Public Comments Received for Environmental Financial Advisory Board
October 2022 Meeting
Written Comments
• Community and Green Finance Practitioners Collaborative
COMMENT: (attached)
• Beth Lipson, Opportunity Finance Network
COMMENT: (attached)
• Cathie Mahon, Inclusiv
COMMENT: (attached)
• Anne McKibbin, Elevate
COMMENT: (attached)
Oral Comments
• Adam Kent, Natural Resources Defense Council
(Comments scheduled for October 18th)
TOPIC(S): Greenhouse Gas Reduction Fund design and implementation
ADDITIONAL WRITTEN COMMENT: (attached)
• Gregory M. Baird, Aging Water Infrastructure
(Comments scheduled for October 18th)
TOPIC(S): Building "capacity" and affordability via OPEX grants, SaaS technologies, and
infrastructure asset management requirements, ESG concerns, and
watershed/sewershed ad hoc regionalization "one water" co-ops
ADDITIONAL WRITTEN COMMENT: (attached)
• Dave Harris, Colorado Clean Energy Fund
(Comments scheduled for October 18th - in person)
TOPIC(S): Greenhouse Gas Reduction Fund and the plan for a National Green Bank
• Kevin S. Minoli, Alston & Bird LLP
(Comments scheduled for October 18th - in person)
TOPIC(S): Greenhouse Gas Reduction Fund
ADDITIONAL WRITTEN COMMENT: (attached)
• Monique Harden, Deep South Center for Environmental Justice
(Unavailable for comment - Comments scheduled for October 19th)
TOPIC(S): Funding community-led solutions to remedy environmental racism
• Andrew Kessler, New York Green Bank
(Comments scheduled for October 19th)
TOPIC(S): Greenhouse Gas Reduction Fund
ADDITIONAL WRITTEN COMMENT: (attached)
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MEMO
DATE: October 11, 2022
FROM: A collaborative of community and green finance practitioners, including:
• Beth Bafford, Calvert Impact Capital
• Susan Leeds, Garrison Associates, founding CEO of New York City Energy Efficiency
Corporation
• Jessica Luk-Li, Climate Impact Advisors
• Sadie McKeown, Community Preservation Capital
• Esther Toporovsky, Housing Partnership Development Corporation
TO: The Environmental Finance Advisory Board of the Environmental Protection Agency
RE: Leveraging the community finance industry to ensure the Greenhouse Gas Reduction
Fund supports an equitable clean energy transition with immediate impact on household
budgets, community health, and quality job creation in low-income communities
Executive Summary
The Greenhouse Gas Reduction Fund (GHGRF) has the potential to seed, support, and finance
local, state and regional activities to drastically reduce greenhouse gas emissions in support of
the U.S.'s climate commitments. This landmark legislation is vital to creating an equitable, cross-
sector, and collaborative approach to accelerate decarbonization in communities and for
populations that have otherwise not benefited from the transition to a clean economy.
The climate crisis is too big and too urgent to take chances on execution. We need to
incorporate lessons from across the public, private, and social sectors to do this once and do it
right. We need to leverage existing capital infrastructure wherever it exists. We need to finance
the deployment of existing technologies and strategies - solar, storage, wind, building
electrification, electric vehicles - as widely as possible while supporting our energy
infrastructure to prioritize stability, security, access, and affordability.
We are beginning to see an increased level of activity and commitment from the public and
private sectors focused on addressing emissions reductions across the U.S. economy to build a
net-zero future. If we are going to accelerate the pace of adoption and scale while promoting
environmental and energy justice objectives, getting money into markets where it is not
currently flowing is critical. We need a coordinated strategy executed by a broad network of
community-based lending and finance organizations that currently exist across the country.
This brief memo introduces the community development finance industry to make the case that
the many organizations within it are well-positioned to implement the Greenhouse Gas
Reduction Fund to meet the legislation's intent: a targeted and equitable transition that
immediately benefits American families while supporting a drastic reduction in GHG
emissions. Mission-based lenders from the community finance sector provide financing for
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consumers, housing, small business, community facilities, and renewable energy projects in low-
wealth communities in every state in the country. They stand ready to act as crucial funding links
for decarbonization in the communities they serve.
We see two main drivers of achieving the GHGRF's ambitious goal: activation of demand for
clean solutions and flexibility of capital to drive broad adoption.
Activation of Demand: In the absence of regulation, there is currently little to no consumer
demand to implement greenhouse gas reduction technologies, especially in low-income and
disadvantaged communities. GHG reduction technologies often represent an additional cost and
that cost is often perceived as an unnecessary expense. In addition, financial products are not
currently including the requirement for GHG reduction in the products they offer their
customers.
The Inflation Reduction Act was passed to create the incentives to drive that demand and
finance GHG reduction in an economically and environmentally just way. To effectively reach
people, we recommend working with lending organizations that already exist to support low-
income and disadvantaged communities and have the capacity, trust, networks, and know how
to blend economic incentives with the right products and services.
Flexibility of Capital: In addition to meeting demand requirements, it is imperative that the
GHGRF capital is flexible in its use and tools available. Flexibility allows lenders to be market
responsive and serve customers with different needs in different geographies. Lenders should
have flexibility in how to allocate funding between fully repayable loans, forgivable loans, credit
enhancements, and grants. Lenders need flexibility to blend GHGRF capital with other sources
at the home, project, balance sheet, and community level. Flexibility, however, does not mean
that these funds should not come with the highest levels of accountability to ensure maximum
GHG emission reductions and the delivery of real-life co-benefits to meet the spirt of the Act.
To effectively bring supply and demand together to meet the capital needs of disadvantaged
communities, community-based lenders have the patience, the trust, the capability and the
mission to direct this capital appropriately. Historically, community lenders have served as a
model for the private sector to show them how to approach difficult to finance markets and drive
investment to scale.
In summary, this letter conveys the following:
• Community finance organizations are already active in the GHGRF's target communities
across the U.S. providing access to affordable and flexible financial products and
services that can easily be adapted to include the adoption of greenhouse gas reduction.
Many of them offer quality green products today;
• Community finance organizations have done the hard work of building trust in these
communities which will be critical to change household, business, and community-level
behavior and drive demand;
• Community finance organizations have a long history blending different sources of funds
to drive adoption and demand that will be critical in addressing the current cost barriers
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preventing adoption of GHG technologies today, especially impacting the multifamily,
energy efficiency, electrification, low-income solar, and electric vehicle industries. Cost
barriers cannot be overcome with financing alone and require a deft combination of
subsidized financing, forgivable loans and cash incentives;
• Community finance organizations have a proven track record managing public funds and
leveraging private capital to drive results, with the highest levels of transparency and
reporting. This track record will be critical so that the EPA can be confident deploying
the funds flexibly.
As the Environmental Finance Advisory Board works with the EPA to discuss, develop, and
design the implementation of the Greenhouse Gas Reduction Fund, we hope this memo
provides a helpful landscape of the infrastructure that currently exists and is ready for activation
at scale. We welcome more detailed discussions about strategy and execution if and when it is
helpful.
I. There are a wide variety of community-based organizations providing access to
affordable financial products and services to low- and moderate-income
households, businesses, and communities, all of whom qualify as direct or indirect
investees under the Greenhouse Gas Reduction Fund provision.
Credit Unions
There are more than 5,000 credit unions across the country, of which approximately 500 are
designated as Community Development Credit Unions, Minority Depository Institutions, and/or
Community Development Financial Institutions (together, "CDCUs"). These CDCUs have a
combined $220 billion in assets and provide access to quality, affordable financial products and
services to their cumulative 15 million members. There are CDCUs in all 50 states and many in
Puerto Rico and other territories. Many CDCUs have been lending in their communities for more
than thirty years and have developed deep trust and relationships with their members.
Map of CDCUs across the country
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Community Development Financial Institutions
There are 1,378 organizations designated as Community Development Financial Institutions
across the US, of which 573 are structured as loan funds ("CDFI Loan Funds"), the majority of
which are non-profit organizations. There are also more than 60 certified Native CDFIs located in
23 states. CDFIs have a combined $200 billion in assets, of which CDFI Loan Funds have
approximately $25 billion in assets and provide access to quality, affordable financial products
and services to their defined "target markets." The industry is designated by and reports to the
U.S. Treasury Department. CDFIs exist to support low- to moderate-income communities'
investment and financial needs. At least 60 percent of any CDFI's lending must go to benefit
their target market every year. There are CDFIs in all 50 states, the District of Columbia, and
U.S. Territories and there are numerous CDFI Loan Funds with a national footprint.
Map of all certified CDFIs across the country (pins are headquarters)
Many CDFIs have been lending in their communities for more than thirty years and have
developed deep trust and relationships in the communities they serve, and in addition to capital,
they provide a wrap-around service model, coupling training and one-on-one technical
assistance to their clients to support borrower success.
Non-profit real estate and solar developers
There are thousands of non-profit developers of affordable housing and/or solar projects across
the country. A subset of some of the largest housing developers have developed a combined
$20B In real estate for the benefit of low- and moderate-income communities. These developers
are active in all of the 50 states and many have a national footprint.
Many of these developers have been developing affordable housing for decades and solar for
the past 10+ years and have built deep trust and relationships in the communities they serve.
They have active portfolios of properties - with hundreds of thousands of units of affordable
housing - that could be rapidly decarbonized with access to the right resources.
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Specialty finance organizations
In addition to all of the organizations above, there are specialty finance and/or development
organizations that are purpose-built to bring access to clean energy and clean energy
technologies to low- and moderate-income communities. These include organizations like:
• PosiGen, a solar finance organization, works to make solar affordable and easy to access
through their solar leasing program, especially for low-income communities.
• Solstice, a community solar organization, organizes and enrolls low-income subscribers
so they can benefit from affordable solar gardens
• Sunwealth, a clean energy investment firm that finances and manages solar projects in
and for low-income communities, partnering with local installers and community-based
organizations to drive cost savings, carbon reduction, and quality job creation.
• Sustainable Capital Advisors, a specialty financial advisory firm connecting investors with
clean energy infrastructure
• Urban Ingenuity, a specialty finance firm that pairs technical support with innovative
financing to support local solar and energy efficiency projects
...among many others, who are active in communities across the country and would be critical
to support and activate to meet the goals of the GHGRF.
II. These commui ance organizations provide financial products and services
that >ring the reduction of GHG emissions in low- and moderate-income
communities or (b) could be quickly adapted to drive the reduction of GHG
emissions in low- and moderate-income communities.
Consumer loans
There are more than $40 billion in consumer loans currently in the portfolios of the community
finance organizations listed above, largely made by CDCUs. Many already offer green lending
products, but all of the products below can be adapted to support the adoption of clean
technologies at the household level with the help of low-cost capital, technical assistance, credit
enhancement, and grants from the GHGRF.
Existing product
Green product(s)
Unsecured consumer loans for
home upgrade or repair
• Unsecured consumer loans for home upgrades,
including heat pump installation, electric water heaters,
and other energy efficiency upgrades
• Unsecured consumer loans for more efficient and/or
smart home appliances
Secured auto loans to
purchase new or used vehicles
• Secured auto loans for new or used electric vehicles
Home mortgages
• "Green" mortgages that provide pricing incentives for
homes purchased that meet certain low-carbon
standards
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Small business loans
There are more than $20 billion in small business and commercial real estate loans currently in
the portfolios of the community finance organizations listed above, largely by CDFIs and CDCUs
Many already offer green lending products, but the following products can be adapted to
support renewable energy and energy efficiency for the country's 30 million small businesses
with the help of low-cost capital, technical assistance, credit enhancement, and grants from the
GHGRF.
Existing product
Green product(s)
Secured small business loan
for building renovations or
upgrades
• Secured loans for energy efficiency and renewable
energy upgrades for business properties
• Small scale C-PACE loans where C-PACE is enabled,
bringing attractive financing to a broader set of
commercial and industrial buildings
Equipment financing
• Equipment financing for EV or more fuel-efficient long-
haul trucks
• Equipment financing for more efficient or renewable
industrial equipment
Agriculture financing
• Working capital loans to finance the adaptation of
sustainable farming practices
• Purchase of additional farmland to expand regenerative
agriculture
Housing and facility loans
There are more than $45 billion in multi-family housing and community facilities (e.g., schools,
health centers, community centers, etc.) loans currently in the portfolios of the community
finance organizations listed above, largely by CDFI banks and loan funds. Their products below
can continue to be adapted to support deeper energy efficiency and net zero properties with the
help of low-cost capital, technical assistance, credit enhancement, and grants from the GHGRF.
