Federal Climate Funding Initiatives: What States Need to Know

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With the creation and continuing development of several new federal funding initiatives like the Infrastructure Investment and Jobs Act, Build Back Better, Justice40, and others, many are wondering how state-level climate action will be affected. States looking to secure funding for effective and equitable climate projects and programs must know how best to prepare for and implement these varying funding sources and guidelines, and we want to help you do just that.

For our February Deep Dive webinar, four experts in the space joined us to discuss these federal funding developments and the implications for states. Shannon Baker-Branstetter, Director of Domestic Climate and Energy Policy at the Center for American Progress, provided a general update on federal climate funding, including the Infrastructure Investment and Jobs Act (IIJA), the Build Back Better Act, and the Justice40 initiative; Joseph Kane, Fellow at Brookings Metro of the Brookings Institution, dove deeper into the IIJA; and Colleen Callahan, Deputy Director at UCLA’s Luskin Center for Innovation, and Dr. Sacoby Wilson, Associate Professor from UMD’s Maryland Institute for Applied Environmental Health provided further insight on Justice40.

Shannon Baker-Branstetter, Center for American Progress

Shannon Baker-Branstetter, Director of Domestic Climate and Energy Policy at the Center for American Progress (CAP), joined us to provide an overview of federal funding initiatives.  CAP’s work in this arena includes an initiative called From the State House to the White House, in which they focus on how state climate leadership is laying a roadmap for nationwide climate action, and what federal lawmakers should learn. This climate action centers on 100% clean energy, good jobs, environmental justice, and confronting fossil fuel corporations. They also work with the Equitable & Just National Climate Platform, a coalition of national environmental and environmental justice groups working together for the last few years to push for and shape the federal Justice40 initiative. 

To contextualize the current state of federal climate funding, Shannon pointed out that the vast majority of federal climate investments are still to come. We really need the climate provisions from the pending Build Back Better Act (BBB) to reach our climate goals and President Biden’s climate commitments. The Infrastructure Investment and Jobs Act (IIJA), also known as the infrastructure bill or the bipartisan infrastructure law, provides six percent of emissions cuts in Biden’s legislative agenda, but BBB will be responsible for 94 percent. These lofty climate provisions include clean energy tax incentives, environmental justice investments, coastal resilience, fossil fuel subsidy repeals, and more. 

The IIJA, as well as regular appropriations, does provide quite a bit of funding, including formula grants to states, competitive grants to states, local governments, Tribal governments, and non-governmental organizations (NGOs), loans to households and businesses, tax credits for businesses and individuals, and technical assistance for applicants. The Justice40 initiative requires that at least 40 percent of benefits of these climate investments go toward disadvantaged communities.

Much of the funding in the IIJA is dedicated to transportation, and is able to be used for pedestrian infrastructure, biking infrastructure, transit electrification, remedying the division of communities by highways, and some more general pots of funding that are competitive awards for projects reducing carbon while increasing mobility. Another major portion of the IIJA money goes to the Department of Energy (DOE), especially funding renewable energy and energy efficiency, including weatherization assistance, energy efficiency block grants, green schools, job training, and grid resilience and transmission. 

Other major categories of IIJA investments are industrial sources, including hydrogen hubs that will be awarded to state projects; resilience, including large allocations to the Federal Emergency Management Agency (FEMA), DOE, the Department of Homeland Security, and the Department of Defense; agriculture, including to the U.S. Department of Agriculture (USDA); and conservation, including cleaning up orphaned oil and gas wells, reclaiming abandoned mines, and funding land and water conservation. 

There are also some less satisfactory funding allocations in the IIJA, including the large amount of funding for highways. State Departments of Transportation (DOTs) have major control over these funds, and while some of it can be used for highway expansion and increasing vehicle miles traveled (VMT), some of it can be used by DOTs in ways that are flexible and help meet carbon reduction goals. There are also large funding allocations to fossil fuel infrastructure, including carbon capture, hydrogen hubs based on fossil fuel-based pathways for hydrogen production, and fossil fuel infrastructure and vehicles. It is important for states to allocate these funds in a way that mitigates harm and reduces emissions as much as possible. 

