Grad student Erin Brown examines credit enhancement strategies for higher efficiency vehicles in Maine

Maine Won’t Wait, Maine’s climate action plan, recommends the establishment of an incentive program for low- and moderate-income individuals to encourage the uptake of higher fuel efficiency light-duty vehicles (LDV) to reduce greenhouse gas emissions. One of the barriers to vehicle ownership or vehicle upgrades can be financing. Without access to financing, purchasing a more expensive, higher efficiency vehicle, which may result in savings over the life of the vehicle, can be inaccessible for many. Credit enhancements, including interest rate buy-downs, loan guarantees, and loan loss reserves are commonly used tools in energy efficiency programs to increase access to financing of identified groups by reducing risk to financial institutions while providing borrowers with more favorable loan terms.

A new report by Erin Brown, Jonathan Rubin, and Bruce Wyatt of the Margaret Chase Smith Policy Center explores the benefits and challenges of credit enhancements, as well as their implementation in selected states.