On April 4, 2024, the White House activated a much-anticipated program meant to catalyze private investment in clean technology across the United States. It will award $20 billion in grant funding to eight recipients under the Greenhouse Gas Reduction Fund, making the fund the single largest nontax investment within the Inflation Reduction Act of 2022 (IRA) to build a clean energy economy while benefiting communities historically left behind. At least 70% of the capital will flow to low-income and disadvantaged communities and at least 20% will flow to rural communities.

IN DEPTH

KEY TAKEAWAYS

• The White House will award $20 billion in grant funding to eight recipients under the Greenhouse Gas Reduction Fund, a green bank that was authorized under the IRA.
• The grant funding will create a national network of clean technology lenders.
• At least 70% of the capital will flow to low-income and disadvantaged communities and at least 20% will flow to rural communities.
• Three of the awardees are nonprofit financing institutions: the Climate United Fund, the Coalition for Green Capital and Power Forward Communities. They will split $14 billion, which will help finance clean technology projects in partnership with private sector investors and developers.
• Another five awardees – the Opportunity Finance Network, Inclusiv, the Native CDFI Network, Justice Climate Fund and Appalachian Community Capital– will split $6 billion to create hubs that deliver funding and technical assistance to community lenders in low-income and disadvantaged communities.
• The Biden administration plans to ask grant recipients to track the impacts of their investments, including emission reductions, benefits to communities and private sector capital mobilization.
• The US Environmental Protection Agency (EPA) will publish annual reports that disclose information from the awardees to ensure the program is working.
• Democrats launched the $27 billion Greenhouse Gas Reduction Fund to help spur the Biden administration’s plan to slash climate pollution by 50% from 2005 levels by 2030.
• The Greenhouse Gas Reduction Fund has an additional $7 billion for a “solar for all” competition that will award up to 60 grants across the US.

A DEEPER DIVE INTO THE GREENHOUSE GAS REDUCTION FUND

The grants will support a national financing network that will fund tens of thousands of climate and clean energy projects across the US, especially in low-income and disadvantaged communities, as part of US President Joe Biden’s Investing in America agenda.

The Greenhouse Gas Reduction Fund advances the Biden-Harris administration’s Justice40 Initiative, which aims for 40% of the overall benefits from certain federal climate, clean energy and other investments to flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. At least 70% of the funds (i.e., more than $14 billion of capital) will be invested in low-income and disadvantaged communities, including historic energy communities that have powered the US for more than a century, communities with environmental justice concerns, communities of color, rural communities and tribal communities, among others.

The $20 billion in grants will be deployed through eight selected applicants across two separate, complementary programs under the Greenhouse Gas Reduction Fund: the $14 billion National Clean Investment Fund (NCIF) and the $6 billion Clean Communities Investment Accelerator (CCIA). Together, the two programs will create a first-of-its-kind national network of mission-driven, community-led financial institutions that will finance various US climate and clean energy projects.

Through the NCIF, selected applicants will partner with the private sector, community organizations and others to provide accessible, affordable financing for new clean technology projects nationwide. While the EPA required that at least 40% of NCIF funds flow to low-income and disadvantaged communities, each selected applicant significantly surpassed said requirement. Thus, almost 60% of NCIF funds will flow to the communities that need it most. The three NCIF selectees are:

• Climate United Fund ($6.97 billion award), a nonprofit formed by Calvert Impact that will partner with two US Department of the Treasury-certified community development financial institutions (CDFIs): Self-Help Ventures Fund and Community Preservation Corporation. Together, they will bring a decades-long track record of successfully raising and deploying $30 billion in capital with a focus on low-income and disadvantaged communities. Climate United Fund’s program will focus on investing in harder-to-reach market segments like consumers, small businesses, small farms, community facilities and schools, with at least 60% of its investments in low-income and disadvantaged communities, 20% in rural communities and 10% in tribal communities.
• Coalition for Green Capital ($5 billion award), a nonprofit with almost 15 years of experience helping establish and work with dozens of state, local, and nonprofit green banks that have already catalyzed $20 billion into qualified projects – and that have a pipeline of $30 billion of demand for green bank capital that could be coupled with more than twice that in private investment. The Coalition for Green Capital’s program will place particular emphasis on public-private investing and will leverage the existing and growing national network of green banks as a key distribution channel for investment, with at least 50% of investments in low-income and disadvantaged communities.
• Power Forward Communities ($2 billion award), a nonprofit coalition formed by five of the country’s most trusted housing, climate and community investment groups that is dedicated to decarbonizing and transforming American housing to save homeowners and renters money, reinvest in communities and tackle the climate crisis. The coalition members – Enterprise Community Partners, Local Initiatives Support Corporation, Rewiring America, Habitat for Humanity and United Way – will draw on their decades of experience, which includes deploying more than $100 billion in community-based initiatives and investments, to build and lead a national financing program that will provide customized and affordable solutions for single-family and multifamily housing owners and developers, with at least 75% of investments in low-income and disadvantaged communities.

Through the CCIA, selected applicants will establish hubs that provide funding and technical assistance to community lenders working to finance clean technology projects in low-income and disadvantaged communities, leading to near-term deployment of climate and clean energy projects while building the capacity of community lenders to finance projects at scale for years to come. All of CCIA’s funds will flow to low-income and disadvantaged communities. The five selectees of the CCIA are:

• Opportunity Finance Network ($2.29 billion award), a nonprofit CDFI intermediary that has been around for more than 40 years and provides capital and capacity building for a national network of more than 400 community lenders (predominantly Treasury-certified CDFI loan funds), which collectively hold $42 billion in assets and serve all 50 states, the District of Columbia and several US territories.
• Inclusiv ($1.87 billion award), a nonprofit CDFI intermediary that has been around for more than 50 years and provides capital and capacity building for a national network of more than 900 mission-driven, regulated credit unions, which include CDFIs and financial cooperativas in Puerto Rico, that collectively manage $330 billion in assets and serve 23 million individuals across the country.
• Native CDFI Network ($400 million award), a nonprofit that serves as a national voice and advocate for the more than 60 Treasury-certified native CDFIs, which have a presence in 27 states across rural reservation and urban communities and have a mission to address capital access challenges in native communities.
• Justice Climate Fund ($940 million award), a purpose-built nonprofit supported by an existing ecosystem of coalition members and a national network of more than 1,200 community lenders to provide responsible, clean energy-focused capital and capacity building to community lenders across the country.
• Appalachian Community Capital ($500 million award), a nonprofit CDFI with a decade of experience working with community lenders in Appalachian communities, which is launching the Green Bank for Rural America to deliver clean capital and capacity building assistance to hundreds of community lenders working in coal, energy, underserved rural and tribal communities across the US.