Existing product
Green product(s)
Pre-development and
acquisition financing
• Pre-development and acquisition financing to support
new construction or preservation of affordable housing
with pricing incentives to develop to net-zero or near
net-zero standards
Construction financing for new
construction or substantial
renovation
• Loans to support new construction or substantial
renovation of affordable housing buildings with pricing
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incentives to develop to net-zero or near net-zero
standards
Permanent financing for
buildings
• "Green" mortgages that provide pricing incentives for
buildings that agree to meet certain net-zero or near net-
zero standards and commit to ongoing improvements to
lower emissions
In addition to new lending for construction or substantial rehabilitation, there is a large
opportunity to take the existing housing portfolios of community-based lenders and developers
to incentivize energy efficiency and clean energy upgrades through targeted grant programs.
This would provide fast and direct access to reduced energy costs for hundreds of thousands of
units of affordable housing through a pre-identified and trusted distribution network.
Solar development
There is $1-2 billion of lending or investment that community finance organizations have
provided to develop household rooftop, commercial, and/or community solar for the benefit of
low- and moderate-income communities. The following products are already in the market and
could be dramatically expanded with access to the right mix of grants and low-cost, long-term
debt.
Green product(s)
• Construction to permanent financing for solar development with pricing scale dependent
on income levels of subscribers
• LMI revenue guaranty to guaranty payments of LMI subscribers for a period of time while
payment risk is uncertain
• Pre-development equity and/or loans to solar developers for project preparation with a
focus on projects with a significant portion of LMI subscribers
III. "The Inflation Reduction Act includes many incentives for clean technologies that
will not reach low- and moderate-income communities if they are not paired with an
attractive package of support, including no- or low-cost financing and technical,
hands-on services, through trusted partners.
Past efforts to use tax credits or rebates to incentivize consumer behavior have failed to reach
low-income communities because, among other things, 1) these communities and individuals do
not tend to have a high tax burden, 2) they are not often the target of market education or
outreach and outreach that is done is not presented in a culturally competent way, and 3) it is
not often a top priority of a family or individual when other challenges abound. If the new tax
credits, rebates, and other incentives in the Inflation Reduction Act are to meet the Biden
Administration's environmental and energy justice goals, these incentives need to be paired with
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extremely attractive financial packages with hands on technical support provided through
trusted local institutions.
For example, a discount on an electric vehicle from $50,000 to $42,500 still makes that vehicle
completely out of reach for most American families. But if a community development credit
union, with the help of credit enhancement from the Greenhouse Gas Reduction Fund in the
form of a loan loss reserve or guarantee provided by an intermediary, could offer $0 down, 0%
long-term financing to a family to purchase the $42,500 EV, monthly payments could reach a
level that is more palatable for a much broader set of families. This especially true if this offer is
provided by a credit union that the family already knows and trusts with other financial products.
Similarly, the Whole Home Energy Reduction Rebates can provide up to $8,000 in rebates for
households that are under 80 percent of Area Median Income but this requires significant work
of the renter or homeowner to identify a contractor, conduct an assessment of the home's
energy savings potential, pay out of pocket for the contractor's services, and then submit the
paperwork required to qualify for the rebate. Instead, a local community lender could partner
with a network of qualified contractors to go door-to-door in neighborhoods to offer these
services at no upfront or ongoing cost to the family. This could be provided by a mix of grants
and low-cost loans to the lender so they can offer a financing package that includes both the
value of the rebate as well as the value of ongoing energy savings with a guarantee not to
increase (and likely decrease) the family's monthly payments. Some of the funds could also
provide added incentive for the contractor to ensure they focus on providing services in low-to
moderate-income communities.
For building owners and developers, changing behavior and influencing design remains a
challenge unless paired with economic incentives and hands-on support. Developers of multi-
family housing and other commercial buildings will have access to new incentives but will be
unlikely to take advantage of them unless they are packaged in a way that meets the developer
or owner where they are. Construction, C-PACE, and mortgage lenders to these properties
should leverage funds from the GHGRF to provide a combination of low-rate financing and
technical support to create a near friction-less process. This provides the developer or owner
with clear instructions of how to adapt design to meet the lowest-carbon standards and offsets
any upfront increases in costs with an overall reduction in their cost of financing.
We know behavior change, especially for things in people's lives that aren't necessarily
"broken" like their gas-fueled car, existing HVAC systems, or current business practices, take
very intentional, economically attractive, and relationship-driven approaches to be successful.
IV. "The success of this legislation will be dependent on the funds coining out of the
federal government in a way that intermediaries, local lenders, and community-
based organizations can flexibly deploy and use.
In addition to the benefits of the on-the-ground capacity of the existing community finance
industry, these organizations also have experience taking, leveraging, and reporting on
government funds for the benefit of low- and moderate-income communities. It is paramount for
the GHGRF capital to have maximum flexibility. If funds come with too many strings attached it
will greatly hinder deployment, particularly fast deployment. The EPA should hold firm to its
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primary goal of reducing GHG and allow the lenders in the program to determine how to use
that capital to create and enhance products to reach it.
For example, it will be critical for funds invested in low-income and disadvantaged communities
that Davis Bacon requirements are not applied to the end project, business, or asset. These
requirements have greatly hindered previous programs from reaching the Act's targeted
communities.
For the EPA to get comfortable with deploying funds flexibly, they must recognize that the
organizations involved in implementation have a track record of appropriately managing,
deploying, and reporting on the use of government funds. The majority of organizations in the
community finance industry have decades of experience taking federal, state, and local
government funds with extremely minimal waste, fraud, or abuse. For example, the amount of
fraud in large and quickly implemented government programs like the Paycheck Protection
Program (PPP) is staggering when the flexibility/accountability balance is off kilter. But the PPP
funds deployed by CDFI lenders have been shown to have greater reach into low- and
moderate-income communities with much lower levels of fraud and abuse (more detail on PPP
in the appendix). Similarly, defaults for first time homebuyers working with local non-profit
lenders have a significantly lower default rate than that of other mortgage lenders because of
the hands-on and personalized lending approach.
V. "The quickest way to ensure that the Greenhouse Gas Reduction Fund reaches low-
and moderate-income communities to reduce their household energy costs,
improve their air quality and health, and mitigate climate change is to leverage this
existing infrastructure and allow community lenders to provide a mix of grants and
affordable capital to low-income and disadvantaged communities.
Taken together, the path to the fastest, most equitable impact of the Greenhouse Gas Reduction
Fund will come by matching the broad and deep capacity of the community finance industry
with tailored, targeted demand generation at the local level. Doing this will require a coordinated
strategy that can support this broad network with the right mix of capacity building, technical
support, credit enhancement, and low-cost capital. Strong existing networks and intermediaries
exist across the entire community finance sector, allowing rapid mobilization of new products
and the sharing of best practices across the entire field.
We highly recommend that this industry is allocated a sizable portion of the EPA GHGRF awards
to complement the work of other lenders looking to drive green technology and broader private
capital market transformation.
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APPENDIX A: Background of author organizations
About Calvert Impact Capital
Calvert Impact Capital is a global nonprofit investment firm that helps all investors and financial
professionals invest in solutions that people and the planet need. During its 27-year history, it
has mobilized over $4 billion of investor capital from more than 20,000 investors into more than
500 community finance organizations in the US and over 100 countries. Every dollar lent or
invested is leveraged at least 30 times, catalyzing more than $7 billion annually into
communities.
Over the last three years, Calvert Impact Capital has expanded to offer a suite of products and
services to support the scaling of impact markets, including two new products, one focused on
reducing carbon in commercial buildings and one supporting unbanked small businesses. These
products will leverage traditional financial structures to drive deeper impact at institutional scale.
Calvert Impact Capital also offers loan syndications and capital advisory services, including
consulting on and structuring loans for institutional and accredited lenders seeking
environmental and social impact. Since 2018, Calvert Impact Capital has arranged more than
$750 million of capital for private impact transactions.
About Climate Impact Advisors
Climate Impact Advisors provides strategic advice to environmental lenders, government, and
non-profits. Our mission is to accelerate the development of green financing markets in order to
fight climate change. As former green bank practitioners, we bring our firsthand experience to
address the unique and complex challenges facing policymakers and mission-driven financial
intermediaries.
About Community Preservation Corporation
CPC is a nonprofit multifamily finance company that was founded in 1974 to provide financial
resources to stabilize and revitalize underserved communities. Today, CPC uses its unique
expertise in housing finance and public policy to expand access to affordable housing and drive
down the costs of housing production, advance diversity and equity within the development
industry, and impact the effects of climate change in our communities through the financing of
sustainable housing. Since its founding, CPC has invested over $14 billion to finance the
creation and preservation of more than 225,000 units of housing through its lending and
investing platforms. CPC is a carbon-neutral company and has been rated AA- by S&P.
About Housing Partnership Development Corporation
The Housing Partnership serves as New York City's primary not-for-profit intermediary for the
development of new and rehabilitated affordable housing. For almost four decades, the Housing
Partnership has facilitated partnerships among private sector developers and financial
institutions and City, State and Federal agencies, resulting in the development of over 60,000
affordable homes. This stimulates economic activity and revitalizes neighborhoods.
About Susan Leeds and Garrison Associates
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Susan was the founding CEO of the New York City Energy Efficiency Corporation (NYCEEC) for
eight years where she still serves on the Board and Executive Committee. NYCEEC was one of
the first green banks in the country. Susan is also a consultant to green banks, NYSERDA, the
Massachusetts Clean Energy Center, energy resource hubs in various jurisdictions, and early
and growth stage clean tech companies.
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APPENDIX 8: Lessons from the Paycheck Protection Program
When COVID hit our economy in March 2020 and tens of millions of small businesses across the
country shut down, we got a rare, system-wide glimpse of the glaring shortcomings in our
banking system. If the banking system was an electric grid - connecting capital from the sources
to individual businesses - we learned quickly that a massive share of our economy was in the
dark.
The federal government's response for small businesses was mostly through the Paycheck
Protection Program (PPP), which was set-up to distribute funds through banks to existing
customers. What the federal government failed to contemplate was that the vast majority of the
country's 30 million small businesses are not banked by a traditional financial institution and thus
had an extremely difficult time accessing these critical relief funds.
A recent analysis of the Paycheck Protection Program (PPP) found that seventy two percent of
PPP funds were captured by households with incomes in the top twenty percent, adding to
study after study that show the enormous disparities in its distribution.
PPP in its initial form was not set-up for community finance organizations to actively participate.
It wasn't until the enormous disparities came to light that the SBA and the Federal Reserve
changed their policies accommodate more non-bank lenders. The SBA started creating set-
asides for CDFI lenders and the Federal Reserve opened up its PPP Liquidity Facility so that
CDFIs could sell loans to the Fed in the same manner as traditional banks. Once these policy
changes were implemented, there was an enormous increase in PPP lending from certified
CDFIs, who ended up doing more than $34 billion of PPP loans throughout the program.
Overall, CDFI lenders were much more successful at reaching the smallest, community-based
businesses and businesses located in low-income communities. CDFIs did nearly 80 percent of
their lending for less than $150,000 loan sizes versus a program average of 50 percent and 40
percent of CDFI lending went to low-income communities versus a program average of 28
percent.
PPP and other COVID relief and recovery programs provide a relevant and recent test case of
how to leverage government support to scale lending in low- and moderate-income
communities to support populations that exist outside of the traditional finance sector. The Biden
Administration was wise to lean on CDFIs as a critical distribution channel to drive their desired
reach and results.
Sources:
CDFI Fund ACR Report, https ://www. cdfifund.qov/sites/cdfi/files/2021-
10/ACR Put h K port Final 10062021 5Q8Compliant v2.pdf
CDFI Fund Certification List as of 9.14.22. https J/www, cdfifund.q ov/s i tes/cdfi/fi I es/2022-
09/CDFI Cert List 09 14 2022 Final.xlsx
CDFIs Continue to Outperform Other PPP Lenders. httpsi//www.ofn.orq/cdfis-continue~
outperform-other-ppp-lenders/
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- : ¦ ' v . FINANCE_jj
NETWORK ill
Michael Regan, Administrator
US Environmental Protection Agency
Office of the Administrator, Mail Code 1101A
1200 Pennsylvania Avenue, NW
Washington, DC 20460
October 11, 2022
Dear Administrator Regan:
On behalf of Opportunity Finance Network (OFN) I am writing to urge you to work with the nation's
extensive network of community development financial institutions (CDFIs) to ensure the
Greenhouse Gas Reduction Fund (GGRF) reaches the underserved communities most impacted by
climate change. I would also like to request a meeting with the appropriate EPA leadership to
discuss how CDFIs can help GGRF achieve the Biden-Harris Administration's policy goals.
