly by countries like China and India. That doesn’t mean Vermont shouldn’t act, but it does mean claims about global impact deserve skepticism.

For many Vermonters already struggling with property taxes, housing costs, and energy bills, the question isn’t ideology. It’s arithmetic.

The Simple Questions That Decide Whether This Is Worth Doing

Before Vermont spends taxpayer money studying how to create a green bank, these questions should be answered plainly:

1. What specific projects are not happening today, and why?
   If banks won’t finance them, what’s the actual barrier?
2. Who pays for the study and any eventual program?
   General taxes? Ratepayers? Fuel taxes? Bonds?
3. How much public money is at risk, and what is the maximum possible loss?
   If there’s no cap, taxpayers are the cap.
4. Who benefits, by income level and housing status?
   Renters or homeowners? Low-income households or already credit-worthy borrowers?
5. What do taxpayers get back in real dollars?
   Lower taxes? Lower rates? Reduced public spending? Not emissions — dollars.
6. Why can’t existing banks and finance programs already do this work?
   And if they can’t, why is the state better positioned to absorb the risk?
7. If it fails, who eats the loss?
   Taxpayers, ratepayers, or someone else?

If these questions can’t be answered now, it’s hard to justify spending public money to study how to spend more public money later.

Let Vermonters Decide — With Real Information

This isn’t about being pro- or anti-climate policy. It’s about basic due diligence.

A green bank may turn out to be a useful tool. Or it may turn out to be another well-intentioned program that socializes risk, privatizes benefit, and relies on future savings that never quite materialize.

Either way, Vermonters deserve clear answers before they’re asked to pay — even for a study.

If the case is strong, it should stand up to simple questions. If it isn’t, the study itself becomes the problem.

So, do you want to invest in a green bank?

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Dave Soulia | FYIVT

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