EPA Releases Implementation Framework for Greenhouse Gas Reduction Fund

On April 19, the Environmental Protection Agency (EPA) released a detailed implementation framework for its new Greenhouse Gas Reduction Fund (GGRF), authorized by the Inflation Reduction Act (IRA), which will invest $27 billion to finance projects that reduce greenhouse gas emissions and air pollution. The implementation framework provides detailed descriptions of program design, grant requirements, and application evaluation factors in advance of the publication of formal Notices of Funding Opportunities for the various GGRF components, anticipated as early as June. EPA is soliciting written comments on the GGRF implementation framework, and interested parties may send written feedback to ggrf@epa.gov by May 12.

EPA’s implementation framework identifies three priorities, enumerated in the IRA statute itself, that guided its design of the GGRF and its constituent programs:

• Reduce emissions of greenhouse gases and other air pollutants;
• Deliver benefits to American communities, particularly low-income and disadvantaged communities; and
• Mobilize financing and private capital to stimulate additional deployment of projects that reduce greenhouse gas emissions and air pollution.

EPA’s implementation framework also reflects two pathways for the use of funds, similarly articulated in the IRA statute itself: 1) “direct investment,” or financial assistance for “qualified projects” at the local, state, regional, and national levels; and 2) “indirect investment,” or financial or technical assistance to establish new or support existing public, quasi-public, or nonprofit entities that, in turn, provide financial assistance for “qualified projects” at the local, state, territorial, or tribal levels.

Consistent with these and other statutory requirements, the implementation framework contemplates three components for the GGRF:

• $14 billion for a National Clean Investment Fund competition, which will fund two to three national nonprofits expected to partner with private capital providers to provide financing to businesses, communities, community lenders, and others for “qualified projects” that accelerate progress towards energy independence and net-zero emissions.
• $6 billion for a Clean Communities Investment Accelerator competition, which will fund two to seven hub nonprofits to build the clean financing capacity of networks of public, quasi-public, and nonprofit community lenders, including community development financial institutions, credit unions, green banks, housing finance agencies, and minority depository institutions.
• $7 billion for a “Solar for All” competition, which will provide up to 60 grants to states, tribal governments, municipalities, and nonprofits to expand access to residential and community solar projects in low-income and disadvantaged communities.

The implementation framework makes clear that activities funded through the GGRF will be required to adhere to a variety of cross-cutting federal requirements, including Buy America, Build America domestic sourcing requirements and Davis-Bacon prevailing wage requirements. However, as a program under the authority of the Clean Air Act, GGRF projects will be explicitly exempt from National Environmental Policy Act requirements.

Of particular interest for HFAs, EPA’s implementation framework appears both to identify certain activities involving affordable housing to be categorically eligible and also to consider HFAs to be potential partners in a variety of ways across all three GGRF component programs identified above.

First, for purposes of both the $14 billion National Clean Investment Fund and $6 billion Clean Communities Investment Accelerator competitions, EPA expects “qualified projects” to meet a variety of requirements, including that they “will deliver benefits to American communities [in] two or more of the following categories . . . : climate change, energy, health, housing, legacy pollution, transportation, water and wastewater, and workforce development.” EPA identifies three priority project categories that “are particularly impactful to achieving the GGRF program objectives,” including decarbonization retrofits of existing buildings. One specific example cited in the framework within this category of priority project is “grid-interactive appliance electrification in affordable multifamily housing alongside energy efficiency, indoor air quality improvements, and solar.”

Second, for purposes of the $6 billion Clean Communities Investment Accelerator competition, EPA specifically identifies HFAs as within the category of public, quasi-public, and nonprofit community lenders intended to benefit from capacity building activities by the two to seven hub nonprofit grantees. EPA expects at least 95 percent of grant funds under this program component to pass through directly to “community lenders” such as HFAs in the form of capitalization technical assistance funding that satisfies the “indirect investment” category described above. EPA envisions successful applications under this program component will be made by entities “as an individual applicant or as a lead applicant of a coalition, in which the lead applicant receives and administers the grant but may provide subawards to coalition members,” which EPA expects to be eligible recipients themselves, including community lenders such as HFAs.

Finally, the implementation framework explicitly identifies residential solar facilities “that support individual households, master-metered facilities, and/or common areas in multifamily buildings” and associated “infrastructure to store solar-generated power for the purposes of . . . maximizing residential solar deployment” as eligible activities for purposes of the $7 billion Solar for All competition.

NCSHA will provide written comments on EPA’s GGRF implementation framework and will continue to follow its implementation and provide information, as it becomes available, to HFAs on the GGRF, as well as other energy efficiency programs under the IRA. By April 28, please send to Robert Henson any feedback on the GGRF implementation framework for NCSHA to consider in our comments.