Climate Catalyst Fund

Department: IBank

Program Description: Businesses in the forestry sector face real challenges raising capital in the private lending market. Creating lower-interest loans removes a major market barrier and expands critical businesses in this sector from micro-mills to masticators to innovative wood and energy products. The Climate Catalyst Fund was established with early action funds in 2020-21 to help jumpstart private sector equipment using wood and woody material removed from forests for wildfire resilience.

Program Impact: Capital was provided in the fall of 2021, along with a crucial legislative change to enable IBank to receive the funds appropriated in 2020-21 and 2021-22. The program was then formally launched in January 2022 and is actively looking at transactions. IBank’s Catalyst Fund team is in advanced lending discussions with six project developers, each one of which is bringing significant private capital to the transaction alongside the state’s investment. Because of the presences of these outside investors, each project negotiation exhibits its own particular complexities – these deals take time, certainly more so than grant allocations do. In addition to Catalyst Fund activity, IBank is working alongside CAL FIRE to support the agency’s financing of projects in the biomass utilization sector, and is leveraging its small business loan guarantee program to encourage community-scale lenders to invest in this sector. IBank continues to support market growth by utilizing other state and federal funding mechanisms where individual transactions allow, and by connecting businesses, NGOs, and public entities in this sector to IBANK’s broader network of financing resources.

Resilience in Action: With the combination of appropriated funding and legislative authorization for IBank to receive and deploy capital, IBank leadership was able to seek and ultimately receive IBank Board approval to launch the program in January 2022. In 2022, , IBank received more than 40 expressions of interest in receiving loans or guarantees from the Climate Catalyst Fund. The IBank staff is currently reviewing expressions of interest, working with entities across the state to support the advancement of projects, and engaging third-party capital partners to further leverage state dollars.