EPA announces $20B clean energy grant competition

The Environmental Protection Agency announced two national competitions funded with $20 billion of grant money aimed at reducing greenhouse gas emissions primarily in underserved areas.

The funds will flow through what the EPA called "national financing institutions" that function as green banks. The EPA also promotes the use of munis and green bonds for clean energy projects. 

The first, the National Clean Investment Fund competition, will provide $14 billion to two to three nonprofit institutions that will partner with the private sector to provide accessible, affordable financing for clean technology projects. 

"These national nonprofits will provide financing through products, such as loans to individuals and families, nonprofit organizations, for-profit businesses, units of government and others, to deploy carbon emission reducing projects," said Jahi Wise, senior advisor and acting director of the Greenhouse Gas Reduction Fund at the EPA. 

The comments came during a concise webinar on Monday that laid out the parameters for the two competitions. The NCIF requires that "at least 40% of NCIF funds will flow to low-income and disadvantaged communities, including communities with environmental justice concerns, traditional energy communities, rural communities, Tribal communities and other underserved areas." 

The other program, the Clean Communities Investment Accelerator competition, will dispense $6 billion of grants through two to seven nonprofit hubs to provide funding and technical assistance to community lenders to finance clean technology projects. The list of viable projects includes retrofitting homes and electrifying commercial fleets in low-income and disadvantaged communities. 

The competitions are tied to the $27 billion Greenhouse Gas Reduction Fund, which is part of an array of policy initiatives designed to combat climate change launched via the Inflation Reduction Act. 

In June, the IRS provided clarification to rules governing its direct-pay system that made it possible for publicly owned utilities to trade clean energy tax credits for cash. The U.S. Dept. of Agriculture has its own green energy efforts under way to push $1 billion toward rural and non-rural municipalities where at least 50% of the population live in a community with a population of 20,000 or fewer.    

"When we consider the needs of disadvantaged or low-income communities, it is not just housing," said Lourdes German, executive director of the Public Finance Initiative.

The new competitions "also contain elements that could strengthen the small business eco-system by enabling zero-interest loans to small business owners who want to buy and use energy efficient vehicles for commercial use that have a reduced reliance on gas," German noted.  

Vice President Kamala Harris and EPA Administrator Michael Regan announced the twin initiatives Friday in Baltimore. Harris stressed the importance of the grants acting as a funding primer. "Public investment is an incentive by design for billions more dollars from the private sector," she said.  

The two competitions will close on Oct. 12. The EPA has set a goal to choose the winners by the end of the first quarter 2024, with work starting as early as next July.