This fresh tranche of funding, announced on Thursday (4 April), has been described as “unprecedented” by EPA administrator Michael S Regan. It forms part of the Inflation Reduction Act’s $27bn Greenhouse Gas Reduction Fund. This fund has an ambition of mobilizing more than six times as much private capital within the next seven years.
There is a particular focus on using the Fund to unlock private investment in low-income communities including rural and Native American communities.
The Fund is touted as “the single largest non-tax investment within the Inflation Reduction Act to build a clean energy economy while benefiting communities historically left behind”.
$14bn of the funding announced this week is coming from the National Clean Investment Fund – an initiative aimed at supporting the establishment of financing solutions for energy efficiency and clean energy solutions in homes and for businesses.
The new Climate United Fund, comprising three long-standing nonprofit financial institutions, will be awarded almost $7bn. It will invest in energy efficiency and clean energy solutions for hard-to-reach market segments such as small businesses including farms, low-income homes, schools and community facilities.
The Coalition for Green Capital, meanwhile, will receive $5bn to grow its network of green banks and facilitate blended finance allocations to clean energy with a focus on low-income communities.
Community investment coalition Power Forward Communities will receive the remaining $2bn to support its efforts to build and lead a national financing programme providing solutions for housing owners and developers.
A further $6bn is being allocated through the Clean Communities Investment Accelerator. This funding will support community lenders in providing the financial assistance needed to create distributed energy projects including community energy arrays; low-carbon transport systems; building energy efficiency projects and new green buildings.
One of the five beneficiaries will be Appalachian Community Capital, which will launch a ‘Green Bank for Rural America’ to support community lenders in underserved rural communities.
Those living in rural Appalachia are believed to have some of the lowest earnings in the US. More than two million are estimated to live in ‘persistent poverty’. The US government classes the region as “characterised by high rates of poverty and unemployment”.
The EPA claims that the projects funded this week will reduce or avoid up to 40 million metric tonnes of greenhouse gas emissions per year.
Vice President Kamala Harris said: “When President Biden and I made the largest investment in our nation’s history to address the climate crisis and to build a clean energy economy, we made sure that every community would be able to participate and benefit.
“The grantees announced today will help ensure that families, small businesses, and community leaders have access to the capital they need to make climate and clean energy projects a reality in their neighbourhoods.”