Document Type
White Paper
Publication Date
10-5-2026
Abstract
A growing number of higher education institutions (HEIs) are decarbonizing their campuses, with thermal energy networks supported by ground-source-heat pumps (GSHPs) as the most common approach (Barron et al., 2025). The value proposition of these systems includes net savings on energy and maintenance, increasing occupant comfort, reducing air pollution and addressing deferred maintenance, guarding against future regulatory risk, providing education and research opportunities, and helping institutions meet climate goals. Despite the many benefits of decarbonization, funding and financing pose a significant challenge given the high upfront costs for GSHPs and building retrofits. “How will we pay for this?” is likely to be the first question when a major infrastructure project is proposed. These capital barriers have the potential to slow the rate at which HEIs can take on these projects and realize the associated economic, social, climate and air quality benefits. Previous research has called for context-specific solutions to financing decarbonization (Long et al., 2024). In this working paper, we compile context-specific approaches for HEIs. We describe the current funding and financing mechanisms used by HEIs for decarbonization and outline potential future sources. This paper is primarily intended for HEIs to use as a guide for early conversations about the economics of GSHP projects.. We present data gathered from HEIs on the capital costs and payback periods of such projects, recognizing that these metrics are incomplete. We primarily focus on the transition of campus heating systems, but note funding and financing for solar and other projects where relevant. Current funding and financing approaches include direct institutional spending, tax credits, state funding and incentives, utility incentives, gifts, internal carbon prices, private debt, green bonds, Green Revolving Funds, and Public Private Partnerships. We highlight a few emerging areas worth attention by both HEIs and state policymakers that can accelerate decarbonization in the non-profit (and for profit) sectors including green banks, Inclusive Utility Investment, public utility Thermal Energy Networks (TENs), and Geothermal Renewable Energy Credits. These tools are worth attention because they can potentially remove the upfront capital barrier to decarbonization for a wide range of customers.
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Rights
Licensed to Smith College and distributed CC-BY 4.0 under the Smith College Faculty Open Access Policy.
Version
Author's Submitted Manuscript
Recommended Citation
Coopersmith, Emma; Prassa, Dimitra; and Barron, Alexander R., "Funding and Financing Mechanisms for Decarbonization at Higher Education Institutions" (2026). Environmental Science and Policy: Faculty Publications, Smith College, Northampton, MA.
https://scholarworks.smith.edu/env_facpubs/38
Comments
Working Paper 10/5/26 v 1.0 for public feedback