A New Program Will Bring Clean Energy to Disadvantaged Neighborhoods in the US

The U.S. just made one of its biggest investments in bringing clean energy to the communities that need it most.

In April 2024, the U.S. Environmental Protection Agency (EPA) released $20 billion through the Greenhouse Gas Reduction Fund (GGRF), one of the most significant clean energy funding programs created through the 2022 Inflation Reduction Act. The funding essentially creates a national green bank network, distributing funds to an initial eight non-profits to finance clean energy projects that would otherwise lack access to capital. The GGRF is made up of three sub-programs:

1. The National Clean Investment Fund (NCIF), which delivers $14 billion to national-scale entities with proven clean energy project lending experience;
2. The Solar for All program, which will provide $7 billion to awarded organizations (still to be announced) to support rooftop solar in low-income communities across the country; and
3. The Clean Communities Investment Accelerator (CCIA), delivering $6 billion to local lending institutions to support communities who historically have been unable to access clean energy funding.

Much has been said about the GGRF broadly and why it could be a game-changer, but the individual sub-programs are less widely understood. Here we break down the Clean Communities Investment Accelerator and how it can bring clean energy to underserved and low-income communities.

What Is the Clean Communities Investment Accelerator and Why Is It Significant?

U.S. clean energy development to date has typically favored large entities - like corporations or utilities - or wealthy neighborhoods that have the money to finance the oftentimes high upfront costs of low-carbon technologies. Small businesses, local non-profits, tribal nations, and city and county governments - especially low-income ones - have been left out of the market historically. Some Inflation Reduction Act programs like tax credits have helped one part of the problem - entities that are priced out of clean energy purchasing due to tax burden - but that's not the whole picture.

The CCIA aims to change that by distributing clean energy funds and technical assistance to underserved and disadvantaged neighborhoods across the nation. Projects receiving financing could include energy-efficient buildings, rooftop solar on hospitals and schools, electric buses for public school students and much more. In that sense, the CCIA represents a historic opportunity to bring clean energy to those previously boxed out of the market.

How Will the Clean Communities Investment Accelerator Work?

Money will flow through five "hub" nonprofits that direct funding (along with technical assistance and other project support) to community lenders in underserved areas. The five nonprofits are:

1. Opportunity Finance Network, receiving $2.29 billion;
2. Inclusiv, receiving $1.87 billion;
3. Justice Climate Fund, receiving $940 million;
4. Appalachian Community Capital, receiving $500 million; and
5. Native CDFI Network, receiving $400 million.

These five groups will direct CCIA grant money to their respective networks of "community lenders" collectively spanning all 50 U.S. states and Puerto Rico. A community lender can be a local bank, a credit union, a local non-profit that provides financing, a community development financial institution (CDFI) and more. Those lenders then give money in the form of subsidies, grants or loans to specific clean energy projects managed by local governments, nonprofits, businesses or even individual households. These funds can help communities with the direct upfront costs of clean energy projects as well as serve as "bridge loans" to help them unlock other financial support such as Inflation Reduction Act tax credits.

The CCIA enables existing community lenders to essentially function like local green banks, directly benefiting people who need finance most to start participating in the clean energy economy. The program will effectively lower the cost of clean energy projects while improving quality of life in specific communities. Community lenders will direct investments toward communities where the energy burden remains disproportionately high, and where clean energy deployment can play a key role in improving economic opportunities and generating community wealth.

What Types of Projects Can Be Covered by by the Clean Communities Investment Accelerator?

The main project types that can be covered by CCIA funding are:

• Distributed energy generation and storage, which includes things like rooftop solar installations, community wind and solar, battery storage, fuel cells and more. These types of projects are well known for their ability to deliver big benefits to low-income and disadvantaged communities for a relatively low level of financial investment.
• Net-zero emissions building projects, which includes retrofitting existing buildings to reduce their emissions, as well as constructing new net-zero emissions buildings in disadvantaged communities. This can span from decarbonizing an apartment complex through energy & water efficiency, to adding geothermal heating and cooling to an office building, to retrofitting a rural elementary school's water and space heating mechanisms.
• Zero-emissions transportation projects, especially in communities that are overburdened by poor air quality. This can include deployment of EV chargers near multifamily housing, zero-emissions school bus purchases and other public transport investments, improving infrastructure to be more walkable/bikeable, and programs making it easier for individuals and families in low-income areas to buy electric vehicles.

What Are Some of the Barriers to Success, and How Can They Be Overcome?

While the CCIA is a huge step forward, it will take additional legwork to ensure the program fulfills its ambitions. Many community lenders receiving and distributing funds from the program do not have previous experience financing clean energy projects, so they'll need technical assistance to design appropriate financial products. And many of the funding recipients - such as local governments, schools, low-income households and non-profits - may lack know-how in implementing clean energy projects, and/or face staffing, budget and other constraints. Many of the groups eligible to receive funds may not even know the CCIA exists!

New partnership and peer learning networks could raise awareness, benefit CCIA recipients and accelerate project development. For example, a lender community of practice or GGRF accelerator program could help CCIA lenders and recipients share best practices and learn from each other on what works - and what doesn't. CDFIs could also form formal partnerships with members of the communities they serve - such as local government agencies - to raise awareness about the CCIA program and ensure its funds are distributed effectively.

What's Next for the CCIA and GGRF?

Now that the five nonprofit hubs have received CCIA funding, expect to see announcements of new clean energy projects and partnerships. For community members, this will eventually translate to projects like rooftop solar installations that reduce emissions and save money; EV charging stations near places that need them, like apartment complexes; buildout of new electric school bus fleets; public transportation and bike paths resulting in better air quality; and more.

Importantly, CCIA funding presents an opportunity for communities to strengthen their ability to stand up clean energy projects on their own and could have a snowball effect, producing more and more projects down the road. This will happen in lockstep with other announcements related to NCIF recipients and projects, which will be further along and more complex than the brand-new projects kickstarted by CCIA funding.

As lending institutions and cities work to implement this historic funding opportunity, they should be on the lookout for opportunities to make existing processes more efficient and create entirely new ways of working that will help accelerate the pace at which projects are approved, financed and implemented. Building out these new approaches will require investment from all involved parties. The maximum benefits of this new clean energy funding will be brought home through partnerships, not in siloes.