With hundreds of billions of climate dollars unlocked by recent federal funding initiatives, including the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), states must be prepared to receive and leverage their money for climate and clean energy plans, projects, and programs. Many states across the country have already introduced and even passed legislation to create or strengthen state and local funding bodies and initiatives for this purpose, using various methods, from statewide green banks to specific federal matching funds and more. To explore the approaches some states have taken, we invited a panel of experts, including Anjali Bains, Lead Director of Energy Access and Equity at Fresh Energy in Minnesota, and Kirsten Stasio, CEO of the Nevada Clean Energy Fund (NCEF).
In this recap article, we’ll provide highlights from our expert panel’s presentations and Q&A, including how state legislatures can create and enact federal matching funds, how green banks can invest and scale federal climate dollars for communities, and what technical assistance programs are available for state actors to assist with understanding, navigating, applying, and implementing federal funding.
Anjali Bains, Fresh Energy
Anjali Bains leads the Energy Access and Equity team at Fresh Energy, a 30-year old nonprofit clean energy advocacy organization based in Saint Paul, Minnesota, where she works with staff across sectors and decision-making venues to achieve organizational goals related to access and affordability of clean energy solutions.
Setting the Legislative Stage for Minnesota Action on Federal Funding
After the Infrastructure Investment and Jobs Act (IIJA) passed in 2021, climate advocates in Minnesota entered the 2022 legislative session with a goal of creating a matching fund in order to maximize investment in the state. Although they had leadership support from both the Republican Senate and the Democratic-Farmer-Labor (DFL) House — at the time, the only divided state legislature in the country — the proposed IIJA matching fund fell apart at the end of the session in May.
Three months later, the Inflation Reduction Act (IRA) passed, increasing the pressure for state-level action in Minnesota’s 2023 legislative session. Further, Minnesota’s entire legislature and the Governor were up for election in November, and Democrats took control of the Senate and maintained control of the House. With Governor Tim Walz winning reelection, Minnesota became a Democratic trifecta, the first time in a decade that the state had single-party leadership.
With a new and improved opportunity to push for matching funds in the upcoming 2023 session, Minnesota advocates, lawmakers, and agency staff convened in December to communicate priorities and prepare for legislative action on federal funding.
Minnesota’s State Competitiveness Fund: The Basics
After failing in the 2022 session and then flipping the Senate in the midterms, advocates and lawmakers pushed into 2023 with renewed urgency to pass a matching fund for IIJA and IRA. The Minnesota State Competitiveness Fund passed the House and Senate with bipartisan votes, it was signed into law, with some alterations, on April 18, 2023.
The Fund will be overseen by the MN Department of Commerce, with $115 million in grant funding — down from $156 million — as the original allocation. The duration is through June of 2034, mirroring the timeline of the IRA. Its main purpose is to be used as matching or complimentary funds for grant applications under IIJA and IRA, or funds that can reduce the overall project cost. It can also be used to cover technical grant development assistance and administrative costs incurred by the Department in assisting with grant applications.
Eligible recipients are listed in the legislation under a ranked priority list, starting with up to 100 percent match requirements for the state, then for political subdivisions like local governments or tribal governments. Following these governmental entities are universities, consumer-owned utilities, and nonprofit organizations. Investor-owned utilities and other entities not listed can receive up to 50 percent of their match requirements, unless their projects would benefit disadvantaged communities according to Justice40, for which they could receive 100 percent. Lastly, the Fund can also be used for grants where a match isn’t formally required, but it would increase the competitiveness of their application.
Of the $115 million, $100m will be used for the matching awards, as ranked above; $6m will go towards technical grant assistance; and the remaining $9m is split between reporting and auditing, supporting Department administration, and supporting the development of an information system to communicate these opportunities and manage grants. The Fund can only be used for IIJA and IRA programs under the purview of the Department of Commerce, while other departments can develop their own matching funds.
Kirsten Stasio, Nevada Clean Energy Fund (NCEF)
Kirsten Stasio is CEO of the Nevada Clean Energy Fund (NCEF), a non-profit organization and the state’s green bank, where she works to provide financing and technical assistance for clean energy projects in Nevada.
NCEF: A Successful Green Bank Model, and More So Now!
While NCEF is a nonprofit organization, it was created by SB 407 in 2017 with close government ties. The board, as defined by state statute, includes several state officials and nominated members from county governments, labor, and contract organizations in Nevada. NCEF works to support state actors to understand clean energy investment opportunities and develop the technical know-how and financial resources to access those opportunities, as well as increase the existing capacity of Nevada governments to implement clean energy programs. Now, NCEF is being used as a tool for implementing IIJA and IRA funding, especially with the $27 billion in the IRA devoted to green financing through the Greenhouse Gas Reduction Fund.
