California Alternative Energy and Advanced Transportation Financing Authority

Qualified Energy Conservation Bonds (“QECBs”)

There is no QECB Volume Cap Allocation available from the State of California.

Financing Opportunities for State, Local, and Tribal Governments and up to 30% of Allocation for Privately Owned or Operated Projects

These bonds are designed to provide low-interest financing to promote the use of alternative energy and energy efficiency in State, Local, and Tribal Government facilities. Up to 30% of each state’s allocation may be used for eligible projects that are privately owned or operated. The term is likely to be at least 10 years long based on similar programs with the borrower making one principal plus interest payment annually.

Eligible Projects

Type I - Capital expenditures incurred for purposes of:

  • Reducing energy consumption in publicly owned buildings by at least 20%.
  • Implementing green community programs.
  • Rural development involving the production of electricity from renewable energy resources, or
  • Any facility eligible for the production tax credit under Section 45 of the IRS code (New Clean Renewable Energy Bond (NCREB) projects)

Type II – Expenditures with respect to research facilities and research grants to support research in:

  • Development of cellulosic ethanol or non-fossil fuels.
  • Technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels.
  • Increasing the efficiency of existing technologies for producing non-fossil fuels.
  • Automotive battery technologies and other technologies to reduce fossil fuel, consumption in transportation, or
  • Technologies to reduce energy use in buildings.

Type III

  • Mass commuting facilities and related facilities that reduce the consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.

Type IV- Demonstration projects designed to promote commercialization of:

  • Green building technology
  • Conversion of agricultural waste for use in the production of fuel or otherwise
  • Advanced battery manufacturing technologies
  • Technologies to reduce peak use of electricity, or
  • Technologies for the capture and sequestration of carbon dioxide emitted from combusting fossil fuels in order to produce electricity.

Type V

  • Public education campaigns to promote energy efficiency (other than movies, concerts, and other events held primarily for entertainment purposes).

These can be used for a broad array of “green” expenditures including the implementation of green community programs, grants to support research in emerging energy technologies, rail and bus facilities, public education programs, energy efficiency, renewable energy facilities, and demonstration projects for emerging energy technologies. Also includes NCREB eligible projects.

Prevailing Wages

Federal Davis-Bacon prevailing wage rules apply.

Allocation Process

The total national volume cap will be allocated to the state based on the proportion each state’s population bears to the national population. States are then to allocate to “large local governments” (defined as any municipality or county having a population of 100,000 or more) based on the proportion each large local government’s population bears to the state’s total population. It has not yet been determined what entity within state government will make the actual allocations to large local governments and direct the allocation of volume cap remaining with the state. As soon as the state process is determined, the website will be updated.


CAEATFA may serve as a qualified applicant to CDLAC and a conduit issuer of the QECB bonds and facilitate the bond process. CAEATFA is not responsible for payment and only acts as a conduit between the borrower and bond purchaser. CAEATFA may, upon request, gather bids from financial institutions to ensure competitive financing, including private placement of these bonds. Please contact CAEATFA or view the draft applications for more information.

Mechanics of a QECB

This is a “tax-credit bond” designed to provide the bond purchaser with a 70% interest subsidy in federal tax credits by the United States government. This subsidy provides a rate savings for the purchaser which allows the public entity to receive low-interest financing upon the sale of these bonds. For example, if the credit amount is $100 and the bondholder is in the 30 percent tax bracket, the credit provides a $79 benefit to the bondholder. The credit rate is updated daily, where the higher the rate translates to a higher benefit for the bond purchaser who in turn can provide lower interest rates.


For general questions regarding QECBs please visit the California Debt Limit Allocation Committee’s website or contact CDLAC at (916) 653-3255.

For questions regarding CAEATFA’s role as a qualified applicant or issuer of QECBs please contact Alejandro Ruiz at (916) 651-5101 to answer any questions or concerns.