This is reinforced with a range of other financial mechanisms to support new programs:
- Revolving funds: Local governments often establish permanent funds to provide low or zero interest loans to public and private sustainability projects. Loans are re-paid based on savings from reduced energy bills, which are then reinvested in future projects.
They push the financial horizon of projects beyond the conventional five-year ceiling of many energy investments. Duluth set up its revolving fund to ensure continuous long-term improvements could be made rather than having to invest time and energy competing for funding in the annual budget process.
- Bonding Initiatives: Public bonds provide money up-front for a guaranteed rate of return on that investment. Because most sustainable energy investments in buildings, infrastructure and neighborhoods are high cost, front-end investments with lower long-term bills, they are well suited for financing through bonds. Lamar, Colorado's public utility is financing a wind farm through the sale of a $6 million revenue bond that will be paid back in less than 20 years through annual electricity sales.
- Performance contracting: With this approach, companies that deliver services finance some or all a project and recoup their money though the savings in operation and maintenance costs. Little Rock, Arkansas, set up a performance contract with a private firm that financed a geothermal system and energy retrofits that saves the municipality $320,000 a year. Redland, California, contracted with Honeywell to retrofit 12 buildings. The improvements will be paid back in seven years and through lowered energy costs that will permanently reduce expenditures by $450,000 annually.
- Public benefits charge: Also called a systems benefit charge, this is a small charge added to utility bills to generate money that can be invested in sustainable energy projects. Santa Clara's public benefits charge finances cost-effective electricity from renewable sources and also helps pay for other energy-efficiency programs.
- Carbon tax: Similar to a public benefits charge, but potentially more educational, Boulder has applied a small tax on energy use that will generate about $1.33 per month per household used to finance their climate plan.
- Life-cycle infrastructure charges: To stem sprawling GHG intensive developments and improve fiscal performance, municipalities can charge developers and consumers the full life-cycle costs. Lancaster, California, bases its development fees partly on the distance from the city center. In DuPage County, Illinois, development fees are based on the infrastructure required to support the volume of traffic that a project will create.
