EPA Starts the Roll Out of the Greenhouse Gas Reduction Fund
This is a huge step with the potential to not only improve lives, but transform ‘green’ investments into ‘mainstream’ investments.
Today, EPA got one step closer to turning the Inflation Reduction Act (IRA) into real investments that can improve lives in low income and disadvantaged communities. The agency released initial guidance on its groundbreaking new program dubbed the Greenhouse Gas Reduction Fund (the Fund). The Fund is a $27 billion program within the Inflation Reduction Act of 2022 to support the rapid deployment of low- and zero-emission technologies, with the majority of funding dedicated to supporting projects that reduce GHG and other air pollution in low-income and disadvantaged communities. This is a huge step. It has the potential to not only improve lives, but ultimately transform ‘green’ investments into ‘mainstream’ investments by catalyzing far, far more than $27 billion dollars of investments and building a more equitable clean energy future.
For years, NRDC has led the charge advocating for expanded access to green finance, and since IRA passed, we’ve worked hand in hand with partners weighing in on the design and implementation of the Fund. We submitted multiple comment letters; convened likeminded partners across the community-based lending, green bank, environmental justice, and community-based organization sectors; and worked with hundreds of practitioners across the country to develop strategy guides for equitable implementation of the Fund across six high-priority sectors.
What we know:
The initial steps EPA has taken today are promising. They align with both the legislative intent of the Fund and NRDC’s vision of what’s needed to create an equitable, efficient, effective program that will improve the lives of millions, particularly those living in low-income and disadvantaged communities. A couple of highlights include:
- Prioritizing Disadvantaged Communities: Although the law requires that just over half of Fund investments target low-income and disadvantaged communities, EPA will aim to prioritize investments in these communities throughout the entire $27 billion program. This decision could transform how funding flows to underserved communities, and Fund investments can support critical, life-improving projects that otherwise would not have moved forward.
- Awarding Multiple Recipients: For the $19.97 billion portion of the Fund, EPA plans to make between 2-15 awards to the most qualified eligible recipients, rather than investing in a single entity. This will allow EPA to create a robust, cohesive network of lenders that collectively have the capacity to reach and meet the needs of all communities, while also improving program efficiency and minimizing risk. This is a sound decision, as NRDC and many of our environmental justice and community-based partners have pushed EPA to select multiple recipients as a critical feature of Fund implementation.
- Seeking Strong Track Records and Collaboration: EPA says it will prioritize applicants with strong track records in deploying capital to move projects benefiting communities – particularly low-income and disadvantaged communities – forward. This will ensure that funding flows to entities best equipped to rapidly, effectively, and strategically deploy capital to the projects and communities most in need. Additionally, EPA emphasized the importance of collaborations across entities to create a network of intermediaries that can deploy Fund capital throughout the country. Meaningful collaboration should include shared governance that properly leverages the expertise and experience of all partners, and we are encouraged that EPA understands how critical this is.
- Supporting Technical Assistance and Capacity-Building: EPA recognized that access to technical assistance and capacity building will be vital to the Fund’s near- and long-term success. Such assistance will help communities build capacity, take ownership of projects, and create a lasting pipeline of community-based projects that deliver economic opportunity to all corners of our country.
What is next:
EPA will release notice of funding opportunities for both the $7 billion zero emission technologies portion and the $19.97 billion portion of the Fund in early Summer 2023. Applicants will have 2-3 months to respond, and EPA will make awards by late September of next year. In the meantime, NRDC and its partners will continue to advocate for program design and implementation elements that will create an equitable, efficient, and effective program.