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A $27 Billion Opportunity to Prioritize Environmental Equality

A $27 Billion Opportunity to Prioritize Environmental Equality

solar power, both residental and larger systems, has seen a massive growth in NC over the past decade. Getty Images

The Community Builders of Color Coalition is working to ensure Black and Brown CDFIs, MDIs, and Community Economic Development Organizations are positioned to help small businesses and underserved communities.

When President Joe Biden signed the Inflation Reduction Act into law last August, it became one of the most significant climate investments in the history of our country.

Among the most notable is the creation of the Greenhouse Gas Reduction Fund, or GHGRF, a first-of-its-kind program to provide $27 billion in competitive grants to mobilize finances and leverage private capital for clean energy and emissions reductions. Administered by the Environmental Protection Agency, the fund includes specific carve-outs for projects that benefit low-income and disadvantaged communities.

It’s never been a more crucial time to act. The United States produced 4.9 billion metric tons of carbon dioxide in 2021, and global carbon emissions increased 5.3 percent to a record 37.12 billion metric tons.

Energy demands are increasing in both the transportation and power sectors, as is the need for net-zero solutions. The IRA’s investment created a chance to advance environmental justice – but if and only if equity and accountability are at the forefront of implementation.

This is where the Community Builders of Color Coalition comes in. This national coalition of 12 BIPOC-led organizations pushed to ensure that minority communities directly benefit from the fund.

The coalition has advocated for equity in all aspects of the fund’s implementation, and for at least 40% of the money it awards to go to Black and brown-led CDFIs, MDIs, and mission-focused financial institutions.

At the center of the coalition is the African American Alliance of CDFI CEOs and its president and CEO, Lenwood V. Long, Sr. We discussed the importance of this investment in detail with Long and other members of the coalition, and how they are positioning their organizations to be competitive in the clean energy sector.

The Importance of the Coalition

Lenwood V. Long, Sr., President & CEO
The African American Alliance of CDFI CEOs

The Greenhouse Gas Reduction Fund (GHGRF) represents an unprecedented opportunity to advance environmental justice for minority and underserved populations. Working to reduce carbon emissions and improve climate justice in low income and disadvantaged communities is fully aligned with the Alliance’s mission and the focus of those within our network. But it will take all of us working together to move the needle. We’re grateful to have partners like Vincent Barnes with the Alliance to Save Energy, who helped us extract details from the legislation to begin to build our campaign. Our communities deserve equity in addressing the disparate economic and health impacts of climate change. And the Coalition is here to ensure our voices are heard.

I saw the Greenhouse Gas Reduction Fund as a once-in-a-lifetime opportunity to begin to address three things:

One – Sadly, there have been many programs created with good intentions, only to be used as vehicles to line the pockets of those coming in to serve our communities, resulting in little impact or improvement. Funding for the Coalition would enable established, proximate, and trusted organizations to really reach the objective of serving low-income and disadvantaged communities, because they’re already there doing the work.

Two, Black-led and brown-led CDFIs, MDIs, and other mission-focused financial institutions, have been historically and consistently underfunded. The GHGRF could provide dedicated resources that allow them to expand their scope and delivery of environmental products and services. 

And third, for the first time there are dedicated dollars – billions – being earmarked for low-income and disadvantaged populations. And if not us, who better to help our communities? 

Hear Lenwood speak more about this once in a lifetime opportunity and the impact it can have on communities of color. Link to direct audio clip

Nicole A. Elam, President & CEO
National Bankers Association

Data continues to show that minority and underserved communities like Black, brown and indigenous groups, are often more vulnerable to the harmful impact of climate and environmental change. And these are the very communities that our minority depository institutions serve. We’re in these communities providing financial services and access to much-needed wealth building resources.

As we create a more equitable future, it’s long overdue that there be economic backing of those organizations that have historically served minority communities. The Greenhouse Gas Reduction Fund is a way to do that.

We became interested and engaged with the coalition because of their equity focus that’s very much aligned with the DNA of the National Bankers Association, as well as the DNA of minority depository institutions.

Hear highlights from our conversation with Nicole and how the coalition is making a case for equity in clean energy. Link to direct audio clip

Marla Bilonick, President & CEO
National Association For Latino Community Asset Builders

The National Association for Latino Community Asset Builders is a network of over 200 organizations working in economic development in predominantly Latino communities. Our members are predominantly Latino-led organizations that are all working to advance economic mobility for Latinos in the U.S.

It’s really important that this coalition come together for many reasons. We know often the most deeply impacted communities to environmental offenses are Black and brown communities, and the power of our coalition is that we are coming together to serve the communities that we are entrenched in, rather than being pitted against one another. These are the communities that we have the cultural competency to serve.   We recently saw with the Paycheck Protection Program, that when CDFIs are not brought into the fold early on, the very communities that programs are developed to protect and help survive and thrive are those that are left behind. And we absolutely do not want that to happen as it relates to the implementation and disbursement of the Greenhouse Gas Reduction Fund).

