What You Need to Know About the Greenhouse Gas Reduction Fund

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The federal government is making its largest-ever investment in clean energy, with historic amounts for communities most burdened by pollution and costs.

These communities are getting well over 40% of the $27 billion Greenhouse Gas Reduction Fund (GGRF), an Environmental Protection Agency (EPA) initiative to finance greenhouse gas- and air pollution-reducing projects nationwide. These projects include solar panels, energy efficiency, electrical appliances and zero-emission vehicles.

About the fund

The fund was established under Biden in 2022 by the Inflation Reduction Act, authorizing a broader $783 billion for domestic energy and climate change spending — the largest in U.S. history.

The GGRF is being implemented through three seven-year grant programs: the $14 billion National Clean Investment Fund, a lending program; the $7 billion Solar for All program for residential solar installation; and the $6 billion Clean Communities Investment Accelerator program granting capital for hundreds of community lenders, like credit unions, nationwide.

68 grantees were rewarded all $27 billion last month, “and are already putting the money to work,” said David Widawsky, director of the EPA Office of the Greenhouse Gas Reduction Fund, at a Friday, September 13 Ethnic Media Services briefing about the fund.

“The purpose is not only to reduce energy burden, which can be three times and as much as 10 times higher as a proportion of income in low-income and disadvantaged communities compared to the rest of the country,” he continued. “It improves health, reduces pollutants, and allows sustainable wealth creation for the communities that will host these projects.”

A household experiences energy burden when at least 6% of its income meets its energy needs; this is closely linked to energy insecurity, which one in three Americans experience. 

“Energy insecurity means making the difficult choice every single month about whether to heat or cool your home or eat,” explained Shalanda Baker, University of Michigan’s first vice provost for sustainability and climate action. “It manifests when people do dangerous things to heat their homes in the winter or keep their homes at unsafe temperatures during the summer. It can lead to things like household fires, even to death.”

“Low income households, especially those of color, are more likely to be in the shadows of this because of health impacts from living near fossil fuel generation, and because the way we structure energy rates in this country is regressive,” she continued. “The lower your income, the more you pay to meet a standard energy cost in your utility district.”

Over 52% of Black and about 47% of Latino U.S. households are energy insecure. 

For some Native American tribes, as much as 35% (Hopi) and 21% (Navajo) of households lack electricity access altogether.

“So far, clean energy transition has been rolled out inequitably in this country,” said Baker. “If you’re a White American in a majority-White census tract, you’re more likely to have access to solar than a Black American at the same income level and homeownership status.”

“This fund is a historic opportunity for people to own their energy assets, to create new jobs through new capital — but we need to make sure communities and businesses are informed,” she added.

One community’s story

“This program is a blessing,” said Evie Bauman, community implementation director of electrification nonprofit and GGRF grantee Rewiring America.

“To raise awareness about the impact it can make, last October, we launched a demonstration projects in communities that are underserved or overlooked by climate action,” she explained. “We provided at least one electrification upgrade at no cost to households most likely to see energy bill savings from it, and we partnered with manufacturers to get donated appliances to reach more homes.”

Buildings are responsible for 40% of total U.S. energy use, while residential energy use accounts for 20% of greenhouse gas emissions.

Rewiring America is part of a nonprofit coalition, Power Forward Communities, which received $2 billion for financing electrification over seven years through the National Clean Investment Fund.

In the small town of De Soto, Georgia, with a population of 122 as of 2022, Rewiring America brought an electric appliance upgrade to about 75 households, partnering with local utility company Georgia Power to bring efficiency initiatives like tax credits and rebates as well.

“When we started with a town hall meeting answering residents’ questions, many of them thought it was a scam. They found it too hard to believe someone was being this generous,” said Rosemery Jones, De Soto resident and Rewiring America project manager.

“One resident who participated had no home AC. He struggled to fill out paperwork and couldn’t come to City Hall to sign up because of transportation issues, so I made a home visit. He received a heat pump unit to cool his house,” she continued. “Another homeowner, a widow unable to replace her broken water heater — she had been boiling water for two months — also got a new heat pump installed that winter.”

“I got a call very late one night from an elderly woman battling cancer in a double-wide trailer with five rooms cooled only by two window units, after she received a heat pump. She said ‘I’m freezing,’ because she didn’t know how to operate her thermostat,” Jones said. 

“So we had contractors, HVAC technicians and our own staff teach residents how to operate their upgrades,” she continued. “Vitalizing De Soto now makes me think of the Roosevelt quote: ‘People don’t care how much you know until they know how much you care.’”

‘This is not a short-term story’

“This is the biggest-ever allocation of funding towards green energy, and we’re not stopping,” said Chrystel Cornelius, president and CEO of the Oweesta Corporation, the longest-standing Native Community Development Financial Institutions Fund (CDFI) and a $156 million GGRF Solar for All recipient. .

“If we can layer these projects with long-term business development, this funding is literally going to change the economic and energy landscape of our communities —  especially our rural and minority-focused communities,” continued Cornelius, a Turtle Mountain Indian Reservation member.

CDFIs, of which there are over 1,200 throughout all U.S. states, are created by the Treaury Department to provide federal and private capital to communities that don’t have easy access to mainstream market capital.

Across largely rural areas nationwide, Oweesta serves 574 federally recognized tribes, 60 state recognized tribes, 30 unrecognized tribes and indigenous individuals in Alaska and Hawaii.

With the GGRF grant, it aims to install solar energy in 20,000 residential households throughout these nations, and kickstart six community solar projects in collaboration with tribal members.

“We’re one step further to saving our planet,” said Cornelius. “We only have one, and they’re not making any more.”

“As we face the climate crisis, how do we put the most impacted communities first in line to receive the benefits?” said Jessie Buendia, chief impact officer for the Coalition for Green Capital, which received $5 billion through the GGRF to support green banks, which are institutions and nonprofits that use public and private capital for clean energy projects.

“This can’t be solved with only public-sector investments,” she explained. “Many in these sectors are used to working with hundreds, maybe thousands of dollars. Climate change is a trillion dollar problem, and our federal government is now making a down payment of billions to help communities transition into clean power systems well beyond the grant term.” 

“Our goal is to provide self-sustaining lending through a national network of green banks. The loans we provide will recycle, so we can offer more,” Buendia continued. “We want to ensure the utilities that communities plug into have renewable energy portfolios that can further fund clean energy, that can disincentivize fossil fuels and their health impacts.”

“We’re not serving not the easiest customers — who often have the most money, infrastructure and voice — but those who’ve been impacted the most,” she added. “This is not a short-term story, it’s a long term story.”

An Ethnic Media Services story