The Biden administration announced Thursday the recipients of the Climate Change Act's largest grant program, launching a $20 billion effort to transform community lending and green the U.S. economy.
EPA will award eight initial grants under the Greenhouse Gas Reduction Fund, ranging in size from $400 million to nearly $7 billion. The biggest award goes to Climate United, a partnership involving a nonprofit impact investment firm and two affordable housing finance companies.
Administration officials told reporters Wednesday that EPA's financing program “creates the first national network of clean technology lenders to finance tens of thousands of climate change and clean energy projects over the next few years.” .
“And just as importantly, this nationwide network will bring capital to communities that are often left behind,” the official added. The conference call was held by the White House for reporters on the condition that officials remain anonymous.
The White House estimates that the program will reduce or avoid 40 million tons of carbon dioxide annually and mobilize $7 in private investment for every dollar spent by taxpayers, according to administration officials. . The official said 70% of the program's total benefits will go to low-income areas.
Vice President Kamala Harris and Environmental Protection Agency Administrator Michael Regan will announce the award Thursday at an event in Charlotte, North Carolina. Officials say they have a history of working with Self-Help, one of the affordable housing lenders affiliated with Climate United, to improve energy efficiency in homes and reduce utility bills. He plans to meet with homeowners in a black neighborhood.
EPA is partnering with Climate United to distribute a total of $14 billion in funding to fund projects such as community and residential solar installations, electric delivery vans, and energy-efficient apartment buildings. We selected three nonprofit organizations: , Green Capital Coalition, and Power Forward Communities. The agency also awarded five grants totaling $6 billion to build green lending capacity at nonprofit community development financial institutions (CDFIs) and credit unions that already serve disadvantaged communities. We plan to issue the money.
The funds that EPA hands over to these nonprofits will be disbursed to a broader range of nonprofit lending institutions over the seven years of the program. EPA expects this program to fundamentally change the way these agencies approach distributed power, electric transportation, and energy-efficient building financing.
The program could benefit some of the large-scale clean energy projects that major green banks have focused on. But the administration is directing most of the program's resources to CDFIs and credit unions that serve low- and moderate-income Americans in urban and rural areas.
This suggests that a large portion of the capital could go toward lending to consumers and small businesses rather than utility-scale clean energy projects.
“These community financial institutions are the backbone of financial access in many communities, and providing them with the capital to start financing clean space will help more American families afford these costs. It just means we have access to more effective air pollution reduction technologies,” a senior government official told reporters on Wednesday.
The official added that only projects that currently lack access to capital will be eligible for financing under the program. For example, it may be difficult for commercial renewable energy projects to clear this hurdle.
EPA will allocate the $20 billion based on two competitions: the National Clean Investment Fund (NCIF) and the Clean Community Investment Accelerator (CCIA).
Climate United, the largest winner of the NCIF competition, will focus on economic opportunity and environmental sustainability in low-income and disadvantaged communities, according to people briefed on EPA's plans. . The group is a partnership with global impact investor Calvert Impact Capital and his CDFIs Community Preservation Corp. and Self-Help.
The Green Capital Coalition, which represents state and local green banks, will receive $5 billion under the NCIF competition to fund green banks and fund eligible projects. Power Forward Communities, which includes electrification nonprofit Rewiring America, national affordable housing organizations Enterprise Community Partners and LISC, and housing philanthropic organizations, will invest $2 billion to focus on housing. You will receive dollars.
EPA also plans to award five awards under the $6 billion CCIA program. These grants range from $2.3 billion for Opportunity Finance Network, a CDFI intermediary, to $400 million for Native CDFI Network, which supports nonprofit Native American lenders on reservations and urban areas. . CDFI Appalachian Community Capital, CDFI brokerage Inclusiv, and the nonprofit Justice Climate Fund will also receive grants under the program.
“It’s a really good start.”
The award was a closely guarded secret even to the selected applicants. Beth Bufford, CEO of Climate United, said her group only received formal notification of winning the award Sunday night and did not learn the grant amount until late Wednesday. .
But Bufford said she and her team have spent the past few months strengthening their outreach and pipeline of partner organizations and projects.
“We basically decided internally that we were going to prepare as if we were going to win an award,” she said. “I knew I had to start running to prepare for this moment.”
Bufford said Climate United plans to begin disbursing funds by the end of the calendar year. But she said implementation plans needed to be adjusted to take into account the size of the award. She applied for the full $14 billion from NCIF.
Power Forward Partners will focus on housing, but Climate United could also work in that area. The Greenhouse Gas Reduction Fund is the largest investment the Inflation Control Act has made to achieve decarbonization, and EPA has identified it as one of the program's core priorities.
Climate United wants to encourage lenders to take out loans for carbon-reducing upgrades such as appliances, heat pumps and car charging when making mortgages for homes, apartment complexes and office buildings. ing.
“Trillions of dollars of mortgages are originated every year,” Bufford said in a recent interview. “If we don't incorporate deep decarbonization investments throughout the process, we will never be able to achieve decarbonization at the scale needed to actually reduce building emissions.”
Reed Hundt, CEO of the Coalition for Green Capital and a longtime advocate for green banks, said three-quarters of the program's resources will be given to community lending coalitions.
Hund said CGC's $5 billion capital raise for green banks is a “very good start.”
“We're going to need a lot more funding just to strengthen the pipeline,” he said. CGC has $30 billion worth of projects and investment opportunities slated, more than half of which are in low-income areas, Hundt said.
CGC has achieved strong results and is aiming to raise further funding.
“Good investments attract more investments,” Hund said.
Douglas Sims, interim CEO of the Justice Climate Fund, said the nonprofit is developing courses on green lending and creating customized programs to support individual CDFIs and credit unions. He said he would design it. The Justice Climate Fund (NCIF's application was unsuccessful) received $940 million under the CCIA.
CCIA funding can be used to help community financial institutions hire staff with expertise in areas such as solar financing, building efficiency, and electric vehicle infrastructure. Community lenders participating in the program will also have access to capital to make loans in these areas.
“We know these lenders are already lending in the community and have a long track record of doing so, so it's important to ask what they need to do to be more effective,” Sims said. Told.