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What is the Greenhouse Gas Reduction Fund?

The GGRF is the IRA’s largest grant program and one of the most impactful programs for low-income, BIPOC, and Tribal communities.

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Executive Branch State Climate Action

Editor's Note:

Passing the Inflation Reduction Act (IRA) ushered in the largest investments in climate and clean energy in our nation’s history. But our work isn’t done yet. Effective and equitable implementation will be key to ensuring we realize our climate goals, cut greenhouse gas pollution, advance environmental justice, and create good-paying jobs that propel the clean energy economy. In order to assist federal agencies, states, local communities, Tribal governments, businesses, and other partners take full advantage of this historic funding, Evergreen Action is writing a series of blogs breaking down several key programs in the IRA.

 

 

Providing a massive $27 billion in grants, the Greenhouse Gas Reduction Fund (GGRF) is the largest grant program within the IRA. Not only does this provide a massive investment in pollution-reducing, clean energy technology, but it targets communities that have been historically overlooked and underserved and brings equity to the clean energy transition. And the program's flexibility puts decision-making into states and communities’ hands—allowing local leadership to design and implement programing for maximum impact. This financing will have both immediate and long-lasting impact, by deploying clean energy projects in communities now, and supporting the creation of green banks that can finance clean energy projects well into the future. 

The deadline to take advantage of these funds is fast-approaching: The Environmental Protection Agency (EPA) only has until September 2024 to award the money. And what follows is the potential to kick-start the transition to clean energy and reducing harmful pollution for impacted communities. It will take engagement from communities, nonprofits, financial institutions, state, local and Tribal governments to deliver transformational impact. That means equitable investment in projects and long term development strategies that prioritize benefits for historically harmed communities. 

 

How does the GGRF work?

The $27 billion is divided among three competition programs, each with different intentions: the National Clean Investment Fund, the Clean Communities Investment Accelerator, and the Solar for All competition. Through these three programs the GGRF will provide 55 percent of the benefits to disadvantaged communities, making this one of the most impactful IRA programs for low-income, Black, Brown and Indigenous communities. 

Nonprofits or eligible nonprofits for the purpose of the GGRF program refers only to nonprofit organizations that are designed to provide capital, leverage private capital and provide other financial assistance for the deployment of clean energy technologies, with ability to invest in or finance projects, and must be funded by public or charitable contributions. 

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The GGRF’s $27 billion is divided among three competition programs. Over 40 percent of the funds will go to disadvantaged communities.

National Clean Investment Fund

This program provides $14 billion in much-needed financing for businesses and community lenders to invest in zero-emissions projects that will allow communities to confidently transition away from their reliance on fossil fuels. EPA has said in initial guidance that it will select up to three national nonprofits to partner with eligible businesses, nonprofits, and lenders to get zero-emissions projects off the ground.

The program is intended to provide flexibility so that eligible recipients can design and deploy projects that serve the unique needs of their communities. This flexibility is critical because each state and community has different hurdles related to reducing pollution and limiting reliance on fossil fuels. Some states would see the greatest pollution reductions by addressing their high-polluting transportation sectors, while other states could focus on strategies to reduce pollution from the industrial sector. This allows each region to get the most emissions reductions out of the program. EPA expects the national nonprofits and award recipients to work closely with communities to ensure that no less than 40 percent of the project benefits are felt in disadvantaged communities. 

Clean Communities Investment Accelerator

The Clean Communities Investment Accelerator will supply $6 billion for up to 7 “hub nonprofits” that could scale up financing for clean technology projects. The hub nonprofits will build this financing capacity through engaging networks of interest lenders in the public, quasi-public, and nonprofit sectors. These lenders may include community development financial institutions (CDFIs), credit unions, green banks, housing finance agencies, depository institutions with majority ownership by disadvantaged individuals, and more.

The goal of this competition program is to ensure that financing for zero-emissions projects is available to small businesses, schools, community institutions and eligible nonprofits across the country. Historically, it has been challenging for disadvantaged communities to receive adequate financing for community improvement projects because loans in general, and lower interest rates, are more often given to white individuals and investors than people of color. This program attempts to fill in the gaps and unlock opportunities for all communities to receive financing that will support long term investments in distributed power generation and storage, decarbonization retrofits of existing builds, and projects that will reduce transportation pollution. 

Solar for All Competition

This competition is a $7 billion fund that will provide up to 60 grants to states, municipalities, Tribal governments and eligible nonprofits to deploy residential and community solar, and storage technologies and enabling infrastructure, in low-income and disadvantaged neighborhoods. EPA plans to award at least one grant per state, with up to three awards set aside to directly serve Tribal nations.

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Nonprofit solar installers and volunteers building a community solar array in Colorado.

The IRA requires all of the money under this competition to benefit disadvantaged communities, and by investing in community and rooftop solar projects within these communities, this program provides benefits to low-income consumers who may not be able to access other IRA programs like tax incentives. This program acknowledges that disadvantaged communities may need extra support to successfully deploy solar projects, and allows for investments in associated storage and critically, enabling upgrades of the buildings that would host these technologies. 

 

Three reasons why the GGRF is a big deal for states, local governments, and Tribes

1. It provides communities with the flexibility to design projects based on their needs.

The National Clean Investment Fund provides the greatest opportunity for project creativity, encouraging proposals for projects and technologies that may otherwise not have been financed, as long as they reduce pollution. The Clean Communities Investment Accelerator also gives communities broad ability to develop projects related to energy generation and storage, decarbonization of existing buildings, and reduction in transportation pollution. These two programs allow communities and lenders to get creative in order to finance projects with the greatest potential for emissions reductions—which may vary depending on the state and local needs. 

Read Our GGRF Implementation Guidance for States

2. It builds long-term financing structures for future clean energy projects.

The National Clean Investment Fund and the Clean Communities Investment Accelerator are also designed to have long-term benefits that extend beyond 2024. By partnering with capital providers and creating networks of community lenders, these two programs allow for the development of long term and recycled clean energy financing through green banks and other nonprofit clean energy investment funds. Green banks and clean energy investment funds will allow the initial investments from the GGRF to be sustained and recycled to provide continued funding for future clean energy projects. 

3. It empowers disadvantaged communities to guide their own climate investments.

By partnering with nonprofits, local businesses, large and small scale community lenders, the GGRF allows for significant financing opportunities within disadvantaged communities. Providing funds to disadvantaged communities through financing institutions owned, operated or supported by disadvantaged individuals (minority depository institutions, CDFIs and others), allows historically marginalized communities to finally have the opportunity to shape the development of their communities and guide the investments.

Watch now: Evergreen Action sat down with NDN Collective and the Institute for Tribal Environmental Professionals to discuss how Tribes can take full advantage of funds in the IRA.

Similarly, for Tribal governments, the ability to receive financing for pollution reduction and zero-emissions projects through community institutions can alleviate a significant barrier to project deployment. Often federal grants and formula funds for states and Tribes require the recipient to “match” or provide a certain percent of the funds before the money will be distributed. This matching requirement is often a hurdle for many Tribal nations, as many they lack the up front capital to meet the match requirement. The GGRF bypasses this matching requirement by partnering with communities and financial institutions, expanding financial access for Tribal and disadvantaged communities across the nation. 

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