There are various resources online to find out more information about these sources of federal funding. 


State-specific resources


Further Resources


Joseph Kane, Brookings Institution

Joseph Kane, Fellow at Brookings Metro of the Brookings Institution, continued the conversation with a deeper dive into the IIJA. In historic terms, the IIJA provides new spending of about $550 billion over the next five years across a variety of programs. While the largest program is transportation, the bill is comprehensive, and there are many other programs with huge implications for climate resilience. This type of funding is on par with New Deal era levels of spending; IIJA and BBB together come close to, if not surpass, that level of spending. The key, now, is how to implement this across the country.

It’s important to identify infrastructure priorities, not just projects, when deciding how to spend this money. States may have a backlog of projects or other issues that might encourage them to spend this money quickly, but it’s necessary to step back and look at the vision and the long-term structural challenges they hope to address. 

Brookings released a report, Rebuild with Purpose, before the IIJA passed, looking back at the past century to identify priorities and targets for these resources. Crucial to allocating this funding is centering the real needs on the ground and using a cross-cutting approach to remove silos. The four big priority areas identified in this report are climate resilience, digitalization, workforce, and fiscal health.

In terms of climate resilience, it’s important to respond to chronic climate challenges and inequities, and Justice40 is a part of that. How we measure and evaluate these markers will require collaboration across agencies, not just the DOE but the DOL, DOT, EPA, and others to approach the long-term issue of climate change. With digitalization, the nature of our infrastructure needs are changing through how we demand and ship goods, how we perform the work itself, and more. The funding must be directed towards areas of experimentation and innovation. 

Workforce is also central to this infrastructure funding, as many in the skilled trades lack diversity, both racially and in terms of gender, as well as the fact that they’re aging. At a time with millions of underemployed and unemployed individuals, how can we help transition and reskill people into higher paying positions, with lower formal education barriers to entry? We cannot focus on investment without centering jobs. Lastly, fiscal health for state and local entities is extremely important, even before the pandemic. These infrastructure needs have existed for a long time, and using this funding to ensure long-term sustainability and durability while addressing these needs is crucial.

So, how can we really harness this funding, not just scramble to use it, in this implementation phase? Brookings has created a Federal Infrastructure Hub, which provides an easy way to sort and filter programs by agency, infrastructure type, funding amount, type of funding, and more. 

To conclude, this infusion of federal resources shouldn’t change the calculus of what’s needed at a state and local level, of better asset management, better prioritization of needs, and a future-focused approach to address these climate issues. The implementation of this funding requires us to measure, modernize, and experiment. We need to have clear ways of measuring what our existing needs are in addition to our new needs, and many places are struggling to do that in a people- and place-based way. We have to modernize, understanding that there are standards that need to be met, while using the funding to address upgrades, equitable access, and fiscal capacity building. Lastly, experimentation is essential; competitive grant programs, especially, are going to reward those places that are demonstrating a willingness to experiment and include climate issues and equity in their plans.

Colleen Callahan, Luskin Center for Innovation

Colleen Callahan, Deputy Director at UCLA’s Luskin Center for Innovation (LCI), joined the conversation to discuss Justice40 in a deeper context. LCI recently released a report on Justice40, Making Justice40 a Reality for Frontline Communities, which focused on learning from the environmental justice movement and states’ climate and clean energy investments for a better implementation of Justice40. 

To start, the Justice40 Initiative was established by President Biden’s executive order on climate action, as a government wide effort to target 40 percent of the benefits of climate and clean infrastructure investments to “disadvantaged communities.” It is a critical part of delivering on the Biden-Harris top priorities of providing economic relief, tackling climate change, and advancing racial equity, civil rights, and environmental justice. The IIJA and Build Back Better are central to delivering on these promises and are subject to Justice40. This is a big opportunity for states and communities to invest in the most underserved areas, but they need to be prepared.

