Could California’s Public Banks Finance a Statewide Green New Deal?

fter years of claiming to be a leader in climate action, California might be finally starting to step into its promised role — and it is bringing a secret weapon to the challenge.

On November 19, Gov. Gavin Newsom announced the state was placing a moratorium on new permits for oil drilling activities that involved steam injection and fracking. The announcement came just a few months after news broke that not only did California’s top oil regulators have a vested interest in major oil companies, but since Newsom became governor, the number of oil permits had doubled.

“Governor Newsom has shown the world today that the future of climate leadership means saying ‘no’ to the fossil fuel industry’s dreams of endless expansion,” said Stephen Kretzmann, head of Oil Change International, one of the organizations behind the Keep It in the Ground movement. “While there is still a long road ahead, the measures announced today are important steps towards comprehensive action to phase out California’s oil and gas production and align its economy with climate safety,” he added.

Governor Newsom agrees there is a long road ahead. In his press release, he explicitly mentioned that the moratorium was undertaken with California’s goal of achieving carbon neutrality by 2045 in mind, and the subsequent need to manage the decline of oil production and consumption in the state — all while ensuring that the transition protects California’s people, environment and economy.

As in many climate discussions, the promises of balancing economic goals with the winding down of fossil fuel production and the ramping up of new infrastructure are often received with skepticism and raised eyebrows. Soon, climate action numbers in the scale of trillions are thrown into the debate in an attempt to align climate ambition with “achievable” solutions. But fortunately, California can bypass this misguided set of choices. Enter the state’s secret weapon: public banks.

Largely unnoticed in the environmental sphere, Newsom also made headlines last month when he passed the Public Banking Act. The act, the first of its kind in the country, legalized the creation of public banks across the state’s cities and counties. Public banks, financial institutions that are owned and accountable to their people through their representative government, are often praised for their investments in much-needed projects and businesses in their localities. Supported projects typically include affordable housing initiatives and small business development.

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