Minnesota Green Bank Faces Funding Challenges Amid Federal Freeze

SAINT PAUL, Minn. – On Monday, the Senate Energy, Utilities, Environment, and Climate Committee received a presentation from the Minnesota Climate Innovation Finance Authority, commonly known as the Green Bank. Established through legislation passed in 2023 by Senator Tou Xiong, the Green Bank aims to finance green projects across Minnesota.

The Green Bank operates as a lending authority rather than a grant provider, issuing loans that are typically repaid through public-private partnerships. In most cases, the Green Bank contributes only 10 to 20 percent of the total loan amount, partners with other funders to raise additional capital.

In 2024, the Green Bank has financed three projects, totaling approximately $11 million in capital. These projects are part of a broader initiative to bolster Minnesota’s green economy.

“The first year of Minnesota’s Green Bank has been a great success,” said Sen. Xiong. “Green investment is a growing sector that Minnesota cannot miss out on. This is just the start of our state’s investment in a green future, climate resiliency, and economic prosperity for all. I am closely following the work of the Green Bank to ensure its success into the future.”

However, challenges loom for the Green Bank following a federal funding freeze initiated during President Trump’s administration. This action has impacted various federal funding sources utilized by the Green Bank, creating uncertainty that affects private investors.

“Haphazardly, the federal government has frozen funds that could provide jobs in our emerging green economic space,” stated Sen. Xiong. “For example, freezing $25 million from the federal Coalition of Green Capital hinders the Green Bank’s capacity to fund worthy projects across Minnesota and spooks private investment. This uncertainty and chaos are not at all ideal for investment. If this continues, consumers will take the hit on energy prices, Minnesotans will lose out on jobs, and our climate will continue to suffer when we cannot move our green energy sector forward. I implore our congressional delegation to act swiftly and reverse these federal freezes and cuts.”

Senator Tou Xiong represents Senate District 44, which includes Little Canada, Maplewood, North Saint Paul, Oakdale, Pine Springs City, and Landfall. He serves as vice chair of the Energy, Utilities, Environment, and Climate Committee and is also a member of the Capital Investment Committee and the Housing and Homelessness Prevention Committee.