Clean energy funding for the smallest communities

Today’s Twelve Days of New York Climate Nerd Christmas edition is a twofer, thanks to some holiday drama and an epic bartending shift yesterday. I made so many Old Fashioneds. Sorry, but also, that’s the holidays for you.

On the third day of Christmas, NYSERDA gave to me: Clean energy funding

Earlier this month, NYSERDA announced a new $25 million round of funding for the Clean Energy Communities program, which gives grants to town, village, city, and county governments for taking “high-impact” actions aimed at achieving clean energy transition, boosting local resilience, and lowering energy costs.

The recently-announced funding round will be open to local governments until December 31, 2025, or until the funds are spent. Communities that are officially designated “disadvantaged communities” (often abbreviated “DACs”) under the state climate law will get a 50 percent boost in funding for grants over $5,000.

So far, more than 800 local governments in the state have participated in the program. Another state program run through the Department of Environmental Conservation, “Climate Smart Communities,” also gives grants to local governments for resilience and transition-related projects.

For the smallest towns and villages, which are run by part-time elected officials and have few staff on hand, identifying and applying for grants can be a challenge. The landscape of grant opportunities is also changing fast because of new climate legislation (and funding) at both the federal and state level. A local “Clean Energy Coordinator” or “Climate Smart Community Coordinator,” who are located across the state and can give advice to local governments on how they can access climate funding, can be a good resource for wading through the red tape.

Another resource that can help connect ordinary New Yorkers to climate and energy funding and incentives is New York’s recently-launched Clean Energy Hub program. Clean Energy Hubs in each of the state’s 10 economic development regions were launched earlier this year to help residents, business owners, and landlords navigate the transition landscape, look into funding opportunities, and connect with contractors. You can find your local Clean Energy Hub on the NYSERDA website.

If you read the Empire of Dirt newsletter about cap-and-invest the other day, you might remember RGGI, the multi-state carbon market power producers in the Northeast participate in. Some of the funding for state climate grants to municipalities comes from RGGI — and if cap-and-invest goes into effect, that might be another major source of funds for small-town climate resilience and energy projects.

On the fourth day of Christmas, the IRA gave to me: Coal country dollars

Last year, after decades of close calls and failures to act, the US finally passed a big piece of climate legislation: the Inflation Reduction Act.

For climate dorks like myself, this was a very big deal. The night the Senate passed the bill, I ended up in a bar hollering about it like it was the Super Bowl to a lot of deeply confused people. I am forever guilty of assuming people know what I’m talking about when I say “the IRA” — alas, they usually just get confused about what any of the energy stuff I’m yawping about has to do with either Ireland or retirement accounts.

The IRA, in case you’re unfamiliar, is more of a carrot than a stick. The goal of the law is not really to punish the fossil-fuel industry, which continues to enjoy a wide array of subsidies from both federal and state governments. It’s more about giving a boost to the emerging economy of clean energy — and making sure a big slice of that economy ends up being made in the U.S.A.

Many of the IRA’s important provisions come in the form of tax credits and incentives for clean energy and US- based clean-tech manufacturing — some of them uncapped, which means they could end up being an even bigger boost to the clean-energy economy than Congress predicted. The incentives in the IRA range all the way from the individual to the market-scale: there are tax credits for homeowners who install heat pumps and induction stoves, and new incentives for renewable energy developers and makers of EV batteries. And there’s a whole lot more besides.

Money is already flowing toward clean energy because of the IRA. Many of the law’s provisions went into effect for 2023. And here’s something relevant to us rural climate-watchers: An outsized amount of that money is flowing to poorer counties.

In a November analysis of where IRA dollars are ending up, conducted with data from a project run by MIT and the Rhodium Group, the US Treasury found that the new climate law was turning on a spigot of clean investment dollars for poorer communities, as well as places where coal and other fossil fuel extraction has historically reigned. From the Treasury’s findings:

• 81% of clean investment dollars announced since the Inflation Reduction Act passed have been for projects in counties with below-average weekly wages.
• 86% of clean investment dollars since the Inflation Reduction Act passed are landing in counties with below-average college graduation rates.
• 70% of clean investment dollars since the Inflation Reduction Act passed are in counties where a smaller share of the population is employed.
• 78% of clean investment dollars since the Inflation Reduction Act passed are in counties with below-average median household incomes.
• The share of clean investment dollars going to low-income counties rose from 68% to 78% when the Inflation Reduction Act passed.

This is by design. The IRA was supposed to deliver more benefits to the bottom than the top. IRA tax credits and incentives are explicitly more generous in “energy communities,” which have historically been dependent on fossil fuel production and industry for their local economies. The authors of the analysis write:

“The IRA aims to increase clean energy investment throughout the United States, and especially in communities that historically relied on fossil fuels for employment and wages.”

Turns out that when you aim to invest in heavily fossil-fuel-industry-dependent areas, you’re also investing in places that are historically poorer and lower-wage. That matters for rural America — and it might mean that the IRA will be difficult to get rid of, even if politicians who are opposed to climate policy and decarbonization gain more political power. The contenders for the Republican presidential primary in 2024 are pretty well united in their loathing for the climate law, and if a Republican wins the 2024 election, there will surely be efforts to undo it from the White House.

But the fact is, the law is already guiding a lot of corporate investments in states across the red/blue continuum — and it’s already delivering outsized benefits to communities in Republican Congressional districts.

Another thing the IRA is doing that’s interesting from a rural perspective: It has given rural electric co-ops, which serve the places in the US with the sparsest populations and the most persistent poverty, the biggest funding boost they’ve seen since they were created in the New Deal.

Last September, after the IRA passed, I interviewed the new incoming CEO of my own local Delaware County Electric Co-op about the new IRA rules that allow rural co-ops and other non-tax-paying entities to access incentives for building renewable energy on a level playing field with for-profit developers.

“We’re excited about the funding opportunities out there,” he told me.

It’s early days for the IRA, but so far, it seems to be a shot in the arm for economic activity in poorer counties — and that could end up being a good thing not just for clean energy and the transition away from fossil fuels, but for rural America.

On the fourth day of Christmas, the IRA gave to me
Coal country dollars
Local energy grants
Climate banking guidance
And a cap-and-invest study