OFN is a national network of more than 380 CDFIs. CDFIs are specialized lenders - community
development banks, credit unions, loan funds, and venture capital funds - that invest to benefit
low-income and low-wealth communities across America. OFN's membership has originated $91
billion in cumulative financing in urban, rural, and Native communities through 2020.1
CDFIs and the Federal Government: Partners in Advancing Environmental Justice
The Environmental Protection Agency (EPA) has an opportunity to design a GGRF application
process that ensures good stewardship of these public funds. To achieve the goals of the GGRF, it
is critical the providers of these funds have a track record of serving low-income communities, not
just a history of providing green products.
As mission lenders with specialized expertise in reaching underserved markets, CDFIs are ideally
positioned to finance projects that reduce greenhouse gas emissions. Clean energy finance in low-
income communities requires specialized lending expertise. Investing in the clean energy
technologies needed to reduce emissions is unaffordable for many households and communities -
especially those already underserved by traditional finance.
Low-income homeowners seeking financial assistance to purchase upgraded heat pumps or install
solar panels will face the same barriers to accessing capital as they do when seeking a mortgage. A
corner store owner looking to upgrade their refrigeration system might not have the collateral or
cash flow needed to secure a bank loan to invest in that technology. Ensuring that GGRF capital
reaches low-income and disadvantaged communities requires partnering with financial institutions
that already have the trust and relationships on the ground.
The CDFI Model: Investing in Communities Other Lenders Overlook
1 Opportunity Finance Network, "Inside the Membership: Statistical Highlights from OFN Membership: 2020",
Published April 14, 2022. Accessed July 1,2022.
https://cdn.ofn.ora/uploads/2022/04/14153742/QFN Inside The Membership FY2020.pdf
We Believe in Opportunity. firil flDf*
For All. Ulll.UnU
901 D Street SW, Suite 1050 ¦ Washington, DC 20024
P: 202-618-6100 ¦ info@ofn.org
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CDFIs are mission lenders with the networks and relationships needed to deploy capital to low-
income, under-resourced, and traditionally marginalized communities. As capillaries of the financial
system, CDFIs reflect and understand the communities they serve. There are more than 1,300
Treasury-certified CDFIs investing in all 50 states and financing sectors with nearly 40% of CDFI
lending in persistent poverty areas.2 As a condition of maintaining their certification, CDFIs are
required to direct at least 60% of their financial products to low-income areas or people in their
Target Markets - a threshold most CDFIs easily exceed.3 Data from the CDFI Fund's 2020 Annual
Certification Report found that on average loan funds and venture capital funds direct at least 88%
of their lending to their Target Markets, and regulated CDFIs direct at least 75% of their lending to
their Target Markets.4
CDFIs are also experts in the type of place-based investing needed to address localized needs of
climate-impacted communities. The overlap between low-income markets and climate-impacted
communities intersects with many markets served by CDFIs: flood prone areas like New Orleans 9th
ward, manufactured housing communities impacted by extreme heat in the Southwest,
farmworkers and rural communities displaced by wildfires in California, coastal communities of
color in Florida and along the Gulf Coast - all communities served by mission lenders working to
address the impacts of climate change.
Further, CDFIs are experts at leveraging philanthropic, public, and private capital and collaborating
with other lending institutions including impact investors, community banks, green banks, and
other CDFIs. For example, the Treasury Department has found that CDFIs leverage a grant
investment 8:1 with private sector investment from banks, foundations, and other impact
investors.5 CDFIs will be able to leverage capital from the GGRF with other funding, deepening its
impact.
CDFI Green Lending in Underinvested Markets
2 Loethen and Fabiani. "Persistent Poverty and the Prevalence of CDFIs". OFN, (2021).
3 The CDFI Fund defines an approved target market or eligible market, as one or more investment areas or
targeted populations. Investment area refers to a geographic area that meets requirements set forth in Title
12, Section 1805.201(b)(3)(ii)(D), of the Code of Federal Regulations with a significant unmet need for loans,
equity investments, or other financial products or services or is wholly located within an Empowerment Zone
currently in effect or Enterprise Community (as designated under Section 1391 of the Internal Revenue Code
of 1986 [26 U.S.C. 1391]). Target populations consist of individuals from the following populations: Low-
income targeted population is defined as individuals whose family income, adjusted for family size, is not more
than (1) for metropolitan areas, 80% of the area median family income in metropolitan areas; and (2) for
non-metropolitan areas, the greater of 80% of the area median family income or 80% of the statewide non-
metropolitan area median family income. Other targeted populations include African Americans, Hispanics,
Native Americans, Native Alaskans residing in Alaska, Native Hawaiians residing in Hawaii, other Pacific
Islanders residing in other Pacific Islands, and other groups with CDFI Fund approval.
4 CDFI Annual Certification and Data Collection Report (ACR): A Snapshot for Fiscal Year 2020, Published
October 2021. https://www.cdflfund.gov/sites/cdfi/files/2021-
10/ACR Public Report Final 1006202.1 508Compliant v2.pdf
5 Remarks by Secretary of the Treasury Janet L. Yellen on $1.25 Billion Award to CDFIs to Support Economic
Relief in Underserved Communities Affected by CQVID-19. June 15, 2021.
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The nation's network of CDFIs has tremendous capacity to address the energy and environmental
challenges facing economically distressed communities. In 2020, OFN members originated more
than $8 billion in financing, with a majority of members indicating they offer green financing
products.
As noted above, CDFIs MUST lend or invest in low- and moderate-income communities as a
condition of maintaining their certification with the CDFI Fund. While some green banks invest in
low-income neighborhoods, they are not required to do so and, in some instances, may lack the
community relationships needed to ensure this capital reaches low-income and disadvantaged
communities. The urgent need to curb emissions in low-income communities must not be left to
chance - EPA needs to work with CDFIs to ensure these funds reach targeted communities.
Federal Programs that Partner with CDFIs Reach More Underserved Markets
The GGRF should be designed with an intentional focus on low-income, climate-impacted
communities and the mission lenders that serve them. The Paycheck Protection Program (PPP)
experience demonstrated that when affordable capital is coupled with supportive public policy,
CDFIs not only deliver but outperform other lenders - reaching deeper into low-income markets
than traditional financial institutions. Lessons learned through the PPP experience can improve
outcomes for other public-private partnerships like the Greenhouse Gas Reduction Fund (GGRF).
When PPP was not reaching businesses most in need of help, the federal government turned to the
CDFI industry to ensure PPP and other pandemic relief reached these overlooked markets. Policy
changes were implemented to increase CDFI participation and reach more of their small businesses
customers. As a result, CDFIs and other mission lenders made at least $34 billion in Paycheck
Protection Program (PPP) loans to small businesses - and, according to SBA statistics, were more
successful at reaching financially underserved businesses than any other type of PPP lender.6
As the federal government contemplates the structures of the new GGRF, there is an opportunity to
adopt two major lessons from PPP:
1) Centering the needs of low-income and disadvantaged communities in program design
produces better policy outcomes
2) CDFIs can deliver rapid and targeted deployment of federal funds to underserved
markets when supportive policy changes are coupled with adequate capital and capacity
building resources
Other programs that prioritize CDFI participation like the Small Business Administration's 7(a)
Community Advantage (CA) program and Microloan program are far more successful at reaching
underserved populations. Data from the SBA shows Community Advantage lenders reached more
than three times as many Black, Latinx, and women-owned businesses as traditional 7(a) lenders -
between FY 2016 and FY 2021, CA lenders lent an average of 5.6 times more dollars to Black
owned businesses and an average of 2.5 times more dollars to Hispanic owned businesses than
5 Jennifer A. Vasiloff, "CDFIs Continue to Outperform Other PPP Lenders", OFN, May 2021.
https://ofn.ora/artides/cdfis-continye-oytperform-other-ppp-lenders
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7(a) lenders.7 CA lenders also lent twice as many dollars to women owned businesses than 7(a)
lenders. More than half of Community Advantage lenders are certified CDFIs, while the 7(a)
program has only a handful of CDFI participants. In the SBA's microloan program which also has
robust CDFI participation, more than 60% of the number of microloans issued in FY 2021 went to
minority-owned or controlled businesses.8
Recommendations for Equitable, Targeted Deployment of GGRF
OFN has recommendations to ensure program funds reach the targeted communities:
• Leverage the extensive existing network of CDFIs to ensure rapid, equitable
investment in all 50 states, across rural, and urban areas, and throughout the
economy. To decarbonize all sectors of the economy, commercial, residential, and
consumer, across all 50 states, we must take advantage of the power of the full existing
ecosystem of CDFIs. We urge EPA to make it explicit that CDFIs are eligible to access these
funds as direct or indirect recipients. To ensure the program meets its statutory intent to
reach low-income and disadvantaged communities, CDFIs that meet the statutory definition
of eligible recipients should be able to apply directly to the EPA individually or as part of a
consortium.
• Develop a separate application for the $8 billion in funding targeted to low-income
and disadvantaged communities. The EPA should develop separate applications to
allocate the $20 billion in GGRF financial assistance not directed to state governments. The
$8 billion in funding designated to low-income and disadvantaged communities requires
specialized market expertise. Applicants should be prioritized based on their track record
and accountability to low-income and disadvantaged communities. The CDFI Fund's
certification process ensures certified CDFIs are accountable to these markets.
• Prioritize Environmental Justice. EPA should consider the current $8 billion set-aside in
the legislation for low-income and disadvantaged communities as a floor and not a ceiling
and include impact for these communities as a funding criterion for awards of funds not set
aside for that purpose. The $12 billion should also conform to the Justice40 Initiative and
target low-income and disadvantaged communities.
• Allocate funding to multiple entities. GGRF funds should not capitalize a single entity or
revolving loan fund. Having multiple recipients increases the government's ability to
achieve its policy and allows lenders to develop customized solutions to meet their
community needs. GGRF funds must also be flexible enough to provide grants to lenders
and end projects. CDFIs and other mission lenders need flexible, low-cost, and long-term
financing to subsidize projects that have high upfront costs. Investments in energy
efficiency are difficult for low-income households and communities to finance despite the
prospect of long-term savings on energy costs and reduced greenhouse gas emissions.
7 SBA Weekly Lending Reports
8 Anthony A. Cilluffo and Anthony A. Cilluffo, "Small Business Administration Microloan Program",
Congressional Research Service, March 30, 2022, httpsi//sap.fas.org/crs/misc/R41057.pdf
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GGRF dollars must flow to lenders and subrecipients at least partially as grants to incent
these types of investments in low-income communities.
• Define "low-income and disadvantaged communities" using the established
definition of an eligible "Target Market" used by the CDFI Fund The legislation does
not define the terms "low-income and disadvantaged communities" so EPA should adopt the
existing definition of an eligible "Target Market" used by the CDFI Fund. This definition
meaningfully captures low-income and underserved communities, including consideration of
individual borrower characteristics as well as the communities where borrowers are located.
Adopting it would create standardization and lower costs of compliance as thousands of
mission lenders already track and report lending activity according to CDFI Fund Target
Market definitions.
• Recognize that small scale is not low impact. Distributing funds through a network of
lenders like CDFIs means smaller projects will receive consideration. As the Carsey Institute
notes in the context of small-scale solar projects, "A variety of obstacles contribute to the
scarcity of financing for low-income solar, including small project sizes, lack of developer
balance sheet capacity, both real and perceived issues with credit risk, elevated technical
assistance needs, and greater subsidy requirements to pursue goals such as deep energy
affordability, climate resilience, or job creation."9 It is also important to balance deployment
speed with deep community impact. Deploying this capital in a way that funds projects and
builds CDFI capacity will result in the sustained investments needed to combat greenhouse
gas emissions.
