The US Environmental Protection Agency (EPA) announced it is seeking applications for two competitive clean energy grant programs, the National Clean Communities Investment Accelerator and the Clean Communities Investment Accelerator, which have combined funding of US$20 billion. These programs are part of the US$27 billion Greenhouse Gas Reduction Fund (GGRF) established under the Inflation Reduction Act (IRA).
To stimulate green energy projects, the IRA utilizes various tax credits and incentives. Perhaps not as widely known, the IRA established the GGRF as a “green bank,” which aims to reduce project risks in low-income communities by providing financial support and attracting private investment. The GGRF program ties into the Biden Administration’s stated environmental justice policies and environmental social governance (ESG) private market trends.
The GGRF Fund
The IRA, signed into law in August 2022, added section 134 to the Clean Air Act, 42 U.S.C. § 7434, to establish the GGRF. Administered by the EPA, the GGRF provides competitive funding to enable zero-emission technologies, as well as funds for financial and technical assistance for projects that reduce or avoid greenhouse gas (GHG) emissions and other forms of air pollution. Maintaining its publicized commitment to “environmental justice,” the EPA intends that a significant percentage of funded projects will be directed to low-income and disadvantaged communities.
The GGRF allows the EPA to make grants, on a competitive basis, as follows:
- $7.0 billion to states, municipalities, tribal governments, and eligible recipients for the purposes of providing grants, loans, or other forms of financial assistance, as well as technical assistance, to enable low-income and disadvantaged communities to deploy or benefit from zero-emission technologies;
- $11.97 billion to eligible recipients for the purpose of providing financial and technical assistance for qualified projects;
- $8.0 billion to eligible recipients for the purpose of providing financial and technical assistance for qualified projects in low-income and disadvantaged communities; and
- $30.0 million for agency administrative costs.
Under the IRA, the following definitions are relevant to the GGRF:
- “Eligible recipient” means a nonprofit organization that is designed to provide capital, leverage private capital, and provide other forms of financial assistance for the rapid deployment of low- and zero-emission products, technologies, and services; does not take deposits other than deposits from repayments and other revenue received from financial assistance provided using grant funds under IRA; is funded by public or charitable contributions; and invests in or finances projects alone or in conjunction with other investors.
- “Qualified projects” means any project, activity, or technology that reduces or avoids GHG emissions and other forms of air pollution in partnership with, and by leveraging investment from, the private sector.
Under the GGRF, eligible recipients/project that meet the above requirements may use grant funding for direct investments in the form of financial assistance for a qualified project or indirect investments in the form of funding and technical assistance to support new or existing public, quasi-public, or nonprofit entities that in turn provide financial assistance to qualified projects at the state, local, territorial, or tribal level, including community and low-income-focused lenders and capital providers.
The NCCIA and CCIA Grants
The EPA is currently receiving grant applications for two the NCCIA and CCIA programs, which provide:
- The $14 billion National Clean Investment Fund provides grants to support two-to-three national clean financing institutions, enabling them to partner with the private sector to provide accessible, affordable financing for tens of thousands of clean technology projects nationwide. At least 40% of the funds from the National Clean Investment Fund will be dedicated to low-income and disadvantaged communities, including those that are rural communities and tribal communities.
- The $6 billion Clean Communities Investment Accelerator provides grants to support two-to-seven hub nonprofit organizations, enabling them to provide funding and technical assistance to public, quasi-public, not-for-profit, and non-profit community lenders working in low-income and disadvantaged communities. The policy goal is to allow community development financial institutions, credit unions, green banks, housing finance agencies, and minority depository institutions to finance clean technology projects in low-income and disadvantaged communities.
The application deadline for the NCCIA and CCIA grants is October 12, 2023. In addition to any additional applicable legal requirements, applicants must be eligible nonprofits as defined in Section 134(c)(1) of the Clean Air Act and as further explained in the applicable Notice of Funding Opportunity issued for this program. Coalitions, led by an eligible nonprofit, are also eligible to apply to this competition. Additional details are available at grants.gov. Funds are available to the EPA to award grants until September 30, 2024.