Imagine hundreds of well-capitalized green banks and community lenders spread across the U.S., providing billions of dollars in low-cost financing for tens of thousands of clean energy and energy efficiency projects, the vast majority of them in long-overlooked communities.

That’s the vision of the new Greenhouse Gas Reduction Fund, created under the Inflation Reduction Act (IRA) to overcome one of the toughest barriers for clean technology investment, particularly in low-income and disadvantaged communities: access to capital.

The U.S. EPA took a big step forward in making that vision a reality this week when it awarded $20 billion (out of a total of $27 billion) to a handful of nonprofit financial institutions to lead the development of a first-of-its-kind nationwide clean energy financial network.

GGRF explained

The $20 billion in funding announced on April 4 is divided into two programs—the $14 billion National Clean Investment Fund (NCIF), under which three selected nonprofit awardees will partner with private lenders and community organizations to finance projects, and the $6 billion Clean Communities Investment Accelerator (CCIA), under which five selected organizations will establish hubs that provide funding and technical assistance to community lenders to finance projects.

Under both programs, buildings—particularly retrofits of existing buildings—are defined as one of three priority areas of investment, along with transportation and distributed clean energy resources. In guidance released in 2023, the EPA said that example projects include efficiency and electrification of affordable multifamily housing or school buildings, along with community facility retrofits with on-site solar, storage and charging infrastructure. All of the financed projects under the CCIA—and 60% of NCIF projects—are to be located in low-income and disadvantaged communities.

Particularly alongside a growing suite of local, state and federal buildings policies such as building performance standards and IRA tax credits, the new financing programs will provide a valuable new tool for accelerating USGBC’s mission of creating healthier, more sustainable and more decarbonized buildings.

What’s next

The EPA said it hopes to complete contracts with the awardees by July, with funds to be released shortly thereafter. Most of the awardees are coalitions of housing, climate and community development organizations, and other nonprofits who have done similar work for years, and should be well-equipped to set up their programs relatively quickly.

Based on the applications, the White House estimates that each dollar of federal funding will be matched by nearly $7 of private capital, for a total impact of about $150 billion. The administration also estimates that the program will reduce or avoid up to 40 million metric tons of carbon pollution annually over the next seven years.

A third program under the GGRF, the $7 billion Solar for All program aimed at financing residential and community solar, is yet to be awarded and is expected soon.

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