Equitable Green Finance Catalyzing Climate Action

The EPA this past week announced $20 billion in long-anticipated awards under the Greenhouse Gas Reduction Fund (GGRF). The GGRF is largest direct investment vehicle under the historic Inflation Reduction Act, which is the foundation of the Biden Administrations clean energy agenda. The GGRF is aimed at supplying much needed capital to transform local neighborhoods and provide support for community financing for the energy transition. What makes this moment so unprecedented is that 70% of the funds are being directed toward vulnerable and disadvantaged communities. This will significantly reduce greenhouse gas emissions for underserved communities which have often bore the brunt of carbon and environmental pollution. The GGRF marks a pivotal moment by scaling up the dollars available to these communities to invest in reducing energy costs, improving public health and creating good-paying clean energy jobs.

Spurring innovation and transformation

So what will this change look like as it unfolds?

Included in the current funding is The National Clean Investment Fund, which has awarded $14 billion in lending facilities to 3 organizations. These groups will finance state and local green banks and community development financial institutions across the United States. It will also catalyze $7 in private investment for each $1 in Federal funds. The other major program funded by the GGRF is the Clean Communities Investment Accelerator, which was awarded to 5 organizations. The Clean Communities Investment Accelerator is funded for a total of $6 billion and will establish hubs that deliver funding and technical assistance to local community lenders working in low-income and disadvantaged communities. The Accelerator will help catalyze clean energy and climate projects at the grassroots level.

A third program under the GGRF is The Solar for All initiative which includes an additional $7 billion in funding to expand residential solar investment opportunities. This program will award up to 60 grants to states, territories, tribal governments, municipalities and nonprofits to make clean energy accessible to more households. This fund will be allocated later this year.

Projects eligible for funding under the GGRF include a wide range of clean energy and climate initiatives, from renewable energy installations to energy-efficient upgrades in public buildings. Priority will be given to projects that test new technologies or methods, and drive innovation in climate change mitigation and adaptation. These programs will specifically target communities that need this type of innovation the most. The GGRF also fosters partnerships between governments, nonprofits, and community organizations that create a network of support for climate action.

As funding is deployed, communities will see that the buildings around them – schools, hospitals and housing, will be more energy efficient. This saves money for individuals and institutions. Families will have greater access to alternative energy options like solar panels, and technologies like heat pumps and induction cooktops that reduce exposure to methane in the home. Communities that typically get hit first and worst with climate impacts will have resources to create resilience hubs and improve drainage, reducing the damage from more numerous and severe storms. Communities that historically are the last to obtain access to improvements in technology will be given the resources and opportunity to reduce their energy costs and make their neighborhoods healthier and more resilient.

Green banks meet the moment

Personally, I am most excited about how the GGRF is highlighting the green banking movement. As the Vice Chair of The Montgomery County Green Bank in Maryland, I have seen that when the right mechanisms and people come together, green banks can successfully drive investment in clean energy projects, and communities are set on a path to flourish. Green banks provide financial tools like loans, interest buy-downs, and credit enhancements, reducing the risk for private investors and private banks who might not otherwise take on these kinds of investments. This makes it easier for individuals and local businesses to finance renewable energy and energy efficiency projects in communities that need it.

Since its establishment in 2015, Montgomery County Green Bank has facilitated over $140 million in clean energy investments, leading to significant reductions in greenhouse gas emissions and creating local job opportunities. Green banks, because of their role in the communities they serve, often become an information hub for individuals, institutions and businesses to access information and resources about clean energy technology.

At WWF, we are the managing partner of the America Is All In coalition, which is working to ensure community organizations are aware of the resources coming from GGRF programs and leveraging lessons learned from successful green banks. We will be hosting a webinar on April 11th to discuss financing tools available through domestic green banks. There is a lot to learn from these innovative institutions and we are excited to invite a few of them to talk about their experiences.

The GGRF is about more than money. It’s about catalyzing climate action at the community level, and about prioritizing action in communities that have been left behind for far too long. The work is just beginning, but it is off to a great start.