Kari Swan has been busy. There is a mile between the Capitol building and the new offices of the Minnesota Climate Innovation Finance Authority (MnCIFA), which she took over in November 2024. She’s been making the walk regularly, often both ways and in heels, as she charts a course for the future of Minnesota’s “green bank,” the financing authority that the state created a few years ago to boost Minnesota’s competitiveness in the climate tech industry. 

MnCIFA has a unique ask for the legislature this year—it doesn’t want public money. Instead, it needs authorization to receive private investments, which right now isn’t allowed under state law. Swan and her team believe they have “tens of millions of dollars” in potential private investments on the line. All they need is a yes from the legislature.

“We aren’t asking for money,” she says. “We’re asking for the ability to ‘crowd in’ money.” 

How the “green bank” works

MnCIFA was formed by the state legislature in 2023 to help “crowd in” funding from private investors. They target sectors that could drive economic growth in Minnesota while reducing carbon emissions and residents’ energy bills. 

The finance authority works similarly to the Minnesota Public Facilities authority, which funds public infrastructure projects; the Minnesota Housing Finance Agency; and the St. Paul Port Authority. 

The organization was founded with a one-time, $45 million appropriation from the legislature and a $60 million transfer from the State Competitiveness Fund. The latter program was set up to capture investments from the federal government following passage of the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, two major pieces of federal legislation under the Biden administration.

Right now, Swan says, MnCIFA is crowding in six dollars of funding for every dollar the organization invests. (That number is difficult to independently confirm, as many additional investments aren’t cut and dry enough to suggest one source or cause.)

MnCIFA does not accept or award grants on an ongoing basis; it invests in loans using only its initial appropriations. It employs 11 staff members and has loaned out $23 million of the $105 million appropriated. An additional $20 million in loans has been approved but is still working its way through due diligence. 

MnCIFA loans typically run 2.5–6% and scale up or down based on investment criteria. Criteria include the creation of clean energy jobs, with special focus on communities affected by pollution or plant closures; promotion of environmental justice; maintenance of energy reliability; and reduction of people’s energy bills. The loans earn interest, which is paid back monthly, and that interest is recycled and reinvested in new loans over time.

The capital that seeded the State Competitiveness Fund is a rare public investment intended not only to be self-sustaining but to grow. That means it would not require additional appropriations over time. 

But MnCIFA’s pipeline exceeds its reserves, Swan says. Some companies want MnCIFA capital to grow, but she says there’s not enough.

As an example of a success story, Swan points to Carba, which built a pioneering biochar facility in Burnsville. Swan claims MnCIFA’s $500,000 loan to Carba crowded in $6 million in funding to help complete its last round.

While MnCIFA’s focus is on innovation and the reduction of carbon emissions, it is not confined to the energy sector. It’s also focused on housing.

MnCIFA provided “gap” funding for housing projects like The Bookmatch, a conversion of an abandoned rural school in Sandstone into 32 new workforce apartments. Projects like this one “create housing that supports local employers and revitalizes towns,” says Swan. 

She also points to Avenues for Youth, a housing project for young homeless people that reduced bills for its residents by way of MnCFIA funding, and the Native American Community Clinic, which Swan says “almost fell apart.” She adds, “Without our loan through the Greater Minnesota Housing Fund, [the clinic] would not have happened.” 

Swan sees MnCIFA’s role in these projects as getting them across the finish line and lowering electric or gas costs, which in turn reduces ongoing expenses for occupants. “We only finance the renewable‑energy technology portion of a project—things like geothermal, HVAC, storage, or efficiency upgrades,” she says.

In the case of The Bookmatch, Meghan Elliott, the principal, founder, and CEO of developer Jillpine, says the MnCIFA investment was critical for lowering residential energy bills and carbon emissions. “Without their involvement, this project would not have been able to achieve the same level of efficiency in the heating and cooling technology,” Elliott says.

