Mary Scott Balys
On August 16, President Biden signed into law the Inflation Reduction Act, a massive health care, tax, and climate bill with implications for the CDFI industry. The bill includes several tax and climate provisions focused on clean energy and greenhouse gas reduction, with a focus on underinvested communities.
The $27 billion Greenhouse Gas Reduction Fund, which will be administered by the Environmental Protection Agency, will fund green and energy efficient projects across three areas:
- $7 billion for zero emission technologies available to states, municipalities, tribal governments, and eligible recipients for zero emission technologies like “distributed technologies on residential rooftops, and to carry out other greenhouse gas emission reduction activities, as determined appropriate by the Administrator in accordance with this section.”
- $11.9 billion for competitive grants for financial and technical assistance for both direct and indirect investments into qualified projects that reduce or avoid greenhouse gas emissions or other forms of air pollution.
- $8 billion for competitive grants for financial and technical assistance for both direct and indirect investments specifically in low-income and disadvantaged communities for qualified projects that reduce or avoid greenhouse gas emissions or other forms of air pollution. This could include projects like financing solar panels, home energy efficiency projects, and electric vehicles.
There is also $30 million allocated for administrative costs. The EPA is required to write regulations and begin the grantmaking process within 180 days.
Eligible recipients must be nonprofit organizations that provide capital or financial assistance to low and zero emission projects, do not take deposits other than deposits from repayments, are funded by public or charitable contribution, and invest in or finance projects alone or with other investors.
CDFIs are well-positioned to deliver greenhouse gas reduction financing to the low-income and disadvantaged communities targeted in this initiative. OFN is advocating with EPA and other Biden-Harris Administration officials that the CDFI industry be included as essential partners in the implementation of this new fund.