NCEF will be instrumental in providing matching funds in a different way than the Minnesota State Competitiveness Fund. Programs in the IRA, like the home and multifamily rebate programs for electrification and energy efficiency, will require matching funds in the non-traditional sense — in order to ensure they’re truly accessible to communities, folks will need gap financing for project costs that aren’t covered by the rebates or tax credits.
The IRA’s Greenhouse Gas Reduction Fund and Green Banks
The Greenhouse Gas Reduction Fund (GGRF), established as part of the IRA, will provide $27 billion in competitive grants for financing and technical assistance for projects that reduce or avoid greenhouse gas (GHG) emissions. Twenty billion dollars of this funding will go toward certain eligible nonprofits (like green banks), with 40 percent or $8 billion of that benefiting low-income and disadvantaged communities. The remaining $7 billion can also go directly to states, municipalities, and tribes for zero-emissions technologies, and they too must benefit low-income and disadvantaged communities.
These grants are competitive, so states must build capacity now to ensure they can fight for their share when the funding is made available. EPA is expected to release these funding opportunities in early summer of 2023, and they’re required to obligate funds by June of 2024.
Key to the GGRF is the leveraging of capital — taking this funding and multiplying it through, for example, private capital. This is exactly what green banks like NCEF are designed to do.
Nevada’s Path Forward
Unlike many green banks created through state legislation, NCEF was not initially allocated funding through the bill that created it. This means that the GGRF is a huge opportunity to capitalize programs that wouldn’t otherwise happen in Nevada. The state is particularly dependent on imported energy, with $8 billion going out of state to support Nevada’s energy needs. Bringing GGRF funding to the state can help to launch programs around energy efficiency and community-scale solar to keep some of that investment in Nevada, especially while dwindling hydroelectric resources and rising temperatures in the West are straining the grid, increasing energy prices, and creating challenges for grid reliability. Of course, with this investment comes economic and job growth for Nevadans, especially for low-income households that, in Nevada, spend over one-fifth of their income on energy.
NCEF is particularly important in Nevada because the state doesn’t have a ton of capacity from community development financial institutions (CDFIs), which are essential partners on important clean financing projects because they focus on community lending. Nevada has only two certified CDFIs, and CDFI spending in the state is far below the national average.
NCEF plans to invest federal funds, including those from the GGRF, on five main areas based on the needs in Nevada: single-family homes, multifamily housing, commercial buildings, clean fleets, and rural solar and storage. Partners are at the core of this work, including CDFIs, affordable housing developers, electric utilities, and more. Beyond grants and rebates, 75 percent of the IRA’s clean energy funding is coming in the form of tax credits. Where those credits flow depends on which states have well-planned and robust clean energy projects, and NCEF plans to ensure Nevada is one of those states.
Kristen Soares, Climate XChange – Federal Funding Technical Assistance Programs and Resources
We also wanted to share a few of the resources and technical assistance programs available to help state actors with understanding, navigating, applying, and implementing federal climate funding opportunities. Below are only a few of the vast array of programs pulled from a larger compilation created by Climate XChange along with the Environmental Policy Innovation Center (EPIC), and Beech Hill Research.
- Hua Nani Partners’ and U.S. Climate Alliance’s State Funding Readiness Project provides free assistance to states to help identify specific investment opportunities, inform budget planning, apply for funding, clarify program guidance, understand Justice40 requirements, and serve as a link between resources and federal agencies.
- Environmental Protection Network’s Capacity-Building Technical Assistance Program provides pro bono assistance to communities, NGOs, and state, local, and tribal agencies disproportionately impacted by environmental and health issues. EPN’s staff of Community Outreach Associates and network of 550+ EPA alumni volunteers assist organizations to more effectively and meaningfully participate in government decision-making by helping them navigate EPA, potential government grants, regulatory processes, federal policies, and publicly available data to support their work.
- The Local Infrastructure Hub connects cities and towns with the resources and expert advice to access federal infrastructure funding. Their Grant Application Bootcamps offer free support in developing federal grant applications for IIJA programs, including access to application templates, example submissions, and other resources to compose an application.