How MnCIFA is governed

The board that runs the organization was intended to represent a variety of interests in the state:

• About a third of the board represents other state agencies involved in climate work. 
• Another third represents industry, with participants with backgrounds in renewable energy, finance, and banking.
• The last third represents greater Minnesota, tribal, and “environmental justice” communities. These are places that have been more impacted by climate change or are transitioning away from reliance on shrinking parts of the energy industry.

All projects and their financials can be viewed on the MnCIFA website, which the organization hopes brings transparency to the process.

“Without us, some projects simply don’t get done”

The fund sits in an interesting space between capitalism and state-funded enterprise. Over the past decade, it has captured policymakers’ attention around public infrastructure investments.

A pure free-market philosophy believes that public funding crowds out private funding in any given industry. But MnCIFA has positioned itself to do the opposite. It posits that strategic public investment can catalyze private investment in certain industries. Similar efforts have taken off in Connecticut, New York, Michigan, and other states.

Why don’t private investors want to make the same investments that MnCIFA is making? “Renewable‑energy underwriting is complex,” Swan says. “Many banks don’t have that expertise or risk tolerance yet. We [MnCIFA] often share the risk or go first.”

In Elliott’s case, MnCIFA played a critical role in making the apartments more affordable to the residents of the workforce housing project. “The MnCIFA funding is directly tied to the costs of the energy efficiency improvements,” Elliott adds. “Private banks will provide lending—but only at terms and interest rates that reflect their perception of risk for a rural housing project like this. And they would be unlikely to see value in the higher cost of integrating the efficient technology.”

Those paying attention to global infrastructure and how it is built and financed note that the United States has fallen dramatically behind China in many areas of advanced manufacturing—perhaps most dramatically in the realm of renewable-energy technologies. China has its own blend of “state capitalism,” with markets and semi-private companies driving much of the growth and innovation while underneath them sit massive, strategic, long-range public investments, which have enabled dominant market positions across many renewable-energy technologies. 

It goes deeper than just solar panels. Transformers, inverters, wiring, and more are needed to electrify the grid. Domestic manufacturers simply do not make many of these parts in large enough quantities, or fast enough, to provide a steady, affordable supply. It is unlikely the U.S. will ever catch up without domestic support.

In this context, Congress passed the Inflation Reduction Act, which was intended to stimulate a domestic renewable-energy industry that could begin to catch up with China. Buried in that legislation was the major funding that MnCIFA used to stand up its financing authority.

The organization was built for a policy landscape that shifted rapidly when Donald Trump was re-elected. The new administration supports domestic manufacturing initiatives, but it also destroyed the Inflation Reduction Act. MnCIFA awaits $50 million that was appropriated but is now tied up in court cases. It may one day arrive, but the organization can’t count on the money until it’s in its account.

Despite the change in federal administrations, a consensus has emerged that more aggressive federal support is needed to catch up to China in various areas. While the Trump administration has taken aim at solar and wind, it has continued support for things like batteries and geothermal.

Rather than needing to go back to the legislature for appropriations over and over again, the finance authority wants to stand on its own. That is why its focus has shifted to crowding in its own private dollars, provided the legislature will allow it.

Without an expansion, Swan says, there will be projects left at the altar looking for a partner to provide the final piece of their capital stack.

Why does something like MnCIFA need to exist for these projects to happen? “Because many deals hit a wall on the last dollars. Without us, some projects simply don’t get done,” Swan says.

It’s this “last dollar” support that Swan thinks is one of MnCIFA’s most essential roles.

Legislative odds and what comes next

MnCIFA’s path has wound its way into a game of political football. It is part of complex negotiation in the House that may link to a study on eliminating the nuclear moratorium, which would provide legislators more data on the impacts of increasing nuclear energy in the state. Because it’s just a study, it might seem like an easy point of agreement, but nothing is easy during an election-year legislative session.

If it can’t tap more funding, projects will be left on the sidelines and private dollars will be left on the table. Still, whether or not MnCIFA gets the legislature’s blessing to accept private dollars, it has hopefully built itself for the long haul. Swan sees the organization as a revolving fund that sustains itself over time: “A durable finance authority that continually recycles capital—loaning it out, getting it back, and loaning it out again.”