Marla talks about the importance of accountability and transparency in the implementation and disbursement of the Greenhouse Gas Reduction Fund. Link to direct audio clip

Seema Agnani, Executive Director
National Coalition for Asian Pacific American Community Development

The reason why groups like those in this coalition really need to be at the heart of the solution is because nobody else is positioned better to really reach local communities and be able to deploy capital effectively. In this country, racial inequities have only grown because of the way money, resources, and capital have been deployed historically. If we keep going down this path, we’re not going to get to real solutions.

I believe now is really the time for us to challenge what has been business-as-usual in Washington, D.C. and say, no, we need to look at different ways that are more transformative, that really ensure communities of color are leading solutions – particularly those working at the local level that have strong relationships with local communities.

This kind network that we have among all the partners in this coalition is really unique. There are an unprecedented number of resources coming from the federal level, and I think each and every one of us needs to be monitoring how that money is going to flow, who’s going to get it, and who’s going to benefit from it. Whether you’re involved in the day-to-day work of deploying capital or in another industry, this is our government, these are our resources, our taxpayer dollars, and so we have every right to make sure that these resources get to our communities.

This is a decade worth of resources that are going to be coming down the pipeline and this will truly dictate what the future of our country looks like in the long run as it relates to wealth and economic prosperity.

It is a beautiful thing that our communities are coming together and have developed this coalition. It’s difficult work and it requires building trust. We all are spending time and energy getting to know one another. What I really appreciate about how Lenwood is leading this coalition is that it’s clear to me he understands that you need to do that building work in order to be able to move together as a coalition. I’m impressed by how he has been leading us thus far and hope that continues, because it does truly feel like everyone has a voice and that we are clear that we need to be working together.

See Also
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Hear Seema explain the importance of working together to get the work of the coalition accomplished. Link to direct audio clip

The importance of this moment

Vincent Barnes, Senior Vice President of Policy Research and Analysis
Alliance to Save Energy

As the country and the globe seek to mitigate the impacts of climate change, we see the role of energy efficiency in several different ways. One, the country certainly is, should be, and can be a leader in the reduction of carbon emissions. The International Energy Agency has said that 40% of the emission reductions required under the Paris Agreement could be achieved by energy efficiency alone. We also know that in addition to reducing carbon emissions, energy efficiency is also extremely effective at removing demand off of our energy systems.

The Alliance to Save Energy began to enter into discussions with committee leadership in the Senate, in the House and with others in terms of ensuring that the funding or the investments that would come out of this legislation directly impacted low-income and disadvantaged communities. We drafted a number of different proposals for consideration and development, and while what came out was not our exact proposal, it did fulfill the outcome of our proposal.

More than 40% of the funds will be dedicated specifically for low-income and disadvantaged communities. I would say that we won that half of the battle. Seven billion dollars has been dedicated specifically to low-income and disadvantaged communities for what is identified in the legislation as “zero emissions.” There is another almost $12 billion that’s dedicated very broadly for projects that reduce greenhouse-gas emissions. That is not specifically identified for low income and disadvantaged communities, but it is identified that all of the funds go to projects that lack access, or have a difficult time accessing private capital. There is another $8 billion designated specifically for projects that reduce greenhouse-gas emissions in low-income and disadvantaged communities.

However, if we’re talking about equity, it is not enough that the funds simply go to projects inside low-income and disadvantaged communities. We also have to ensure that CDFIs and non-profit financial service providers inside these communities are actually direct awardees of these funds. These dollars need to go to organizations that actually have the ability to place those funds inside the communities in which they work.

I can’t overstate enough about what’s about to happen. In not only the U.S. economy but the world economy, we are about to completely change how we do and how we think about energy. There is about to be an energy evolution and revolution that will rival the industrial revolution in terms of the level of investment  by governments. We must also take into consideration the level of investment from the private sector. If minority communities and low-income communities are not aware, there is the potential for an energy divide. We know as a general rule, markets go where the opportunity for the return on investment is less risky.

What we are saying with the Greenhouse Gas Reduction Fund, is that the real success as we think about the energy transition is that we are targeting our financial service providers so that they grow as these markets grow, they participate as these markets are participated in. Thus, they’re part of a new sustainable green market. So not only are we having projects built in our communities, but at the same time, we’re also developing and growing our financial services sector within our communities as well.

Hear Vincent breakdown the importance of energy efficiency and the Greenhouse Gas Reduction Fund. Link to direct audio clip

________________

A 2021 Pew Research study found Black and Hispanic Americans were more likely than white respondents to say their own communities are experiencing environmental problems. Seven in ten Black adults and more than half of Hispanic adults said help for lower-income communities should be a top consideration in climate policy.  

As the EPA takes into careful consideration their plan to ensure equity and accountability, we can be certain that the members of the Community Builders of Color Coalition will be watching and waiting for their opportunity to advocate for the minority communities they serve.

You can learn more about the Community Builders of Color Coalition and the African American Alliance of CDFI CEOs by visiting their website at aaacdfi.org

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