What is the Greenhouse Gas Reduction Fund?
By Ellen Wang and Defne Aslan, E2 Summer interns
One program from the Inflation Reduction Act that many states, nonprofits, and business leaders have been eagerly awaiting the full rollout of is the Greenhouse Gas Reduction Fund (GGRF), an unprecedented federal investment in the clean economy. The GGRF is a $27 billion investment fund [SP1] aimed at reducing greenhouse gas emissions and stimulating additional financing and private capital for clean economy projects. The Fund, managed by the Environmental Protection Agency (EPA), has three main programs: National Clean Investment Fund, Clean Communities Investment Accelerator, and Solar For All.
What are the NCIF and CCIA and what projects qualify?
The first main program, the National Clean Investment Fund (NCIF), received $14 billion to establish long-term clean financing institutions. The three direct national awardees were Climate United, Coalition for Green Capital, and Power Forward.
The Clean Communities Investment Accelerator (CCIA) received $6 billion to help expand the capacity of community lenders in low-income and disadvantaged communities. The five direct awardees of the CCIA are the Opportunity Finance Network, Inclusive, the Justice Climate Fund, Appalachian Community Capital, and the Native CDFI Network. A notable distinction between the CCIA and the NCIF is the NCIF aims to help already established clean financing institutions, whereas the CCIA focuses on providing technical and financial support to smaller community lenders in historically underinvested communities.
The EPA has outlined priority clean projects to receive funding from the NCIF and the CCIA. The first category includes distributed energy generation and storage projects and projects to develop enabling infrastructure. The second category is net-zero buildings, which includes both retrofitting existing buildings to become net-zero or creating new net-zero buildings in low-income and disadvantaged communities. The third category is zero-emissions transportation, including projects that develop transportation modes and deploy infrastructure.
What is Solar for All?
The third program of the GGRF is Solar for All (SFA), which is structured differently from the NCIF and CCIA. SFA received $7 billion to create new and/or increase distributed solar and solar storage projects in low-income and disadvantaged communities. SFA prioritizes residential solar projects, including rooftop solar, residential community solar, and enabling upgrades. The awardees for these funds cover all fifty states and are wide-ranging, including thirty six different States and State Offices, eight state-level nonprofits, and six programs serving tribes. A majority of SFA programs will be run by state government entities.
Beyond clean investments: how to ensure an equitable clean energy transition?
All three GGRF programs also follow the Justice40 initiative, which aims to have 40% or more of the total benefits from federal investments in clean energy go towards low-income and disadvantaged communities that have historically received less clean investments and been disproportionately harmed by pollution.
Overall, the GGRF goes beyond the Justice40 initiative, with almost 70% of the total fund going to low-income and disadvantaged communities. Additionally, groups — including NRDC — have been advocating for GGRF Best Practices. This guide was created for NCIF and CCIA applicants to ensure that communities impacted by GGRF investments will directly benefit. It emphasizes the importance of environmental justice communities having decision-making power in how and where GGRF investments are being made.
How will the GGRF impact different states?
The potential impacts of these unprecedented climate investments are wide-ranging and could reach every state. The challenge is rolling out the funds and navigating the difficulties of coordinating between federal and state institutions. While allocations for the funds have not been completely fleshed out, there are some sub-awardees announced at the state level.
For example, the California Infrastructure Economic Development Bank was awarded $249,800,000 for California’s SFA program, and the California Infrastructure Bank was named as a Coalition for Green Capital sub-awardee from NCIF. Similarly, the Colorado Energy Office will spearhead the Colorado SFA initiative with $156,120,000 from the EPA. The state of Colorado will also see benefits from the support of NCIF and Coalition for Green Capital, as the Colorado Clean Energy Fund was also named a sub-awardee of NCIF.
States in the southeast, such as North Carolina and Georgia, will also receive funds from the GGRF, specifically the SFA program. The North Carolina Department of Environmental Quality was awarded $156,120,000 and is planning to lead EnergizeNC, the North Carolina SFA Coalition. Georgia will receive $156,010,000 through The Capital Goods Fund, a nonprofit community development finance institution. The nonprofit will lead Georgia’s SFA program, Georgia BRIGHT Communities Coalition, to increase access to clean energy and good jobs.
Where is the GGRF now?
While all these GGRF awardees have been announced, organizations are still awaiting the actual distribution of funds. SFA programs are slated to begin in September 2024. Investments from the NCIF and CCIA were planned to start in July 2024; however, direct awardees such as the Coalition for Green Capital have yet to receive any funds. This hinders the ability of these green banks and community lenders to begin rolling out funding for qualified projects. Nevertheless, organizations, businesses, and communities are anxiously waiting for the GGRF to take effect and continuing to plan for this unprecedented flow of investments.
For example, two E2 members, Ms. Nenha Young and Dr. Anthony Kinslow have been working with the GGRF and continue to follow its progress. Young and Kinslow were kind enough to share with us their experiences at both the finance institution and individual business level.
Ms. Nenha Young on the Coalition for Green Capital
Nenha Young, an E2 1 Hotels Fellow and Senior Director of Development and Network at the Coalition for Green Capital (CGC), is working to access funds from the GGRF and J40. CGC was named a direct awardee of NCIF, receiving $5 billion. Young plays a pivotal role in guiding CGC’s efforts in assisting low-income and disadvantaged communities to navigate the complexities of securing capital in order to invest in the energy transition. CGC’s broader energy transition efforts include establishing green banks like the National Clean Energy Infrastructure Bank and fostering public-private partnerships to support clean energy projects in rural, tribal, and underserved communities.
Once the funds begin flowing to CGC and can be distributed further, benefits will ripple beyond qualified projects to increased jobs for contractors and community economic growth.
Dr. Anthony Kinslow II on Gemini Energy Solutions and Working with Communities
Dr. Anthony Kinslow II, founder of Gemini Energy Solutions and member of E2, is dedicated to advancing energy efficiency in historically marginalized communities. As the leader of a Black-owned firm, he stands at the forefront of the clean energy revolution. Gemini Energy Solutions’ mission transcends profit, with over 80% of profits reinvested into the community to drive the transition. Their current largest project focuses on installing solar panels on Black and Latino churches, aiming to bring sustainable energy solutions to these communities.
The GGRF and J40 act as beacons of hope for a more inclusive energy transition. Kinslow highlights that while uncertainties surrounding fund availability and timing have complicated access, clear communication and tailored approaches are essential to ensure that marginalized communities are fully knowledgeable on and can benefit from programs like J40, which differs fundamentally from previous government grant initiatives due to its specific focus on lower-income communities.
Kinslow advocates for a paradigm shift in delivering clean energy solutions to these communities. It’s not merely about offering choices or promoting consumerism, but about empowering communities to take control of their energy futures. This requires a nuanced understanding of their unique needs and a commitment from green banks and developers to adopt flexible, innovative strategies. Collaboration with community-based organizations is crucial in raising awareness about programs like the GGRF. Educating stakeholders on the intricacies of these initiatives can bridge gaps, making the benefits of clean energy more accessible to all.
The experiences of Kinslow and Young underscore the transformative potential of the GGRF and Justice40 initiatives in driving equitable energy change. While challenges persist, the way forward lies in collaborative efforts to ensure that all communities can participate in and benefit from the clean energy transition.
The Equity Engine of the Inflation Reduction Act: the Greenhouse Gas `Reduction Fund was originally published in e2org on Medium.