• Ensure a broad range of projects are included as eligible activities. There is no "one-
size fits all" approach to curbing emissions. Rather, it will require investing in a broad set of
projects and interventions based on community needs. CDFIs are working across the
country to address the climate crisis. The included appendix features CDFIs that received
grant funding through OFN's Renewable and Energy Efficiency Financing Grant Program.
Between 2019-2022, OFN provided $5.25 million in grants to OFN members focused on a
wide variety of renewable and energy efficiency financing projects. Small investments of
grant capital will catalyze the creation of innovative new green loan products, development
of new funds focused on energy efficiency, and more.
Conclusion
Environmental hazards and climate-driven disasters disproportionately impact low-income
communities. The federal government needs CDFIs to implement the Greenhouse Gas Reduction
Fund successfully. Even without direct federal support for clean energy financing, CDFIs have
financed businesses and projects that reduce greenhouse gas emissions and air pollution and are
9 Eric Hanaen. Rebecca Regan. Sarah Boeae. "Bringing Solar Energy to Low- and Moderate-Income
Communities", Published April 23, 2021. httpsi//carsev.unh.edu/publication/brinaina-solar-enerav-low-
moderate-income-communities
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poised to do much more. OFN and our network of CDFIs stand ready to partner with EPA to make
meaningful progress on reducing greenhouse gas emissions, particularly in the low-income and
disadvantaged communities prioritized in the law.
Sincerely,
Beth Lipson
Interim President & CEO, Opportunity Finance Network
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Appendix: Examples of CDFI Green Lending from OFN's Energy Efficiency Grants
BlyehubCaBlM, based in Boston, MA created an electric vehicle (EV) pilot program using
vehicle-to-grid (V2G) technology to lower the costs and increase the reliability of a car for low-
income households, identify barriers to low-income household adoption of EVs, and recommend
policy changes and business initiatives that enable low-income households to transition from gas to
EVs.
Capital Good Fund, based in Providence, RI is planning to expand their DoubleGreen loan
program for energy-efficiency upgrades. Designed to serve the needs of moderate-to-middle
income homeowners with less-than-perfect-credit, the loans serve to upgrade wall insulation, duct
sealing, high-efficiency heating & cooling equipment to make your home more energy-efficient and
safe. Currently serving Rhode Island, Florida, Massachusetts, Delaware, Illinois, and Texas with
hopes of expansion.
OoaflfllJULJPe^ based in Cincinnati, OH, created the Affordable Energy Fund,
targeting developer-borrowers who are creating affordable, multi-family housing in the high-
poverty neighborhoods CDFIs serve. The Affordable Energy Fund provides low-cost mezzanine debt
as incentive for developers to identify energy-efficiency solutions, proper implementation, while
preventing the creation of a financial barrier for low-incomes through the added cost of energy-
efficient systems.
Citv First Enterprise, based in Washington, DC is launching the Small Business Renewable and
Energy Efficient Fund (REEF) in partnership with Montgomery County, MD's Green Bank. In the first
phase, the organizations will provide a $650,000 loan fund of secured and unsecured debt to
Montgomery County-based small businesses to accelerate adorable energy efficiency and clean
energy.
CfflBrounjMJ^ based in Albany, NY is supporting affordable
housing developers moving into the economically distressed neighborhoods of Arbor Hill and
Sheridan Hollow to build-out green infrastructure. They also help nonprofits who serve residents in
those communities make energy updates to their buildings providing cost savings to their limited
budgets. All funds are combined with sustainability education for new and existing residents.
Kentucky Highlands Investment Corporation, based in London, KY, makes loans to small
businesses for energy efficiency improvements and retrofits so they can reduce operating costs to
remain competitive. KHIC has a program that combines energy projects with the USDA's Rural
Energy for America Program (REAP) loan and grant program to a achieve a 3:1 leverage. Only
agricultural producers and rural small businesses are eligible to apply for REAP funds. REAP is a
competitive renewable energy and energy efficiency improvement reimbursement program that
makes grants up to 25% and loan guarantees up to 75% of eligible costs.
Neighborhood Housing Services of South Florida, based in Miami, FL is expanding their
operations to provide innovative solutions to communities facing an affordable housing crisis and
residential as well as business displacement due to climate change, natural disasters,
gentrification, and unexpected economic hardships, such as a pandemic.
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Mew Jersey Community Capital, based in New Brunswick, NJ finances projects that upgrade
and improve energy efficiency of housing units and other facilities and may lead to LEED
certification. Through their Healthy Communities Fund, they provided the financial resources and
development expertise to drive the construction of safe, affordable, stable, and environmentally
sound housing opportunities in an effort to realize better health outcomes in distressed
neighborhoods.
NjjrtfaejiM^^ based in Sisseton, SD will use the grant to
educate and provide lending for upgrading or purchasing new energy-efficient products to business
loan customers. Providing education to customers on energy-efficient products that will enhance
small businesses and lower operating costs.
QMBMbsMes^CreditMBim., based in Winooski, VT, created a loan program for energy-efficient
home appliances with affordable monthly payments for low-income homeowners in Vermont.
Rural Community Assistar rppration, based in West Sacramento, CA, created the
Biomass Utilization Fund (BUF), a pilot lending program designed to reduce wildfire risk by using
low-value forest wood (biomass) to generate sustainable energy and employment for low-to-
moderate-income (LMI) rural Californians.
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inclusiv
October 11, 2022
Ed Chu, Designated Federal Officer
U.S. Environmental Protection Agency
Environmental Financial Advisory Board
1200 Pennsylvania Avenue, NW
Washington, DC 20460
RE: Environmental Financial Advisory Board October 2022 Public Meeting
Dear Mr. Chu:
Thank you for the opportunity to submit comments to inform the October 2022 Public Meeting of the
Environmental Financial Advisory Board (EFAB). Our comments will focus on the Greenhouse Gas
Reduction Fund (GHGRF) portion of the Public Meeting agenda.
The Environmental Protection Agency (EPA) should plan the implementation of the GHGRF to ensure it
achieves both the equity and climate goals of the Inflation Reduction Act. By expanding capacity for
high-impact green lending in historically redlined communities, counties experiencing persistent
poverty, and states that lack effective infrastructure to make GHGRF investments, the GHGRF can
address the dual problems of disproportionately high energy burden and devasting climate changes
impacts in these communities. These GHGRF investments can and should be designed and deployed by
the local, community-based financial institutions that were created by members of these communities
and have been serving the members of these communities for many years.
Community development credit unions specialize in working closely with people who have historically
been excluded from the mainstream financial system and provide safe, affordable consumer, mortgage
and small business loans. Their nature as member-owned, not-for-profit financial cooperatives creates
strong incentives for them to meaningfully serve people who live in historically redlined communities,
areas with persistent poverty, and in other communities the mainstream financial system fails to serve
equitably. Community development credit unions' deep experience in community-based lending means
that they are an ideal conduit for investments to advance environmental justice while also achieving
critically needed energy cost savings for low- and moderate-income households.
For example, low-income people typically have longer commuting distances when driving to work than
middle- and upper-income people, forcing them to spend more on transportation and generating more
greenhouse gas emissions. Community development credit unions like (JSC Credit Union in California
and Clean Energy Credit Union in Colorado have developed innovative, affordable electric vehicle
lending programs specifically designed for low- and moderate-income people to reduce both their
emissions and their fuel costs.
39 Broadway Suite 2140, New York, NY 10006 | T. 212 809 1850
iincllusiiv..org | info@inclusiv.org
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About Inclusiv & Community Development Credit Unions
Inclusiv is a Community Development Financial Institution (CDFI) Intermediary and nonprofit national
network of community development credit unions committed to promoting financial inclusion through
credit unions. The Inclusiv network represents more than 490 credit unions serving more than 18 million
people in predominantly low-income urban, rural, and reservation-based communities across 47 states,
DC, the U.S. Virgin Islands and Puerto Rico. Fully half of our members are Minority Depository
Institutions (MDIs) or Cooperativas that are governed by and predominantly serve people of color, 58%
of our members are CDFIs, and 75% are Low-Income Designated.
Community development credit unions are cooperatively owned and democratically governed financial
institutions that offer their members:
• Fairly priced loans, including to members with imperfect, limited or no credit history.
• A safe place to save and build assets.
• A place to conduct financial transactions at reasonable cost.
• Financial coaching, first-time homebuyer counseling, and other support services.
• Products, services, and support that can help members to free themselves from high-cost and
predatory debt, gain control over their personal finances, and achieve economic well-being.
Inclusiv, in partnership with the University of New Hampshire, provides training as well as peer support
and capacity building for credit unions and other community-based lenders seeking to build and expand
green lending programs. In just 22 months, more than 300 lenders from nearly 150 deeply mission-
driven financial institutions (primarily community development credit unions, CDFI loan funds, and
community banks) have completed the Inclusiv-University of New Hampshire solar lending training
course. In the past 12 months, just 96 of the community-based lending institutions that have graduated
from our training courses have invested more than $2.24 billion in green loans.
Community-Based Lenders Have a Strong Record of Successful Green Lending
Community development credit unions and other community-based lenders should be key partners in
the planning and disbursement of the GHGRF to ensure the fund reaches and benefits all communities
equitably. They are the ideal vehicle to deliver on the goal and commitment to direct the benefits and
impact of the GHGRF to climate-impacted communities.
Our market research of credit unions, community banks, and CDFI loan funds shows that at least 510
community-based lenders across the country currently offer dedicated green loan products with
another 69 lenders developing new green lending programs.
Community-based lenders are financial institutions that are already out on the frontlines, providing
services that plug holes in our financial system. Each of these 510 financial institutions has designed
green loans products that are uniquely tailored to the clean energy and financing needs of their local
communities and customers. Some community-based lenders have already become leaders in their local
markets. Tucson Old Pueblo Credit Union, for example, originated more than $25 million in solar loans in
2022 alone and is the leading solar lender in Tucson; while Clean Energy Credit Union has reached more
than 7,000 members and deployed $134 million in clean energy financing in the past four years.
These 510 community lenders already finance the full range of consumer, residential, and small business
energy projects, including:
39 Broadway Suite 2140, New York, NY 10006 | T. 212 809 1850
iincllusiiv..org | info@inclusiv.org
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• Efficient home appliance upgrades.
• Energy efficiency upgrades.
• New and used electric vehicles.
• Solar and solar-powered battery storage projects; and
• Operating capital to grow small businesses that provide clean energy and energy efficiency
installation and contracting services.
As an extension of these 510 community-based lenders that currently offer green loans, the existing
capillary banking system of over 11,000 community-based financial institutions can quickly transition to
finance decarbonization projects in climate-impacted communities providing both clean energy
products (consumer, EV, residential, small business) and supports (financial and homeownership
coaching, entrepreneurial assistance) to make sure borrowers are set up for success. For low-income
and low-wealth borrowers to succeed, the ability to match the climate benefits with household budget
in the form of reduced consumption is critical. CDFIs, MDIs, community banks, and credit unions already
have expertise and proven success doing just that with their borrowers. These lenders are ready to use
GHGRF investments to scale affordable financing that makes green projects accessible to the most
climate-vulnerable communities.
The EPA Should Prioritize Investments that Advance Equity While Reducing Emissions
Although the GHGRF does not permit depository institutions, such as credit unions, to be eligible
recipients of the GHGRF, as non-for-profit financial institutions, credit unions are eligible to receive
indirect investments through the Fund. Inclusiv is a CDFI Intermediary and is committed to making
GHGRF investments accessible to its member credit unions to support the critical greenhouse gas
emissions and air pollution reduction goals of the GHGRF.
Community development credit unions have deep ties with their local communities, extensive
experience developing financial products to meet the needs of lower-income households and people
who have been excluded from the mainstream financial system, and a strong track record of green and
climate resilience-focused lending. Although our comments focus on community development credit
unions, CDFI loan funds, community banks, and mainstream credit unions share many of the same
positive characteristics. These institutions are typically able to leverage public investment like the
GHGRF as much as tenfold and could bring the total impact of the fund to more than $200 billion in
green lending over the next three to five years.
