Biden’s Climate Funding Now Pouring In
TL/DR –
Over the past month, the Biden administration has spent $37 billion of the $110 billion in grant funds from the Inflation Reduction Act (IRA) on climate-related projects. The funds have been used to support efforts such as replacing natural gas boilers in ice cream factories with climate-friendly ones, assisting a manufacturing plant that makes bathroom faucets and showerheads, and setting up a green community bank to help small farms, businesses, and schools replace fossil fuels in their buildings. Most of the funds come from the Environmental Protection Agency’s Greenhouse Gas Reduction Fund, aimed at seeding green banks around the country, with $20 billion awarded to three coalitions made up of nonprofits, state-level green banks, and community development financial institutions.
Climate Change Investments from Inflation Reduction Act Funds
The Inflation Reduction Act (IRA) is funding various climate change projects. In the last month, $20 million has been allocated to replace natural gas boilers with climate-friendly ones in ice cream factories in Tennessee and Vermont. A manufacturing plant producing bathroom faucets and showerheads in Arizona has received $51 million. Furthermore, a green community bank designed to help small farms, small businesses, households, and schools replace fossil fuels with electric vehicle chargers and other eco-friendly alternatives, has been granted a staggering $6.97 billion.
In perspective, the $37 billion spent on climate funding over the past month surpasses the recent foreign aid bill given to Israel, Taiwan, and humanitarian aid in Gaza, combined. As the election approaches, the Biden administration’s deployment of IRA funds has significantly increased compared to last year. Only $11.8 billion of the law’s roughly $110 billion in grant funds had been spent as of October 2023, according to a Heatmap analysis.
Most of the funds come from the Environmental Protection Agency’s Greenhouse Gas Reduction Fund. This fund, worth $27 billion, is intended to seed green banks across the US. Nonprofits, state-level green banks, and community development financial institutions will use the money to invest in new solar farms, decarbonize homes and apartment buildings, and make communities more resilient to extreme weather and other climate impacts. The returns from these projects will then go back to the coalition and allow them to fund more projects over time.
This initiative is expected to leverage more funding than their dollar amounts would suggest, encouraging private investors to match or exceed the government’s investment. The impact of EPA’s $20 billion Greenhouse Gas Reduction Fund is huge. “You look at EPA’s $20 billion Greenhouse Gas Reduction Fund — they talk about each of those dollars leveraging seven more. We’re talking about a massive transformation here,” states Sam Ricketts, a veteran of Jay Inslee’s presidential campaign and the co-founder of the climate consulting firm C2 Strategies.
The industrial sector, expected to be the economy’s most emissions-intensive sector by the middle of this decade, is receiving significant support. The Energy Department is funding an array of new projects, aimed at reducing carbon emissions from key industrial processes such aschemical and cement production, ironmaking, and even glass bottlemaking.
Moreover, the EPA program “Solar for All” will spend $7 billion to help 900,000 households get rooftop solar or join a community solar project. This initiative is being complemented by the American Climate Corps, another IRA program that will train and employ 20,000 young people to work on conservation or clean energy projects. President Joe Biden praised these programs at an Earth Day event in a Virginia park on Monday.
However, the IRA’s grant programs are not the only climate law expenditures planned. The majority of the law’s support for decarbonization will come in the form of tax credits and other payments made to households and companies. These subsidies, estimated to exceed $1 trillion, will help build new wind and solar farms, manufacture grid-scale batteries, and electric vehicles, and refine minerals needed for zero-carbon technologies.
These incentives provide a significant boost for poor communities who otherwise may not have the funding for such projects. The new EPA program also includes “technical assistance,” which will teach local nonprofit, government, and banking leaders how to finance and manage long-term clean energy and climate projects. This is an unparalleled infusion, ensuring these projects reach the communities that need them most,” Advait Arun, an energy finance researcher at the Center for Public Enterprise, commented.
“The money’s coming. The dollars are here,” Ricketts assured. And they’re not going to stop. “This cavalry is going to be followed by an even bigger force, which is the tax incentives. You’ve got the right hand jab of grants, and you’ve got the big left hook of tax incentives. And combined are the fists of climate-fighting fury.”
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