A lot of this federal funding will flow to states, and states will then have major discretion in deciding how it is distributed throughout their state. One of the guiding principles for understanding Justice40 in using this funding involves justice-driven resources. Justice40 should reverse the historical wrong in which some communities have least benefited and been most harmed from government investments. Communities of color and other overburdened, under-resourced areas at the frontlines of systemic pollution and poverty should be at the front of the line for investments. This means prioritizing investments in physical infrastructure, like clean energy and zero-emissions transportation systems, but it also means fundamentally leveling the playing field; otherwise, no amount of federal funding will result in more equitable outcomes. 

States have a role to play in helping under-resourced communities to prepare for, apply for, and manage such complex, resource-intensive government programs and grants. The second main guiding principle is empowerment. Justice40 should be a pathway to achieve transformational change from the ground up, which requires updating investment programs and processes to ensure community engagement. The third is accountable and systemic reform. Justice40 should include strong guardrails so that agencies at all levels of government and in all states further justice-oriented goals. An accountable Justice40 can be a catalyst for more broadly institutionalizing fairness, equity, and racial justice into government programs, processes, and systems. 

This will not be easy. States must be proactively prepared not only to receive the federal funding, but also proactively introspect about how they themselves can do more to advance the above principles. 

Preparing for Justice40 requires intentional coordination between different levels of government alongside community voices. Two states that are looking to do this are South Carolina and Delaware. South Carolina was the first in the country to introduce a bill in response to Justice40; HB 4322 would establish a Justice40 Oversight Committee for transparency and accountability, and organizing behind this bill has spread to other states, primarily in the South. Delaware was the first state to pass a law, Resolution 40, intended to seize the opportunities of Justice40 by establishing a committee to locate and help organize disadvantaged communities to ensure that they derive the full benefit of Delaware funding. 

Many states are not only responding to Justice40 funding opportunities now, but also have a history of climate and clean energy laws. These states, like California, Illinois, Maryland, New York, Virginia, and Washington, have a leg up in receiving this funding: They have years of organizing and support for prioritizing disadvantaged communities and actually codifying in law minimum investments for disadvantaged communities from clean energy and climate laws, and we can learn from their implementation. 

New York, specifically, is highlighted as a state that is doing a good job of addressing the extreme levels of disparities that hinder our transition to a clean energy economy, through planning to address outside pollution burdens and associated health impacts in their Climate Leadership and Community Protection Act (2019). This bill is arguably the most equity-centered climate and clean energy law in the country. 

Virginia is highlighted for planning to address the impacts of climate change through their Clean Energy and Community Flood Preparedness Act (2020). California is highlighted for investing in technical assistance and capacity building support to help disadvantaged communities apply for and manage large grants through its California Climate Investments initiative, which is the longest-standing equivalent of Justice40 in the nation. Other highlights include Illinois, for focusing on impacts on fossil fuel workers, and Washington, for addressing uneven costs and benefits in the transition to clean energy.

There are core actions that states can do to codify some of the Justice40 goals in a way that helps to ensure they are actually operationalized and realized. States should establish a 40 percent minimum (a requirement, not a goal, and a floor, not a ceiling) for direct investments, rather than counting trickle-down benefits. While the federal Justice40 initiative uses the nebulous term of “benefits”, states should use more clear and direct language. 

States should also set clear guidelines and processes to give frontline communities agency in local investment decision-making and avoid harmful effects of investment such as housing displacement. They should also establish strong guardrails, including justice-oriented funding criteria, implementation requirements, transparent reporting of results, and other enforcement mechanisms to ensure Justice40 objectives are achieved across administering agencies and states.

The report also has recommendations for state screening tools used to decide where to target investments. States should be prepared to use the federal government’s forthcoming Climate and Economic Justice Screening Tool and complement that with state-tailored tools to identify and target investments in frontline, underserved communities. This is an opportunity to develop or improve state-level tools with next generation capabilities to identify and track absolute levels of disparities, and see how they change across communities and over time to support robust evaluation, transparency, and accountability. 