The EPA should align the GHGRF award criteria with Justice40 goals. The GHGRF can rely on the clear
strengths of high-impact community development credit unions in reaching low-income people and
people of color, and in their demonstrated record of success in green and resilience-focused lending. We
urge the EFAB to help the EPA to develop equitable disbursement criteria for the GHGRF by focusing on:
• Expanding capacity for high-impact green lending in historically redlined communities, counties
experiencing persistent poverty, and states that lack effective infrastructure to make GHGRF
investments. Directing investments to MDI credit unions and CDFI credit unions with a racial equity
mission is a straightforward way to reach this goal and aligns with the Justice40 initiative.
Communities of color face higher energy cost burdens than white communities and, to date, have
been largely excluded from the clean energy transition, which has shut people of color out of both
savings and job opportunities.
• Ensuring green lending and climate resilience lending is responsive to local needs and that loan
39 Broadway Suite 2140, New York, NY 10006 | T. 212 809 1850
iincllusiiv..org | info@inclusiv.org
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products are accessible to frontline and historically disinvested communities. Credit unions are
financial cooperatives that are democratically governed by their members on a one member, one
vote basis. Community development credit unions know and serve these communities and their
structure ensures they are accountable to their members.
• Leveraging public dollars for additional impact. As described above, community development credit
unions and other community-based lenders can leverage public funding as much as tenfold.
• Prioritizing institutions with a strong track record of green lending or climate resilience lending.
Including the two community development credit unions with strong green lending records
described above, 428 credit unions across the country and 19 of Puerto Rico's cooperativas have a
strong track record of both solar and climate resilience lending. Cooperativa Jesus Obrero, for
example, has financed more than 500 PV solar systems across the island of Puerto Rico and
renewable energy lending makes up 10% of its total loan portfolio.
• Seeking robust stakeholder feedback. Community development credit unions should be key partners
in the planning and disbursement of the GHGRF to ensure the fund reaches and benefits the
communities that are most climate-vulnerable and most excluded from our mainstream financial
system.
By keeping the priorities above front and center in GHGRF disbursement criteria decisions, the EPA can
meet the greenhouse gas emissions and air pollution reduction goals of the Inflation Reduction Act
while advancing racial and environmental justice in frontline communities.
Thank you for the opportunity to provide input at this critical juncture in the implementation of the
GHGRF. Please contact Neda Arabshahi, Vice President, Inclusiv Center for Resiliency and Clean Energy
(iiarabshahigiiiclusiv.org) with any questions.
Sincerely,
d, -
Cathie Mahon
President/CEO, Inclusiv
39 Broadway Suite 2140, New York, NY 10006 | T. 212 809 1850
iincllusiiv..org | info@inclusiv.org
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ELEVATE
773-269-403?
ElevateNP.org
322 S. Green St.
Suite 300
Chicago, 1L 60607
October 11, 2022
U.S. Environmental Protection Agency
Environmental Financial Advisory Board
Via efab(a)epa.gov
Thank you for the opportunity to provide a written statement in advance of the Environmental
Financial Advisory Board's (EFAB) October 18 public meeting. Elevate is an Illinois-
headquartered nonprofit that works nationwide, with extensive projects in historically
disinvested communities in the Midwest and West Coast states. We design and implement
energy efficiency, solar, building decarbonization, clean water, and workforce development
programs that lower costs, protect the environment, and ensure that program benefits reach
those who need them most. We help owners and tenants of affordable rental apartment
buildings, public housing authorities, and home-based childcare centers to retrofit their
buildings and manage their energy use. We are also a partner in the philanthropy-funded
Justice40 Accelerator, which is helping community-based organizations grow their capacity so
that they may participate fully in federally funded programs.
We are pleased to see that the EFAB's agenda includes discussion of the Greenhouse Gas
Reduction Fund ("Fund"), created by the Inflation Reduction Act. We were thrilled that the
Fund was included in the legislation and are eager for it to drive benefits to affordable housing
and low income and disadvantaged communities. The details of the Fund's implementation will
determine how effective it is at reaching these communities, and we hope that the EFAB and US
EPA will carefully consider the principles below as the program is implemented.
Financing for Clean Energy Projects Must be Coupled with Technical Assistance
Our experience working with owners of subsidized and naturally occurring affordable housing,
nonprofit building owners, and homeowners with low incomes has taught us that building
owners often do not have the capacity or expertise necessary to identify and complete clean
energy retrofits. They need to work with program implementers who can help them manage
the projects, preferably through a one-stop model that assists with the entire project, from
assessing the building to identifying and managing financing and funding opportunities, to
managing construction and ensuring quality installations. We hope that you will carefully
consider the linkage between organizations providing the Fund's financing, program
implementers, contractors, and building owners.
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ELEVATE
773-269-4037
ElevateNP.org
322 S. Green St.
Suite 300
Chicago, 1L 60607
Grants are Needed to Fund Technical Assistance
Technical assistance is critical to getting projects off the ground, but interest rates must also be
kept low enough that low income and disadvantaged communities can use and benefit from the
funding. Consequently, we hope that EPA will seriously consider using grants to fund technical
assistance needs, fully or partially, while ensuring that loan terms remain accessible for
communities with low incomes.
The Fund Must Finance Small Projects
To ensure that the Fund's benefits reach into communities, it must finance local projects.
Examples might include electrification of smaller apartment buildings or solar systems for
houses of worship or local nonprofits. These projects will be relatively small but bring benefits
that are clearly visible to community members. Consequently, the Fund should be designed to
ensure broad availability and to accommodate smaller financing amounts and grants.
Community Development Finance Institutions Should Play an Important Role in the Program
Community Development Finance Institutions (CDFIs) have both the lending expertise and the
community connections needed to help ensure Fund resources make a difference in
communities. Funding and opportunity for financing should be available CDFIs, with priority
given to those that serve affordable housing and projects that directly benefit disinvested
communities. CDFIs, along with program implementers, will be important elements of the
ecosystem of organizations necessary to ensure the Fund reaches its goals.
Again, thank you for the opportunity to comment and we look forward to working with US EPA
and the EFAB in any way we can to make the Greenhouse Gas Reduction Fund successful.
Thank you
Anne McKibbin
Principal Director, Policy
Elevate
Anne. McKibbin(a) ElevateNP.org
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NRDC
VIA EMAIL
Kerry E. O'Neill
Chairperson
Environmental Protection Agency (EPA)
Environmental Financial Advisory Board (EFAB)
efab@epa.gov
Re: Comments related to EPA's Greenhouse Gas Reduction Fund
Dear EPA Environmental Financial Advisory Board:
On behalf of the Natural Resources Defense Council (NRDC), we are pleased to submit these
comments focused on the design and implementation of EPA's newly created Greenhouse Gas
Reduction Fund (GHGRF). NRDC is an international nonprofit environmental organization with more
than 3 million members and online activists. Since 1970, our lawyers, scientists, and policy advocates
have worked to protect the world's natural resources, public health, and environment.
Over the last decade, NRDC has increasingly focused on how public funds could dramatically increase
private investment in the clean energy transition and help to accelerate the shift to a greener, more
prosperous economy that benefits everyone. Our experience co-founding and serving as the Secretariat
of the global Green Bank Network, our work alongside community development financial institutions
(CDFIs) and credit unions charting innovative clean energy models, and our on-the-ground efforts
working to equitably deploy clean energy solutions has made clear how critical our financial system is
in reducing carbon emissions, bolstering climate resilience, and supporting development that is
sustainable and equitable. NRDC's private/public finance expertise puts us in a unique position to
comment on the design and implementation of EPA's GHGRF, which we believe can be a critical tool in
accelerating a more equitable clean energy transition.
We understand that EPA is just beginning the design and implementation process for the GHGRF, and
thus our comments for EFAB focus on four key considerations. These four principles will be critical for
a fund deployment that appropriately balances the speed at which we need to reduce GHG emissions
with the essential work of fueling a sustainable clean energy transition that delivers tangible and
lasting benefits to low-income and disadvantaged communities and households.
Additionality, Market Creation, and Ecosystem Development
EPA should require applicants to (1) demonstrate how GHGRF funds will accelerate deployment of
key GHG-reducing projects and technologies in underserved markets; (2) show how blending
public and private capital will drive new market creation and/or market transformation; and (3)
articulate clear, measurable equity-based outcomes in addition to pollution-related ones. Given the
enormous amount of capital required to reduce GHG emissions and decarbonize our economy, public
dollars must be used strategically to rally and redirect private investment into low-carbon, climate-
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resilient projects that produce tangible outcomes, especially for low-income and disadvantaged
households.
By prioritizing low-income and disadvantaged sectors, EPA can help accelerate GHG-reducing
investments in communities that the private market does not broadly serve. These communities and
households have an acute need for assistance due to systemic public and private disinvestment and
environmental injustices, and there currently exist limited strategies to protect these households from
harm resulting from GHG pollution. By focusing on these sectors, the GHGRF can be the lynchpin that
induces additional flows of capital that transform and create markets to deliver tangible benefits in
communities long overlooked.
Investments that benefit low-income and disadvantaged communities include energy efficiency,
electrification, and resiliency investments in buildings and facilities like: (1) affordable housing - both
ownership and rental, (2) small and BIPOC-owned businesses, (3) nonprofits, (4) community facilities,
and (5) small, religious, and educational institutions. These investments can not only reduce GHG
emissions, but also dramatically improve indoor air quality and health outcomes. Where applicable,
EPA should also encourage ownership and community control given the long history of capital
extraction many low-income and disadvantaged communities have endured. In addition, renewable
energy and other zero emission technologies, as well as transportation infrastructure that is located in,
serves, and in which such communities have an equity stake also fit this bill. Finally, projects that
deliver deep GHG reductions (e.g. deep energy retrofits); are not currently covered by other LMI-
focused programs (e.g. pre-weatherization, electrification-ready services, etc.); or deliver grid and
resiliency benefits (solar + storage), all are areas where GHGRF funds could be catalytic and further
leverage other IRA investments and incentives in these areas.
Correspondingly, GHGRF investment criteria should screen out projects that cannot convincingly
demonstrate a need for GHGRF capital to drive project benefits directly and overwhelmingly to low-
income and disadvantaged communities. Projects that may fail this "but for" test could include mature
technologies such as utility-scale renewables; market segments well-served by current financing such
as transmission; and areas that are well funded via other federal provisions in IRA and IIJA. Many non-
low-income focused entities - such as corporates, investment-grade rated institutions with no
demonstrated mission focus, affluent customers, and commercial real estate developers - do not
require public financing assistance to adopt GHG-reducing and decarbonization technologies.
We also encourage EPA to take an ecosystem development approach to GHGRF design and
implementation. A mix of grants and financial capital will be needed to fulfill this vision. Financial
assistance needs to be more than loans, and include (recoverable and non-recoverable) grants and
flexible, low-cost impact investing structures that don't excessively rely on cash flow from low-income
residents. Building community trust, project development, workforce development, small business
support, and flexible early-stage financing represent just some of the challenges in finding "investable"
projects in low-income and disadvantaged communities.
GHGRF funds should address these issues head-on, and incorporate the necessary capacity building,
technical assistance, project development, and community engagement support that will ultimately be
needed to deliver a pipeline of GHG-reducing projects with meaningful impacts over the long run.
Technical assistance is needed at the community level to educate both households and potential
borrowing organizations about decarbonization benefits and strategies, and to connect interested
parties to vendors and other project development resources including financing alternatives. In
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addition, many lenders would benefit from a technical assistance platform to provide lender education,
product information, uniform standards, as well as metrics for decarbonization, professional
certification standards for third parties, and capacity building.
In thinking about what ecosystem supports are needed, it may be helpful to think about what each
technology or product vertical (e.g. multifamily affordable decarbonization; EVs; etc.) needs to scale
and reach all communities. For instance, the financial, technical, and capacity issues associated with
delivering community solar to low-income households looks different and requires different solutions
than what is needed for net zero new construction affordable housing. By fleshing out the deployment
hurdles in each distinct vertical, EPA can take a more tailored and informed approach in its GHGRF
design. Additionally, EPA may consider creating selection criteria for awards that specifically ask
applicants to describe and address deployment hurdles in each vertical in which the applicant intends
to deploy GHGRF resources.
