Cleaner energy and water
The Biden plan also seeks to improve drinking-water infrastructure and deliver a new, improved electrical grid. To improve the quality of drinking water, all lead pipes and service lines across the country will be replaced. As we witnessed in cities like Flint, Michigan, and Newark, New Jersey, lead water pipes are a major public health hazard; replacing these systems is highly impactful from both a social and an environmental perspective.
For example, Newark issued municipal bonds to replace its lead water system, and we expect many other cities to follow suit. A modernized electric grid, along with a goal of reaching 100% carbon-free electricity by 2035, should spur a considerable amount of issuance in the clean energy sector. Along with wind, solar, and hydroelectric power system projects, the plan includes clean transmission and storage system upgrades for public power systems throughout the country.
Building greener and more efficiently
The American Jobs Plan will also address the need for more affordable housing projects while making housing, commercial buildings, and schools across the country more energy efficient. More than two million homes, schools, and commercial buildings will be constructed, preserved, and retrofitted to improve resiliency and increase efficiency. Examples of similar projects that have been issued in the municipal market include a multifamily housing project in New York State and green bonds for a California school district project.
The housing project bonds were issued to construct affordable low-income housing projects, which were identified as environmentally beneficial based on the expectation that the buildings will meet or exceed energy-efficiency standards and qualify as low-carbon buildings. As a result, the bonds were certified as climate bonds by the Climate Bond Initiative. The school district in California issued green bonds to finance acquisition, installation, and equipping of solar heating and lighting systems to improve energy efficiency throughout the district. These bond issues also financed critical affordable housing and school buildings and had positive environmental impact by meeting or exceeding energy-efficiency standards.
The bottom line
The American Jobs Plan is a robust, comprehensive strategy to update aging US infrastructure with a focus on sustainability and with climate change at the forefront. Municipal investors seeking an ESG focus will have the opportunity to invest in the revitalization of US infrastructure and achieve positive environmental impact with their investment portfolios.