- The Just Transition Fund’s (JTF) Federal Access Center offers direct grants to support costs associated with developing applications, including subcontracting grantwriters and other experts, organizing community partnerships, and meeting matching funds requirements. JTF also provides technical assistance from their team of experts to identify funding programs, understand application requirements, build relationships with agency contacts, and see proposals through the final submission stage. In addition, JTF offers a limited number of grants and technical assistance for early-stage planning projects that have a long-term goal of leveraging federal funding.
- EPA’s EJ Thriving Communities Technical Assistance Centers provide training, assistance, and capacity building on writing grant proposals, navigating federal grant systems, and effectively managing grant funding. These centers will also provide guidance on community engagement and meeting facilitation. See the full list of centers here.
Q: Anjali, this convening that connected Minnesota agencies, policymakers, advocates, and other stakeholders really sounds amazing. Could you just talk a little more about how that worked, the types of stakeholders that were involved, and any insights you have or lessons learned for other states that might be interested?
Anjali Bains: Yeah, definitely. That retreat was organized really quickly by the Energy Foundation’s contract lobbyist from Minnesota, who is well known among advocates and has been really at the Capitol a lot working on clean energy issues. She was able to pull together state agency staff, advocates, and lawmakers, including the new committee leaders and other state lawmakers, together. She did a great job of checking with advocates and lawmakers as well as others to know exactly what would be helpful. So that was great, and it kind of aligned a message and a mission for the state legislative session. I wouldn’t say there was necessarily a point A to point B follow up, but at least got people on the same page. And that same lobbyist was able to be the point person for the bill itself — that really helped in terms of maintaining connection throughout the process. I’m happy to talk to anyone offline, too if anyone’s interested.
Q: What are the most helpful actions for NGO actors to take when trying to engage their green bank on federal funding related issues?
Kirsten Stasio: Good question. I mean, the answer may differ for other states, but I know for us, building partnerships with the nonprofit organizations in the state, whether you’re talking about community groups, or other groups that are providing technical assistance already to low-income and underserved communities, those are going to be really important. And I think there’s also an opportunity to leverage Greenhouse Gas Reduction Fund dollars to build the capacity of other nonprofit organizations within the state to help advance financing and technical assistance solutions for low-carbon measures. So I mean, that’s at a high level, and it’s where we’re focused and something that’s a priority for me, although we have had limited capacity. So I would say if you’re a nonprofit organization in a state and your green bank hasn’t or your state organization hasn’t reached out, it’s not necessarily because they don’t want to.
Q: What are the major barriers to creating these strong leveraging mechanisms for the State Competitiveness Fund and for NCEF that people may be unaware of in the actual implementation of this work?
Anjali Bains: Okay, I can go first. Actually, someone mentioned the Q&A, but I think that workforce development aspect is going to be a key challenge. There wasn’t a requirement for a certain amount of workforce development to happen in the State Competitiveness Fund, actually, at the retreat I mentioned. Discussions of getting these funds out the doors, for workforce contractors, contractor education, workforce development, and pipeline development have been huge as a well-known bottleneck in making sure that, especially, anything around building efficiency, weatherization, electrification is happening. So that will need to be happening in conjunction with the implementation of these funds as well.
Kirsten Stasio: Yeah, I’ll second Anjali on that. For the Nevada Clean Energy Fund, we definitely just have an acute kind of capacity constraint as a new organization, with one employee pretty much all of last year. And, you know, I was lucky to bring on a second employee in January. We’re working with a lot of different partners in the State, we work closely with our State Energy Office in Nevada, the Governor’s Office of Energy. I mentioned, we’re working with community lenders. And we have a nonprofit organization in the state called Nevada Grant Lab, who we’re working with to identify and work with a professional grant writer, because we anticipate that we’re going to be the primary applicant for the 7 billion on behalf of state and local governments and tribal governments. And we’re leading a collaborative effort to do that. But yeah, it’s really just capacity. Because we’re stretched pretty thin and trying to ensure Nevada is competitive for these federal funds, while also working with a variety of different stakeholders and providing those educational and technical resources in Nevada to make sure everyone’s prepared for these significant federal funds that are coming down the pike.
Conclusion & Key Takeaways
Whether through enacting state-level federal matching funds, creating or strengthening green banks, or taking advantage of the various governmental and non-governmental technical assistance programs, your state must prepare to not only receive but leverage — multiply, expand, boost — federal climate dollars. While this funding is a historical, unprecedented investment in climate and clean energy, we must work hard within and across state lines, ensuring that we take advantage of the wealth of knowledge, experience, and support that exists in the climate movement across the country. With such connection and collaboration comes strength, resilience, and a more secure future for all.