Finally, a critical piece of ecosystem development is a focus on community ownership and wealth
building. While it's true that a major goal of the GHGRF is on the energy demand side - namely,
increasing access to clean energy and its co-benefits while decreasing energy costs/burden - like other
parts of the IRA (for example, the tax incentives provided for the creation of apprentices), there is great
potential for disadvantaged communities to share in the benefits of supplying clean energy. The
benefits include (1) expanding the clean energy workforce to community members; (2) increasing the
number of small, BIPOC-, and woman-owned business directly or indirectly supporting projects; (3)
growing the number of lenders investing in improvements to key community-identified local
infrastructure needs as part of project financing; (4) investing profits or surpluses in key community
assets; (5) supporting community ownership models like community land trusts and cooperatives as
they transition to clean energy; and (6) entering into carried interest or profit-sharing arrangements
with partner organizations, individuals, or groups. The EPA should appropriately weigh community
ownership and wealth building strategies when designing GHGRF and incentivize consortia with
partners (deep impact investors) who can equitably deliver these supply-side outcomes.
Prioritize Low-Income and Disadvantaged Communities and Households Across the Entire
$27 Billion
Given $15 billion of the GHGRF is specifically earmarked for low-income and disadvantaged
communities, a key decision facing EPA is how to define such communities. We recommend applying
the White House's Justice40 Initiative's definition of disadvantaged communities1 as a starting
point, and modifying it to include other key climate, energy, and economic factors. Specifically,
when applicable, other key variables could be: energy insecurity; energy cost burden; present and
anticipated climate impacts; lack of access to credit or capital; and presence and growth of high-quality
jobs supported by GHGRF resources. In addition, it will be important for EPA to consider how low-
income and disadvantaged communities definitions map to other existing and potentially
complementary federal programs, such as New Markets Tax Credit eligible tracts, HUD Multifamily
and Public Housing locations, and Low-Income Housing Tax Credit locations. Programs that have
track records of insufficiently or ineffectively targeting disadvantaged communities (e.g. Opportunity
Zones) should be excluded or cross referenced with other criteria to ensure the integrity of this
program.
1 https://www.whitehouse.gov/ wp-content/uploads/2021/07/M-21-28.pdf
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Second, EPA should structure and award the unrestricted portion of the GHGRF ($11.97 billion)
with a priority toward low-income household access, as well as small businesses that may be based
outside of a low-income community but still serve it. While many low-income individuals and
households live in low-income and disadvantaged communities, many do not. The same is true for
BIPOC-owned businesses and other small businesses that low-income households rely on. It is
therefore critical that the unrestricted portion of the GHGRF follow similar Justice40 and additionality
principles as the place-based $15 billion. We recommend considering the $11.97 billion as "people-
based" funds, whereby these funds can also reach low-income households and small businesses who
may not specifically be located in a qualified "low income or disadvantaged community" area. EPA
should also establish an eligibility testing regime that does not impose undue administrative cost and
burden to qualify households or businesses. In addition, GHGRF awardees of this unrestricted pot of
funds should similarly demonstrate a mission-based focus as discussed elsewhere in this letter.
Finally, EPA should prioritize low-income and disadvantaged community engagement and outreach
in both the development of the GHGRF application, and in the awarding of funds. In the
development of the GHGRF application, it may be helpful for EPA to model its community
engagement after other federal programs like Department of Energy's Communities LEAP Program or
EPA's own Brownfields Program, as well as leverage its Regional Offices and the newly established
Office of Environmental Justice and External Civil Rights to ensure diverse voices are heard and
incorporated throughout the GHGRF implementation process. Any GHGRF awardee should
demonstrate a proven track record and commitment to working alongside low-income and
disadvantaged communities, as well as environmental and energy justice organizations. This may
include community representation at the board and leadership levels; explicit partnerships with
environmental or energy justice organizations to inform business models; or committed and funded
community engagement plans designed to inform business models.
Fast, Equitable, and Flexible Deployment
To deploy capital quickly and equitably, the GHGRF should route clean energy investments
through existing mission-driven institutions and platforms. These entities should have demonstrated
track records of successfully deploying capital in low-income and disadvantaged communities either
directly or through their networks. EPA should prioritize applicants that have: (1) clear
client/borrower networks in low-income and disadvantaged communities; (2) an established lending
and/ or grantmaking infrastructure, including prudent lending/ grantmaking standards and existing
products that can be modified to include GHG reduction technologies; (3) a specific and credible
commitment to modify existing products to drive GHG reductions; (4) existing reporting frameworks
that can be used to track performance; and (5) demonstrated organizational accountability mechanisms
to the communities they serve.
These institutions and platforms, such as Community Development Financial Institutions (CDFIs),
established Green Banks, Housing Finance Agencies (HFAs), Public Housing Authorities (PHAs), as
well as associations of community-based lenders like Credit Unions and Minority Depository
Institutions (MDIs), can all deploy GHG-reducing capital quickly to projects in areas that have thus far
been overlooked in our country's clean energy transition. With access to GHGRF capital and technical
assistance, lenders can adjust and complement existing loan products - such as predevelopment, rehab,
equipment, construction, and refinance loans - to finance GHG reducing technologies. The GHGRF
represents a critical opportunity to adapt and leverage the vast existing community and green finance
infrastructure throughout the country to pursue GHG reduction goals in low-income and
disadvantaged communities.
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EPA should afford flexibility to established institutions that meet the above-listed criteria regarding
how financing products are designed, how customers are solicited, and how funds are ultimately
deployed in GHG reducing projects and technologies. Flexibility will allow lenders to be market-
responsive and serve customers with different needs in different geographies. Prescriptive financing
products and underwriting methods can hamstring lenders. For example, lenders should have
flexibility in how to allocate funding between fully repayable loans, "soft" loans, and grants. While the
EPA should afford lenders flexibility to set rates and terms, the benefit of GHGRF zero or low-cost
funding should be substantially passed through to project beneficiaries. Explicitly, the EPA should
require the all-in financing costs to be less than comparable market terms for similar risked
investments. Lenders need flexibility in how to "blend" GHGRF funds with other capital sources (both
at the project and balance sheet level). Although such flexibility is beneficial, lenders should be
required to report on key outputs and outcomes on a consistent basis with metrics that state GHG
reduction and other key goals - such as # and type of households served - per dollar of GHGRF capital
grant on a term-consistent basis. EPA should also prescribe GHG measurement methods and
technology guidance for lenders, leveraging independent 3rd parties and standardized processes, as
well as encouraging shared infrastructures and platforms when applicable.
Complementary to the primary approach discussed above, EPA could also use a smaller tranche of
GHGRF funds to invest in and spur new institutions and innovative approaches that address
persistent gaps in the marketplace. Such institutions could be new local, state, or regional Green
Banks, CDFIs, or nonprofit loan funds. In places where there are limited or insufficient intermediaries
to adequately serve low-income and disadvantaged people and communities, EPA should look to
invest in new entities that have a business model that explicitly seeks to complement (not compete
with) existing institutions (part of the concept of additionality discussed herein). In addition to
accountable and inclusive governance and performance standards, such entities should have a credible
model to either (1) help bring together commercial, public, and mission-driven capital to drive GHG
reduction in low-income and disadvantaged communities not currently met by existing institutions; (2)
seek to fill funding gaps (e.g. pre-development, bridge loans, taking on specific risks that established
lenders may avoid due to policy restrictions); and/ or (3) address specific barriers in local, state, or
regional markets inhibiting the existing deployment infrastructure.
Governance and Performance Standards
EPA should award applicants that can credibly demonstrate both (1) inclusive governance practices
with responsiveness and accountability to low-income and disadvantaged communities and (2) best
practices of nonprofit and financial governance. Other Federal programs, such as those run by US
Department of Treasury's CDFI Fund or the US Department of Health and Human Services Federally
Qualified Health Centers, may serve as good examples for EPA to consider when deciding on GHGRF
governance parameters. At minimum, consideration should be given to board and leadership
representation, board charters, investment/credit policies, as well as organizational policies such as
conflicts of interest standards, procurement policies, and document retention. In addition, applicants
with a demonstrated track record of effectively stewarding federal and/or state funds through other
programs (e.g., Paycheck Protection Program, CDFI Fund, utility ratepayer funds, etc.) should be
scored highly. Similarly, indirect regulated recipients of funding, such as credit unions and minority
depository institutions should fare well in scoring if they can demonstrate a record of best-in-class
regulatory compliance.
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EPA should also define clear impact standards and metrics for awardees to drive significant GHG
and air pollution reductions, as well as meaningful energy and environmental justice impacts for
low-income and disadvantaged communities. Awardees should prioritize meaningful improvements
to the lived experience of marginalized and disadvantaged communities through investments in GHG-
reducing projects (e.g. % reduction in energy burden and utility shut offs; employment outcomes;
projects with clear ties to community ownership; etc.). One potential resource for EPA to consult is
University of Michigan's newly released Energy Equity Project report, which provides a framework to
measure and further energy equity outcomes.2 Ultimately, for the GHGRF to successfully meet
Justice40 goals, impacts will need to be focused on people-centered benefits.
We recommend that EPA consider a short list of clear, overarching, quantifiable program outputs and
outcomes that all project verticals should measure and evaluate (e.g. GHG reductions, leverage,
underserved market location, etc.), and a more tailored set of metrics specific to each project vertical
(e.g. building electrification; EVs; etc.). EPA should identify when national, standardized approaches to
measuring outcomes could best be applied, when a regional approach makes sense, or when a more
local recipient-level reporting is needed. Currently, many green lending entities communicate impact
differently. The GHGRF presents an opportunity for EPA to establish clear standards on impact
reporting and measurement for all recipients to follow.
In addition, EPA should ensure that GHGRF awardees can rely on independent 3rd-party professionals
to provide assessments, validate project scopes, validate GHG savings estimates, and also provide
reliable cost estimation services. To the greatest extent possible, EPA should seek to streamline these
services to maximize efficiency and reliability, although local/state policy or code may require more
tailored approaches in some instances.
•k-k^c
We thank the EFAB and the EPA for their consideration of our comments. If we can be of any further
assistance, please do not hesitate to contact us.
Sincerely,
Adam Kent (akent@nrdc.org)
Doug Sims (dsims@nr dc .org)
Sarah Dougherty (sdoughertv@nrdc.org)
Natural Resources Defense Council
1152 15th Street NW, Suite 300
Washington, DC 20005
2 Energy Equity Project, 2022. "Energy Equity Framework: Combining data and qualitative approaches to ensure
equity in the energy transition." University of Michigan - School for Environment and Sustainability (SEAS).
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Environmental Financial Advisory Board Meeting Oct 18, 2022
Public Comments by Gregory M. Baird, greg.m.baird@agingwaterinfrastructure.org
Dear EFAB members - thank you for your time, resources, and expertise in discussing and
struggling with finding solutions for many complex issues.
EFAB is an EPA advisory committee chartered under the Federal Advisory Committee Act to
provide advice and recommendations to EPA on creative approaches to funding environmental
programs, projects, and activities.
I wanted to take a few moments to raise some common themes and questions for your
consideration.
Utilities face many financial obstacles many of which are on the OPEX- operations and
maintenance side of the budget. EPA funding most of the time only focuses on CAPEX -brick and
mortar capital projects.
Can "Building Capacity" for water/sewer and storm utilities include a 3-year grant for "new"
hired employees focused on infrastructure asset management, regulatory compliance, and
finance/communications? As a municipal finance officer in California, I saw the benefit to the
police department which would receive such grants to reduce crime with the city tasked with
finding the revenue to maintain the positions beyond year 3.
Can EPA/SRF funding broadly be applied to SaaS type of products that may not be directly tied
to an immediate capital project? Technology must be funded and applied to address our aging
infrastructure, workforce, sustainability, and affordability challenges. Artificial Intelligence,
Machine Learning, Digital Twins, and many cloud platform products are packaged as SaaS
annual subscriptions requiring OPEX - operation's budget planning and approvals. If the EPA
funding favors only capital project justification, then many SaaS product and cloud offerings
geared for mid to small and very small utilities with capacity building benefits for field crews are
left untapped. As the CFO of Colorado's third largest municipal water utility, I found it was
easier to fund a capital project versus adding a new operational budget line item.
States are faced with the impossible and overwhelming duty of monitoring compliance issues of
hundreds of public water/sewer systems. Local governance and capacity issues drive water
quality and infrastructure neglect and failures. Can combined watershed/sewershed ad hoc
regionalization "one water" co-ops be formed for peer-to-peer reporting on infrastructure risk
and reliability, staff capacity, water sustainability and quality - funded as a program with SRF
money?