To conclude, there are some main recommendations and examples for state program investments. States should resource and engage underserved communities by investing in systematic technical assistance and capacity building. An example of this is California’s Technical Assistance program for their suite of California Climate Investments. This program helps disadvantaged communities develop partnerships, conduct cooperative planning, develop funding proposals, and eventually administer complex grants. This is essential, as disparities in local resources and capacity creates an unfair playing field that only deepens inequality if not proactively addressed. 

States should also set funding processes that facilitate the empowerment of communities to make and help implement local investment decisions, including prioritizing holistic, multi-sector approaches that center local knowledge. An example of centering local communities through community-based organizations and other local stakeholders is California’s Transformative Climate Communities program, which empowers disadvantaged communities to choose their own goals and strategies for multi-million dollar infrastructure projects and community plans, while also uplifting local leaders in a way that builds power for larger scale, more structural change. 

Dr. Sacoby Wilson, Maryland Institute for Applied Environmental Health

Dr. Sacoby Wilson, Associate Professor from UMD’s Maryland Institute for Applied Environmental Health, was an advisor for LCI’s Justice40 report, as discussed above, and joined to provide deeper insight on the implementation and challenges of Justice40 and other federal initiatives like the IIJA. 

For Justice40, Dr. Wilson pointed out that the original law in New York, based on investments, was watered down through the Biden administration in a way that is problematic for many on the frontline working with environmental justice issues. As we try to target communities that need these investments, whether from Justice40 or the IIJA, we should be using mapping tools, but we didn’t necessarily need to create a new tool, which is still pending – this has lost us valuable time. 

We need federal tools, but we also need state tools. We can use existing state-level tools, like those in California, Washington, Minnesota, New York, New Jersey, Maryland, and North Carolina. Many tools are not good at tracking changes over time, many are missing climate change indicators, and many are missing the economic, social, and environmental health benefits of the investments. As we develop these state level tools, we must contextualize them to the specific issues and environmental factors of the state. 

For example, most environmental justice issues are energy justice issues. When we talk about infrastructure, energy justice refers to mining extraction, transport pipelines, petrochemical operations and refineries, power plant combustion, highways, and waste products. As such, we must have indicators that track those kinds of impacts, and further, allow for the identification of communities experiencing the cumulative impacts of the legacy of fossil fuel infrastructure. We also have to look at accessibility, with energy affordability, energy burden, and other indicators included. This ecosystem of impacts and benefits exist not only for energy, but for housing, food, water, and more. 

At the crux of these environmental justice issues is environmental racism. When we are trying to allocate federal money through states, how can we address these injustices when the systems that dole out the funding are racist themselves? There must be guardrails through state-level Justice40 bills. Maryland, for example, is currently looking into creating a goal that any environmental funds from state sources must include 40 percent of their investments to disadvantaged and overburdened communities.

Another important piece of implementing this funding is ensuring that frontline and fenceline communities are engaged in the process, through advisory boards, working with community development corporations, or other means. Whenever money is being doled out, those communities must be at the table. 

Technical assistance is also essential. There are communities that don’t have the capacity to apply, receive, and dole out this funding, which means that we may not be able to see the impacts of Justice40 without providing technical assistance. Instead of a grant process, we should make direct investments, where we identify communities based on the mapping and invest money there. 

Workforce development is also a critical component of moving toward a clean energy economy, but creating jobs alone is not enough. A just transition is not only about getting a job, but it is also about ownership. Who owns the companies, does the infrastructure work, and does it actually get built? To address inequality, we must have equity in ownership so that we move beyond giving people jobs, but actually toward ensuring that the money can cycle through the community many times and stay there. These bills should focus on creating new economic opportunity structures which are people-centered and restorative. 


While we are currently experiencing a major influx of federal money for state-level climate action, states must be intentional about their preparation to ensure effective and equitable funding implementation. Across initiatives like the IIJA, the forthcoming Build Back Better Act, and Justice40, states must look to existing state leadership, work across agencies, center communities, and think about long-term sustainability when implementing these hundreds of billions of dollars. With New Deal era levels of spending, we can create true resilience in our states, but we must be prepared.

Featured Image: Izzy Hamilton, Climate XChange SCPN Fellow