With $20 billion in “Green Bank” funding to advance climate projects large and small, more underserved communities will be able to afford going green.
Many climate-friendly projects, like solar panels and energy-efficient appliances, pay for themselves pretty quickly over time. Yet despite this good rate of return, getting financing for projects can be difficult, especially for small borrowers. This month, Vice President Kamala Harris and EPA Administrator Michael Regan announced funding to break down these barriers: $20 billion in “Green Bank” awards that will go to promote energy efficiency and climate projects, many in disadvantaged communities.
The money comes from the 2022 Inflation Reduction Act’s $27 billion Greenhouse Gas Reduction Fund (GGRF), and will be distributed through two programs: The National Clean Investment Fund ($14 billion) and the Clean Communities Investment Accelerator ($6 billion).
Both programs selected applications from nonprofit groups with extensive experience delivering financial assistance for a cleaner future. Most of the selected applicants are themselves coalitions of established partners, such as Rewiring America, Habitat for Humanity, and the United Way. In addition, many are Community Development Financial Institutions (CDFIs), private banks that specialize in providing financial services in low-income communities and to people who lack access to financing. Seventy percent of the awarded funding will be directed to disadvantaged communities, including rural and tribal communities.
Once all projects financed are completed, they will reduce greenhouse gas emissions by up to 40 million metric tons of CO2 equivalent yearly — as much as nearly 9 million cars.
The eight selected entities have also pledged to leverage every dollar of federal funds with nearly seven dollars of private investment. The Biden administration intends to distribute all the funds by the end of 2024. Once all projects financed are completed, they will reduce greenhouse gas emissions by up to 40 million metric tons of CO2 equivalent yearly — as much as nearly 9 million cars.
The White House gave an example of the type of impact these funds can have, highlighting 78-year-old Mildred Carter of DeSoto, Georgia, who could not afford to replace her broken water heater. Rewiring America, one of the groups that will receive funding, replaced it for her, combining Georgia Power incentives with philanthropic support to install a brand-new heat pump water heater on Dec. 23, just in time for the holidays.
A couple dozen green banks exist, including state level ones in California and New York, and in local areas, but this is the first national program. Senator Chris Van Hollen (D-MD) first introduced national green bank legislation in 2009, when he was in the House of Representatives. He said, “Today’s deployment of $20 billion from that fund is a pivotal moment in America’s fight to confront the climate crisis while driving inclusive economic growth. These funds will serve as a catalyst for private investment in job-creating projects to cut carbon emissions, spur clean energy innovation, and advance environmental justice in underserved communities that have borne the brunt of climate change. Today’s investments are just the beginning — they will be multiplied seven times over to turbocharge our transition to a clean energy economy.”
