Rahul SomvanshiThe US Environmental Protection Agency (EPA) has announced the creation of a Greenhouse Gas Reduction Fund to finance clean energy projects aimed at reducing pollution and energy costs, particularly in low-income and disadvantaged communities. The agency expects to award up to $20bn in competitive grants to non-profit groups working with local banks and other financial institutions to invest in such projects, while another $7bn will be given to states, tribes, and municipalities to deploy various solar energy projects. EPA Administrator Michael Regan said that the new fund, modelled after similar banks established in states such as Connecticut, will unlock billions of dollars in private investment to enable disadvantaged neighborhoods and communities to “participate in full force” in creating green jobs.
Regan emphasized that low-income and disadvantaged communities, who pay the largest percentage of their income towards energy bills, have been left out of the clean-energy economy and have not seen the infusion of private capital to help them realize opportunities. The program expects to begin making grant awards this summer, and has already received nearly 400 responses to preliminary inquiries. However, even before the grants are awarded, Republicans in Congress have criticized the fund, calling it a taxpayer-funded “slush fund” ripe for abuse.
The Greenhouse Gas Reduction Fund is part of the $739bn Inflation Reduction Act Democrats enacted last year to combat climate change. Democrats consider the fund to be a historic opportunity to cut greenhouse gas emissions, protect public health, and create economic opportunity in disadvantaged and under-resourced communities. Republicans, on the other hand, argue that the fund heightens the risk for overspending, fraud, and abuse, and that it does not help American people with their utility bills.
The EPA’s announcement surprised some observers, who had expected the Washington-based non-profit, the Coalition for Green Capital, to become the nation’s de facto green bank. Instead, the EPA will issue grants directly to non-profit groups, ranging from two to fifteen organizations. The coalition and its partners, however, welcomed the EPA’s announcement, stating that it will help fight climate change and create good-paying jobs.
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The Greenhouse Gas Reduction Fund will provide nearly $27bn in funding to help finance projects aimed at combating climate change. It will deliver benefits to all in a transparent and inclusive fashion, according to Regan. He added that the program will mobilize billions more in private capital to reduce pollution and improve public health, while lowering energy costs, increasing energy security, creating good-paying jobs, and boosting economic prosperity in communities across the country.
