As described in our August 16, 2022 Client Alert, the Inflation Reduction Act of 2022 (IRA) provides approximately $60 billion in funding for clean energy and environmental projects, including to a variety of Environmental Justice (EJ) projects. The investments are available as tax credits, grants, loans, and as other financial assistance. Under the Justice40 Initiative, 40% of the environmental funding must be directed toward projects that “benefit” disadvantaged communities across climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure. In an effort to concentrate funds in disadvantaged communities, a group of 60+ Congressional Democrats sent a letter on September 6, 2022, urging the White House to make the 40% a floor on funding directed to EJ communities rather than using it as a target for overall benefits.
The IRA sets EJ criteria for select, but not all, benefits. Ultimately, whether the measure of funding is 40% or a higher percentage, federal and state recipients of IRA funds will have a large role in deciding where and how funds are allocated to EJ communities, meaning distribution may vary across agencies and programs.