Planning Ahead In the Wake of the Greenhouse Gas Reduction Fund
Last week, the EPA announced the first awards under the $27 billion Greenhouse Gas Reduction Fund (GGRF) as part of the Biden Administration’s Inflation Reduction Act. The first $20 billion in GGRF awards are split between the National Clean Investment Fund (NCIF) and the Clean Communities Investment Accelerator (CCIA). These two funds will create “a first-of-its-kind national network of mission-driven, community-led financial institutions” with the aim of financing clean energy projects across the country in low-income and disadvantaged communities. The final $7 billion of the GGRF comes from the Solar for All (SFA) program, which aims to deploy residential solar in these communities across the US.
Eight awardees were selected in the first round, with three receiving money from the NCIF and five receiving money from the CCIA. Sixty applicants received grant money from the SFA:
National Clean Investment Fund ($14 billion)
- Climate United Fund ($6.97 billion)
- Coalition for Green Capital ($5 billion)
- Power Forward Communities ($2 billion)
Clean Communities Investment Accelerator ($6 billion)
- Opportunity Finance Network ($2.29 billion)
- Inclusiv ($1.87 billion)
- Native CDFI Network ($400 million)
- Justice Climate Fund ($940 million)
- Appalachian Community Capital ($500 million)
Solar for All Program ($7 billion)
Congratulations to all of the awardees and their sub-recipients! This is a historic moment in the fight against climate change. We are confident that these organizations will effectively direct this capital to projects in communities around the country.
With great capital comes great responsibility.
The success of green banks, community lenders, and the GGRF will hinge on overcoming particular operational and strategic challenges. These include the need for enhanced data infrastructure to manage the performance of sustainable portfolios and create scalable operational frameworks for obligations like impact measurement and EPA reporting.
Once the GGRF is distributed, you will face the challenges of managing the influx of money at an accelerated rate. To meet the urgency of the moment, you and your sub-awardees will have to act swiftly to organize, standardize, and implement sustainable infrastructure projects. Otherwise, you risk falling into a convoluted architecture of cross-references, messy data, and inefficiencies.
In addition to the capital you will receive, you will be responsible for ongoing compliance and impact reporting to the EPA. As time goes on, meeting these requirements will become increasingly complicated as each of your portfolios grows, and without a streamlined solution to keep data organized, connected, and accessible, it will be impossible to continue. Because of the manual tedium associated with corralling data and documents, the EPA estimates that the cost of this reporting will range from $1.6 million to $3.1 million per year. If recipients pursue the development of their own integrated data systems, the EPA estimates the cost to be almost $150,000 in startup costs. Given that you will likely continue working towards your missions even after the final GGRF funds are deployed, planning for the future now is crucial.
Banyan Infrastructure creates standards for project finance
Current practices are too slow to deploy GGRF funds at scale across many distributed organizations. However, there are significant efficiencies, network effects and collaboration opportunities that can be achieved through technology used among GGRF recipients, sub-recipients, financial institutions, regional green banks, and other transaction parties.
Today Banyan Infrastructure works with many green banks and community funds, such as NY Green Bank, Hawaii Green Infrastructure Authority, and Colorado Clean Energy Fund. With Banyan Infrastructure, your organization can benefit from organized data architecture, accelerated deal execution, and simple and transparent compliance.
By using a connected platform, organizations can standardize community impact and financial reporting, and work together more efficiently to finance the sustainable infrastructure projects that are critical to address our communities' needs and the nation’s climate goals.
Stay competitive with a software solution
With a sound digital strategy and software to support standardization and growth, the sustainable infrastructure industry can take full advantage of the Greenhouse Gas Reduction Fund, and accelerate the deployment of renewable infrastructure to meet the pace necessary to avert climate disaster.
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“Unleashing the Greenhouse Gas Reduction Fund: How green banks, CDFIs, and community funds can effectively manage funding and efficiently mobilize capital” is the latest white paper from Banyan Infrastructure. Download it here