Environmental, social, and governance (ESG) principles implies that an organization has a
strategy which focuses on the three pillars of the environment, social, and governance. This
includes taking measures to lower pollution, C02 output, and reduce waste. It also means
having a diverse and inclusive workforce, at the entry-level and all the way up to the top. ESG is
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costly and time-consuming to undertake. While a worthy cause and probably achievable for
larger municipalities and their utilities, thousands of capacity building utilities need to focus on
the basics of utility infrastructure management, sustainable service delivery, compliance, rate
affordability, communications, and funding. 85% of all water utilities report under a
municipality/public works department, less than 10% have accessed SRFs, 30% may even fail to
submit a lead(Pb) service line inventory by 2024. The issues are complex but there must be a
focus on the basics of utility management and governance.
Thank you for your time and consideration,
Gregory M. Baird
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CGC
Coalition for Green Capital
October 11, 2022
Hon. Edward H. Chu,
Designated Federal Officer
Environmental Financial Advisory Board
U.S. Environmental Protection Agency
Hon. Kerry O'Neill,
Chair
Environmental Financial Advisory Board
U.S. Environmental Protection Agency
RE: Greenhouse Gas Reduction Fund
Dear Mr. Chu, Ms. O'Neill, and Members of the U.S. Environmental Protection Agency's
Environmental Financial Advisory Board-
The Greenhouse Gas Reduction Fund ("GGRF" or "Fund") represents a historic investment in the
fight against climate change. It is designed to reduce or avoid greenhouse gas emissions and
other forms of air pollution by accelerating investment in clean energy technologies in every
community in the United States, including low-income and disadvantaged communities that are
often left out of public and private investments. For EPA, the $27B appropriated to the Fund by
the Inflation Reduction Act ("IRA" or "Act") is unprecedented, and the deadlines established in
the Act leave the agency with little time to stand up an entirely new grant program. As
emphasized by Senator Van Hollen, Senator Markey, and Representative Dingell in their
September 9, 2022, letter to EPA Administrator Michael Regan ("Congressional Letter"), meeting
those statutory deadlines is critical to the Fund's ability to reduce emissions of greenhouse gases
and other forms of air pollution at the levels called for by the President, and we encourage the
Environmental Finance Advisory Board ("EFAB") to advise EPA on how the agency can implement
the Act within the Congressionally-mandated deadlines.
The Congressional Letter, in conjunction with a statement for the Congressional Record made by
Representative Dingell, documents the legislative history of the GGRF and Congress's intent for
how EPA should implement this new program. We commend both to the EFAB, and have included
them as Attachment I and Attachment II to these comments. We further encourage the EFAB to
provide EPA with advice that is consistent with Congress's intent, as documented by the
Members of Congress that were the lead sponsors of the legislation that was incorporated into
the IRA to create the GGRF. Together, the Letter and the Statement provide EPA with a roadmap
for how to implement the GGRF and award the full amount appropriated by Congress within the
time provided in the Act.
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The Letter and Statement explain that Congress's intent in creating the GGRF was to capitalize a
single national, nonprofit financial institution - often referred to as the National Green Bank.
Consistent with well-established financial protocols, Congress understood that consolidating the
grant money in a single National Green Bank would actually expand the number of entities that
would benefit from the funding provided through the GGRF and the total amount of "funding
and technical assistance" that will be delivered to these entities. That is true for several reasons.
• Congress drafted the legislation not only to provide financial assistance to qualified
projects, but also to provide technical assistance and financial assistance to new or
existing public, quasi-public, not-for-profit, or nonprofit entities that provide financial
assistance to qualified projects at the State, local, territorial, or Tribal level or in the
District of Columbia, including community- and low-income-focused lenders and capital
providers. Simply put, the National Green Bank is required to share the funding it receives
with all entities that are committed to accelerating investment in clean energy
technologies in every community in the United States.
• Unlike a traditional grant program with a one-time application window, the National
Green Bank will have the ability to expand continually the network of new or existing
entities that receive funds through the GGRF long after the application window closes. No
existing membership organization or network can be certain that its current members
alone can meet the environmental justice mandate included in the GGRF. The National
Green Bank's flexibility is essential to meeting the President's Justice40 goals, because
low-income and disadvantaged communities are less likely to currently be served by
financial institutions that will be prepared to provide green financing on Day 1.
Recognizing this, Congress included a requirement that the National Green Bank provide
both technical assistance and financial assistance to help create new and develop existing
public, quasi-public, not-for-profit, or nonprofit entities that will provide financial
assistance to qualified projects, including projects located in low-income and
disadvantaged communities.
• Congress recognized that to accelerate the construction of the clean power platform in
the most critical communities in the country, the National Green Bank will need to focus
"funding and technical assistance" on geographic and demographic targets. To this end,
the National Green Bank will depend upon partnerships in those communities with
nonprofit financial institutions of all kinds. Continual focus on well-selected communities
will require a consistent strategy with an adaptable and flexible approach to problem
solving by the National Green Bank and its partners in those communities. By providing
the money to a single National Green Bank and requiring the bank to in turn provide
technical and financial assistance to new and existing financial entities, Congress found a
creative solution that overcame the time-based limitations of a traditional grant program.
• Capitalizing one single independent National Green Bank offers both the benefits of
flexibility and speed in decision-making that private sector financing entities enjoy and
the restraint on profit-seeking that should attach to the recipient of taxpayer funds. That
flexibility will allow the National Green Bankto prioritize delivery of funds to communities
with the greatest need, and to quickly respond as demands and needs change over time.
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Finally, it is important to note that this flexibility does not come at the expense of accountability.
In fact, capitalizing a single National Green Bank will allow for more effective and efficient
accountability by consolidating the responsibilities and obligations in a single entity. The National
Green Bank will be responsible for ensuring the funds are used consistent with the requirements
of the IRA and the terms and conditions contained in the grant agreement. That grant agreement
will include key aspects of the National Green Bank's governance and business plan, which will
enable effective oversight by EPA and Congress.
As intended by Congress, capitalizing a National Green Bank is an essential component for
meeting the stated purpose of the GGRF and is key to ensuring the rapid deployment of funds to
communities across the country, and in particular low-income and disadvantaged communities.
We commend the EFAB for taking on this important charge and encourage you to provide advice
to EPA that is consistent with Congress's intent, will assist the agency in meeting its
responsibilities under the IRA, can make a meaningful difference in the effort to reach low-
income and disadvantaged communities, and helps the GGRF realize its full potential.
If I or anyone at the Coalition for Green Capital can be of assistance as you complete your work,
please do not hesitate to contact me.
Kevin S. Minoli
Alston & Bird LLP
Kevin.Minoli@Alston.com
202-860-5581
Counsel to the Coalition for Green Capital
Enclosures
cc: Reed Hundt
Robert Sussman
Sincere ly;
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ATTACHMENT I
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Congress of tlye United States
Hlaslfingtmi, S« 20515
September 9, 2022
The Honorable Michael Regan
Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Dear Administrator Regan,
As the lead sponsors of the National Climate Bank Act (S. 283) and the Clean Energy and
Sustainability Accelerator Act (H.R. 806) in the Senate and House of Representatives, we worked to
include the Greenhouse Gas Reduction Fund (GHGRF) in the Inflation Reduction Act (Pub. L. 117-
169) to provide resources to fulfill the mission of our legislation. Therefore, we write to encourage
you to rapidly invest maximum funding from the GHGRF to capitalize a national climate bank that
will support an equitable transition to a clean-energy economy and fund a nationwide network of
state and local climate banks, which will turn the challenge of climate change into an opportunity
for prosperity. As the GHGRF intentionally dedicates $8 billion to the "purposes of providing
financial assistance and technical assistance in low-income and disadvantaged communities," the
swift and successful disbursement of this funding will further the Biden administration's
environmental justice goals, which you have been a strong advocate for within the Environmental
Protection Agency (EPA). An effective national climate bank program will build generational
climate-friendly wealth in communities that have the least access to clean energy capital and are
most at risk from environmental harm.
We have long championed the concept of a single, independent, non-profit national climate bank
that would maximize the leveraging of private capital investment, ensure the efficient distribution of
funds within a growing green bank network, and create opportunities for large scale,
transformational investments—particularly in environmental justice communities - and it is critical
to the country's ability to reduce emissions of GHGs at the levels called for by the President.. The
GHGRF is poised to accomplish that goal as it intentionally includes as an eligible recipient 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 this section; is funded by public or charitable contributions; and
invests in or finances projects alone or in conjunction with other investors, "
The provision also instructs eligible recipients to use grant funding to make direct investments
which:
"provide financial assistance to qualified projects at the national, regional, state,
and local levels; prioritize investment in qualified projects that would otherwise lack
access to financing; and retain, manage, recycle, and monetize all repayments and
other revenue received from fees, interest, repaid loans, and all other types of
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financial assistance provided using grant funds under this section to ensure
continued operability."
Furthermore, the GHGRF requires recipients to make indirect investments to promote climate
finance efforts throughout the country by:
"providing] funding and technical assistance to establish new or support existing
public, quasi-public, not-for-profit, or nonprofit entities that provide financial
assistance to qualified projects at the State, local, territorial, or tribal level or in the
District of Columbia, including community- and low-income-focused lenders and
capital providers."
A national climate bank is uniquely structured to meet all of the requirements of the GHGRF. It will
bring together a comprehensive, diverse, and inclusive network of state and local financing entities
in the public and non-profit sectors. We have championed the effectiveness of a standalone national
institution that is authorized to capitalize both current and newly formed state and local banks,
along with all other entities eligible to receive indirect assistance through our legislation. This
approach allows these subnational entities, nonprofits, and lenders to make their own investments
tailored to the needs of their communities, with the financial and technical support of the national
climate bank. In the aggregate, a national climate bank and its network is expected to produce $10
billion of public-private investment over a decade for every $1 billion in initial capital.1
The GHGRF will provide a national climate bank with the funding it needs to immediately begin
investing in qualified projects that would otherwise lack access to financing on favorable terms.
There are $200 million worth of projects targeting low-and-moderate income communities,
nonprofits, public schools, and affordable housing that are shovel-ready, in addition to the $21
billion in clean technology projects that are in the larger pipeline.2 With so many projects ready to
go, it is vital that we establish an organized central entity that is able to fund qualified large-scale
projects and coordinate downstream financial entities to implement a system that efficiently reduces
emissions and supports disadvantaged communities in those efforts.
As a centralized institution, a national climate bank will reduce costs for financial entities, attract
private capital investments, and support a more efficient project-financing pipeline, while also
seeding and providing technical support to state and local climate banks, minority depository
institutions, community development financial institutions (CDFIs), and other nonprofits. Green
banks have already proven successful on the local and state level, and a national bank would
support those efforts while providing additional coordination for larger projects at the regional and
national level. Green banks have been established or are being considered for development in 37
states and in Washington, DC, and are supported by governors of both parties.3 A national climate
bank will optimize our federal investment and provide a unified national approach to climate
mitigation, while supporting state and local banks' abilities to meet their individual needs. A green
bank network will be able to rise to the challenge that climate change presents with the leadership
and guidance of a national climate bank.
1 "Supporting a Clean Energy Recovery: Jobs and Emissions Impacts of a $100 Billion Clean Energy and Sustainability
Accelerator" (Vivid Economics Limited, December 18, 2020).
2 "National Green Bank: Project Ready Day One - Conversations with the American Green Bank Consortium," July 7,
2021, http://coalitionforgreencapital.com/wp-content/iiploads/National-Green-Bank-Proiect-Readv~Dav-One.pdf
3 Nevada's green bank, the Nevada Clean Energy Fund, was signed into law by Republican Governor Sandoval.
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To carry out the requirement that 40 percent of funds within the GHGRF be dedicated in support of
environmental justice communities, a national climate bank can use trusted community partners,
such as local green banks and CDFIs, to target investments within disadvantaged communities.
These partnerships will allow the benefits of clean technologies to reach communities that have
been left behind for too long. Moreover, the national climate bank will lower costs for all
consumers, including low-to-moderate income households, by deploying tested financial
instruments that will reduce energy consumption, costs, and emissions for everyday activities.4
Capitalizing a national climate bank will provide long-term, comparatively low-cost solution to
reduce our reliance on fossil fuels and greenhouse gas emissions, while decreasing families' energy
bills and creating new clean energy jobs. As authors of the legislation upon which the GHGRF is
based, we urge you to maximize the impact of these funds through the capitalization of a national
climate bank which will have the capacity to make direct investments in qualified projects at the
national and regional levels and provide funding and technical assistance to state and local
financing entities. We look forward to working together as EPA establishes the implementation
procedures for the GHGRF, per the statute and intent of the Inflation Reduction Act, and thank you
for your efforts on this historic project.
