Credit unions are the original socially responsible lenders, and now Community Development Financial Institution-Certified credit unions have a wonderful new opportunity to expand services to even more people in need and help the environment.
The Environmental Protection Agency recently announced the structure for its $27 billion Greenhouse Gas Reduction Fund, which was created when President Joe Biden signed the Inflation Reduction Act into law last year.
The EPA has created a nearly $20 billion General and Low-Income Assistance Competition to award competitive grants to eligible nonprofit entities that will collaborate with community financing institutions like green banks, CDFIs, credit unions, housing finance agencies and others. The goal of the funds is to leverage the public dollars with private capital to invest in projects that reduce pollution and lower energy costs for families, particularly those in the low-income and disadvantaged communities.
Awardees will also facilitate technical assistance and capacity building to strengthen the community-based organizations, small businesses, workers and suppliers required to accelerate the transition to an equitable, net-zero economy and catalyze the jobs of the future. The EPA expects to make between 2 and 15 grants under this competition.
“We are excited about the significant opportunity this presents for the communities served by our credit unions and the future of green lending," CU Strategic Planning CEO Stacy Augustine said. "Credit unions have always been pioneers in socially responsible lending creating market momentum that forces profit-driven financial institutions to follow suit."
According to the Opportunity Finance Network, the $27 billion Greenhouse Gas Reduction Fund aims to bolster energy-efficient projects across three areas:
$7 billion for zero-emission technologies available to states, municipalities, tribal governments, and others
$11.9 billion for financial and technical assistance grants for both direct and indirect investments into qualified projects
$8 billion for financial and technical assistance grants for both direct and indirect investments specifically in low-income and disadvantaged communities for qualified projects, such as financing solar panels, home energy-efficiency projects and electric vehicles
“CDFIs are well-positioned to deliver greenhouse gas reduction financing to the low-income and disadvantaged communities targeted in this initiative,” OFN VP for Public Policy Mary Scott Balys wrote. OFN advocated with the EPA and other Biden-Harris Administration officials that the CDFI industry be included as essential partners in the implementation of this new fund.
CDFI credit unions and other eligible organizations received recognition in the EPA’s announcement from several members of congress, like Washington State’s own U.S. representative Congressional Progressive Caucus Chair Pramila Jayapal, who stated, “The Greenhouse Gas Reduction Fund will provide vital funding to create jobs, speed the development of new renewable energy technologies, and support development in communities across the country, all while contributing to the work to reach President Biden's goal of 80 percent clean energy by 2030. I applaud the EPA for this ambitious new program."
U.S. Representative Debbie Dingell of Michigan said, “We have proven green bank models nationwide, including in Michigan, that not only mobilize investment directly into the most critical projects, but are creating incredible economic opportunity, with good-paying, high-value jobs. Over the next decade, this investment will help us build on current efforts by mobilizing financing and private capital for a range of clean energy projects to decarbonize communities—including low-income and disadvantaged communities—across the United States.”