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Apr 21, 2020

What if Everyone Banked for the Climate?

Here’s a big question at the heart of Atmos’ reason for being:  What sort of climate solutions could be realized if everyone in the US made the conscious effort to bank for the climate?

There are an estimated 120 million households in the US according to the US Census Bureau.[1] According to the Federal Reserve’s most recent Survey of Consumer Finances (2016), approximately 98% of households have bank (transaction) accounts - checking, savings, money market and prepaid debit cards - and the average account size across households is approximately $4,500,[2] resulting in approximately $529 billion in liquid, low-yielding deposit-like products in the US among retail household accounts. Banks typically won’t lend out the entirety of its deposit base in order to maintain a liquidity cushion for economic cycles. The average Loan-to-Deposit Ratio across the US is 84% according to a recent FDIC survey,[3] reducing approximate total lendable capital to $447 billion.

For simplicity, let’s assume that lendable capital was deployed into new residential solar systems. At an average US single-family residence installation price of $3.40/watt, and a residential solar capacity factor of 17.5%, this investment has the potential to immediately displace approximately 21% of the 966 billion kWh of coal-fired utility generation (or 8% of the total fossil-fuel generation mix) produced in the US in 2019.[4],[5] At an average installed system cost of $30,000, that’s approximately 14.9 million home installations, or just 23% of the total estimated number of single-family residences in the US.[6] From an impact standpoint, this deployed loan capital would avoid roughly 142 million metric tons of CO2 per year, which is equivalent to removing 31 million passenger cars from the roads.[7]

Let’s take this one step further and include all US deposits rather than just consumers' accounts. There were $12.6 trillion of domestic deposits held within FDIC-insured financial institutions in the US as of December 31, 2019.[8] These deposits support loans to countless individuals and companies big and small that keep the economy humming, so while it’s unrealistic to think that the entire US deposit pool could be redeployed to support sustainability initiatives, let’s assume that 15% could be. Using the same assumptions from above, lendable capital of $1.6 trillion (for perspective, this is just slightly larger than JP Morgan Chase & Co.) has the potential to displace approximately 75% of the US’ coal-fired utility generation (or 28% of the total fossil-fuel generation mix) in 2019, covering 81% of the total estimated number of single family residences in the US. From an impact standpoint, this deployed loan capital would now avoid 507 million metric tons of CO2 per year, equivalent to removing roughly 109 million passenger cars from the roads.[9]

The potential carbon impact of banking on climate is game-changing, and Atmos is on a mission to catalyze this change.











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