Sincerely,
Chris Van Hollen
United States Senator
United States Senator
Member of Congress
4 The Climate Access Fund of Maryland is developing, managing, and financing a community solar array on the rooftop
of the Henderson-Hopkins School in Baltimore, MD. This project will be open to 175 low-to-moderate-income
households in East Baltimore, and will save each subscriber an estimated $200 annually on electricity.
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ATTACHMENT II
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H7702
CONGRESSIONAL RECORD — HOUSE
August 12, 2022
lease sales provided through the Inflation Re-
duction Act are somehow being rushed
through or will be conducted with insufficient
administrative process. That is simply not the
case.
These sales were scheduled under the
Obama Administration under the 2017-2022
five-year plan. That Interior department sub-
jected the plan to a large programmatic envi-
ronmental impact statement. They then under-
went a multi-sale EIS. These sales then also
went through a supplemental EIS. Thus, the
idea that any further process should be re-
quired is just not credible and that is why the
bill requires them to occur by a date certain.
It is in our national interest to do so as
quickly as possible so that the energy crisis
does not become even worse and so that the
fuel and revenue these sales will generate can
find their way into our economy sooner than
later.
Mrs. DINGELL. Madam Speaker, I rise in
strong support of the Inflation Reduction Act
we are considering today and would like to
speak specifically to the inclusion of the
Greenhouse Gas Reduction Fund, which is
based on important legislation I authored to
address the climate crisis.
The Inflation Reduction Act appropriates
$27 billion to the Environmental Protection
Agency (EPA) to finance climate specific
projects that will reduce carbon emissions,
which will be dispensed through the Green-
house Gas (GHG) Reduction Fund. The GHG
Reduction Fund is the product of more than
13 years of legislative effort by numerous
members of the House and Senate and pro-
vides resources to fulfill the vision and mission
of this legislative effort to capitalize a national
climate bank that will support a swift transition
to an equitable, clean-energy economy,
In the House, the GHG Reduction Fund is
based on H.R. 806, the Clean Energy and
Sustainability Accelerator Act. I introduced this
important legislation to provide the maximum
funding possible to and capitalize a single
independent, non-profit national financing insti-
tution ("NNFI")—the first ever national green
bank—that would in turn make its financial
and technical resources available to commu-
nities across the country. It is our hope, as the
administration implements the GHG Reduction
Fund, it will consider the benefits and structure
of the Clean Energy and Sustainability Accel-
erator Act.
It is our hope the Environmental Protection
Agency would make awards through the GHG
Reduction Fund to capitalize a single NNFI, as
intended under the Clean Energy and Sustain-
ability Accelerator Act, and for that NNFI to
use that capitalization funding to leverage pri-
vate investment in amounts several times
greater than the initial public investment. Once
capitalized, the bill requires the entity to make
direct investments into qualified projects at the
national, regional, state, and local levels and,
importantly, to make indirect investments into
such projects by providing financial and tech-
nical assistance to an open, inclusive, and
ever-expanding network of state and local
nonprofit financial institutions—including exist-
ing and newly established green banks and
community development finance institutions—
that are committed to making investments in
the products that will compose the clean
power platform on which the economy must
run.
The GHG Reduction Fund makes an historic
investment into low income and disadvantaged
communities as well, mandating that at least
40 percent of the over $20 billion be used to
benefit qualified projects and the financing en-
tities that support qualified projects within
these communities, but we expect that the full
investment in these communities will be far
larger through leverage and investments from
the remainder of the Fund.
The GHG Reduction Fund, and the Amer-
ican people, would benefit most and achieve
its purpose most effectively through the cap-
italization of a single independent NNFI, as
originally intended in the Clean Energy and
Sustainability Accelerator Act. A single inde-
pendent NNFI will not be limited by any juris-
dictional boundary—no community is beyond
its reach. Therefore, the NNFI approach could
directly invest in qualified projects anywhere in
the United States that would otherwise lack
funding. In addition, the NNFI approach can
indirectly invest in any community by providing
the funding and technical assistance nec-
essary to establish new financial institutions
and further capitalize and strengthen existing
ones. The NNFI would grow a diverse, open,
and inclusive network of state and local green
banks and other mission driven financing enti-
ties.
Capitalizing a single independent NNFI at
scale, through the GHG Reduction Fund,
would also enable public investment to be le-
veraged more efficiently which, in turn, drives
much greater private capital investment in
qualified projects, whether at the national, re-
gional, state, or local level. And the Inflation
Reduction Act requires the entity to "retain,
manage, recycle, and monetize all repayments
and other revenue" generated using the cap-
italization grant. We count on EPA to assure
that the NNFI will be subject to the appropriate
regulations and requirements that would apply
to similar non-profit institutions that have been
capitalized with federal or nonfederal dollars.
At the same time, the relationship between
EPA and the single independent nonprofit na-
tional financing institution should be designed
to preserve its operational flexibility and ability
to respond quickly to market conditions to exe-
cute with the speed that the climate crisis de-
mands.
Finally, the Inflation Reduction Act sets a
180-day period for EPA to complete all these
steps: establish the GHG Reduction Fund,
issue a grant solicitation, award capitalization
grants, and disburse the funds. These aggres-
sive deadlines were established because the
GHG Reduction Fund cannot achieve its pur-
pose unless the full amount of funds appro-
priated to this program are put into use
through a NNFI approach immediately. Dis-
bursing all the funds within 180 days though a
single independent NNFI, as originally in-
tended under the Clean Energy and Sustain-
ability Accelerator Act will ensure that we can
expeditiously address the urgent threat of cat-
astrophic climate change, in an equitable man-
ner, on day 181. A swift disbursement of the
maximum funding amount possible will allow
the climate bank to leverage more private fi-
nancing—thereby ensuring our public invest-
ment has a far reaching impact.
The impacts of climate change have created
an emergency situation that poses a substan-
tial danger to the health and safety of the
American public, and the award and disburse-
ment of the maximum amount of funds appro-
priated to the GHG Reduction Fund cannot be
delayed. We recognize that the timeline will
require EPA, at every step in the grant proc-
ess, to evaluate approaches that can reduce
the amount of time that it would otherwise
take to complete that step—and it is our inten-
tion that EPA will utilize all legally-authorized
strategies that are necessary to ensure the full
amount of the funding is disbursed on time.
Mr. THOMPSON of California. Madam
Speaker, I strongly support H.R. 5376, the In-
flation Reduction Act of 2022.
I am particularly pleased that the legislation
before the House includes major provisions of
my GREEN Act, including incentives for a vast
array of clean and renewable energy sources.
This legislation represents the most sweep-
ing and ambitious climate policy ever to pass
the Congress.
It reduces our dependence on fossil fuels
while accelerating the development of solar,
wind, and other renewable energy sources.
And it incentivizes individuals to limit green-
house gas emissions from their homes, their
businesses, and their vehicles.
I am also extremely supportive of the health
care provisions in this bill.
Allowing Medicare to negotiate the price of
prescription drugs has been a priority for
Democrats in Congress for decades—and this
bill not only ensures that seniors don't go
broke paying for their medicines, but also
saves taxpayers hundreds of billions of dol-
lars.
Given the negotiations of the past 18
months, this bill could not accommodate every
single priority or proposal.
And I am hopeful that my colleagues will
work with me moving forward to ensure that
the corporate minimum tax—a policy I sup-
port—does not inadvertently burden compa-
nies, like some in my district, who suffered se-
vere net operating losses in previous years
due to natural disaster.
This bill is a tremendous step forward for
our country. It pays down our deficit, reduces
the cost of prescription drugs, extends health
insurance subsidies for low-income Americans
and invests hundreds of billions of dollars in
clean and renewable energy.
I am proud to have helped author this legis-
lation, and I strongly support its passage.
Mr. WELCH. Madam Speaker, as many of
my colleagues know, I have worked for years
to protect patient access to pharmacies across
this nation. It is the intent of the United States
House that this legislation, and in particular,
Section 1860D-14C(c). MANUFACTURER
DISCOUNT PROGRAM shall operate in the
same manner as the Medicare Part D Cov-
erage Gap Discount Program found under 42
USC 139bw 114a. CMS shall implement this
provision to operate in the same manner with
respect to a pharmacy. In that way, this sec-
tion shall not result in any reduction in phar-
macy reimbursement or require or permit price
concessions or other remuneration from the
pharmacy. We will convey this intent to the
Centers for Medicare & Medicaid Services as
they develop the rules that will govern this dis-
count program. I will continue to look for addi-
tional ways to help patients and to preserve
and protect our pharmacies that are so essen-
tial to communities across Vermont and our
country.
Ms. BONAMICI. Madam Speaker, I rise
today in support of a transformational piece of
legislation, the Inflation Reduction Act.
The Inflation Reduction Act's historic invest-
ments will reduce costs for families and indi-
viduals, expand access to affordable health
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/"I
To: Kerry O'Neill, Chairperson, Environmental Financial Advisory Board
From: Andrew Kessler, President, NY Green Bank
Re: Oral Statement Delivered at EFAB October 2022 Public Meeting
Date: October 21, 2022
On October 19, 2022, NY Green Bank ("NYGB") President Andrew Kessler provided an oral
statement to the Environmental Finance Advisory Board ("EFAB") during its October 2022 public
meeting on the topic of the Environmental Protection Agency's ("EPA") Greenhouse Gas
Reduction Fund (the "Fund") established pursuant to the Inflation Reduction Act of 2022. NYGB
is pleased to hereby submit a written copy of the oral statement. NYGB thanks EFAB for the
opportunity to provide its input during the public meeting and looks forward to continued
engagement with EFAB in connection with the Fund.
***
"NY Green Bank welcomes the Environmental Protection Agency's Greenhouse Gas Reduction
Fund as an historic opportunity to further accelerate clean energy investments across the United
States, and particularly welcomes the Fund's emphasis on low income and disadvantaged
communities, which is directly in line with our commitment to supporting these communities
across New York.
NY Green Bank is a $1 billion-dollar New York State-sponsored investment fund. We operate as
a division of the New York State Energy Research & Development Authority, and we are the
largest green bank in the United States. Our mission is to work with the private sector to transform
financing markets in ways that accelerate clean energy investments on an equitable basis and in
support of New York State climate goals.
Since we opened for business in 2013, we have advanced this mission by making $1.8 billion of
investments in more than 100 transactions in asset classes that are critical to the clean energy
transition. Our team works every day to make investments that are market-based, replicable and
scalable, and then we then find ways to create secondary markets for those investments. And, since
New York passed its historic climate law in 2019, we are committed to ensuring that at least 35%
- with the goal of 40% - of our investments benefit disadvantaged communities across New York
State.
NY Green Bank welcomes - and strongly supports - the Environmental Financial Advisory
Board's proposed charge to the Exploratory Workgroup for the Fund. We encourage the EPA,
EFAB and the Workgroup to run a transparent consultative process that solicits feedback on the
design and implementation of the Fund from the broader stakeholder community.
We encourage EFAB to consider the following general principles across the Fund:
• Competitive allocation methodologies that are designed to identify recipients that can
mobilize capital at scale, especially in low-income and disadvantaged communities
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• An application process that identifies recipients with a demonstrated ability to leverage
private sector capital and access secondary markets
• Strong internal controls and compliance programs to ensure responsible stewardship of
public dollars, while avoiding undue administrative burden on Fund recipients
• An allowance for states that already have established criteria for disadvantaged
communities to be able to use such criteria to satisfy EPA's requirements
For the Zero Emission Technologies Fund specifically, it will be critical to have a reallocation
mechanism that ensures that funds are not left unused but can instead be reallocated to other
recipients who are able to maximize the use of these funds.
We look forward to receiving further guidance in the weeks ahead from the EPA, EFAB and the
Workgroup. We stand ready to engage collaboratively with all market actors to advance this effort.
In the meantime, we thank EPA leadership and staff - as well as EFAB and the Workgroup - for
their important work ahead on making the Greenhouse Gas Reduction Fund a success. Thank you
for the opportunity to make remarks."
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