April 25, 2023
EPA’s Greenhouse Gas Reduction Fund (GGRF)
On August 16, 2022, President Biden signed H.R. 5376
IRA defines “qualified projects” to include any project,
(P.L. 117-169), a budget reconciliation measure commonly
activity, or technology that reduces or avoids GHG
referred to as the Inflation Reduction Act of 2022 (IRA).
emissions and other forms of air pollution in partnership
IRA contains eight titles, each with some provisions that
with, and by leveraging investment from, the private sector.
directly or indirectly address issues related to climate
change, including the reduction of U.S. greenhouse gas
Eligible recipients that meet the above definition may use
(GHG) emissions and the promotion of adaptation and
the grant funding for
resilience to climate change impacts.
direct investments in the form of financial assistance for
IRA Section 60103: Greenhouse Gas
a qualified project or
Reduction Fund
Section 60103 of IRA (codified at 42 U.S.C. §7434)
indirect investments in the form of funding and
amends the Clean Air Act to provide for a Greenhouse Gas
technical assistance to support new or existing public,
Reduction Fund (GGRF) to be administered by the U.S.
quasi-public, or nonprofit entities that in turn provide
Environmental Protection Agency (EPA). The provision
financial assistance to qualified projects at the state,
appropriated $27 billion to EPA for FY2022, out of any
local, territorial, or tribal level, including community-
money in the Treasury not otherwise appropriated, to
and low-income-focused lenders and capital providers.
remain available until September 30, 2024, to make grants,
on a competitive basis, as follows:
IRA directs EPA to begin this process not later than 180
calendar days after the date of enactment (i.e., not later than
$7.0 billion to states, municipalities, tribal governments,
February 12, 2023). Section 60103 does not explicitly
and eligible recipients for the purposes of providing
clarify which additional requirements apply to EPA or its
grants, loans, or other forms of financial assistance, as
grant recipients, such as general federal requirements for
well as technical assistance, to enable low-income and
grants and agreements.
disadvantaged communities to deploy or benefit from
zero-emission technologies;
EPA Implementation
Upon enactment of IRA, EPA launched a stakeholder
$11.97 billion to eligible recipients for the purpose of
engagement strategy to help shape implementation of the
providing financial and technical assistance for qualified
GGRF. EPA conducted listening sessions for members of
projects;
the public and stakeholder groups on November 1 and
November 9, 2022. EPA published a Request for
$8.0 billion to eligible recipients for the purpose of
Information seeking public comment on core design aspects
providing financial and technical assistance for qualified
of the GGRF. Further, EPA delivered a set of formal charge
projects in low-income and disadvantaged communities;
questions for expert review and comment at the October 18-
and
19, 2022, meeting of the agency’s Environmental Financial
Advisory Board (EFAB). On January 26, 2023, EFAB
$30.0 million for agency administrative costs.
submitted guidance and considerations to EPA regarding
the GGRF’s potential objectives, program structure,
IRA defines “eligible recipient” as a nonprofit organization
execution, reporting, and accountability. In its review,
that
EFAB assessed the strengths and weaknesses of various
design elements of the fund including financial leverage,
is designed to provide capital, leverage private capital,
additionality (i.e., whether project proposals would proceed
and provide other forms of financial assistance for the
in the absence of the GGRF), capital recycling, capacity
rapid deployment of low- and zero-emission products,
building, and long-term operability across various recipient
technologies, and services;
types including states, municipalities, tribes, regional
collectives, sectoral collectives, lender intermediaries, and a
does not take deposits other than deposits from
national entity.
repayments and other revenue received from financial
assistance provided using grant funds under IRA;
On February 14, 2023, EPA reported initial guidance on the
design of the GGRF program. At the time, EPA announced
is funded by public or charitable contributions; and
plans to hold two competitions to distribute the grant
funding: a $20 billion General and Low-Income Assistance
invests in or finances projects alone or in conjunction
Competition and a $7 billion Zero-Emissions Technology
with other investors.
Fund Competition.
https://crsreports.congress.gov
EPA’s Greenhouse Gas Reduction Fund (GGRF)
On April 19, 2023, EPA released additional guidance on the
institutions aimed at overcoming market barriers and
implementation framework for the GGRF. The guidance
scaling up investment in low-carbon technologies and
proposed splitting the majority of the $27 billion between
climate-resilient infrastructure. In general, green banks may
national and community groups across three competitions.
be public, quasi-public, or nonprofit institutions that are
Each competition would be administered separately.
publicly capitalized to facilitate private investment and
produce revenue to be used for further investments. Green
1. A $14 billion National Clean Investment
banks typically do not exist to make a profit and as such
Fund competition to fund two to three
may be able to help reduce the cost of capital, mitigate risk,
national nonprofits that would partner
and provide more favorable lending rates to incentivize
with private capital providers to deliver
investments. They can offer loans, leases, credit
financing to businesses, communities,
enhancements, and other financing services either directly
community lenders, and others.
to project management entities or through financial
2. A $6 billion Clean Communities
intermediaries.
Investment Accelerator competition to
fund two to seven nonprofits that have the
Governments have created green banks in various national
capabilities to build financing capacity
and local contexts to achieve a range of goals, including
across specific networks of public, quasi-
meeting GHG emissions targets, supporting local
public, and nonprofit community
community development, lowering energy costs,
lenders—including community
developing low-carbon and climate-resilient technology
development financial institutions
markets, creating jobs, and lowering the cost of capital for
(including tribal institutions), credit
specified investments. Governments have established green
unions, green banks, housing finance
banks at the national level (e.g., Australia, New Zealand,
agencies, and minority depository
Malaysia, Switzerland, and the United Kingdom), at the
institutions.
state or district level (e.g., California, Connecticut, Hawaii,
New York, Rhode Island, and the District of Columbia),
3. A $7 billion Solar for All competition to
and at the county level (e.g., Montgomery County, MD).
provide up to 60 grants to states, tribal
Some of the above-listed green banks—as well as some
governments, municipalities, and
other financial institutions—may meet the definition of
nonprofits to expand the number of low-
eligible recipient under Section 60103 of IRA, whereas
income and disadvantaged communities
others may qualify to receive indirect investments.
for residential and community solar
investment.
Past Congressional Proposals
The guidance also identified three priority project
Proposals for a national-level green bank in the United
categories for the competitions beyond the Solar for All
States reach back at least to the 110th Congress (e.g., H.R.
investments: (1) zero-emissions distributed power
6078 and H.R. 6899). In the 117th Congress, at least four
generation and storage; (2) retrofits to decarbonize existing
bills were introduced on green banks, including H.R. 806,
buildings; and (3) transportation pollution reduction that
“Clean Energy and Sustainability Accelerator Act”; S. 283,
supports zero-emissions transportation modes, especially in
“National Climate Bank Act”; H.R. 2451/S. 685,
communities experiencing diesel pollution and other poor
“America’s Clean Future Fund Act”; H.R. 2656/S. 1208,
air quality.
“A bill to amend title 31, United States Code, to provide for
the issuance of Green Bonds and to establish the United
EPA stated that the implementation framework was
States Green Bank, and for other purposes.”
“intended to provide continued transparency and respond to
stakeholder requests for additional information on EPA’s
Past congressional proposals for a national green bank have
anticipated program design and application requirements in
differed among themselves and from existing entities in
advance of the Notices of Funding Opportunity that will
significant ways, including, but not limited to (1) whether
formally kick off the application process as early as June
the proposal is freestanding or amendatory of existing
2023.” As proposed, the implementation framework steps
statute; (2) the legal status of the bank and its relationship
away from a conceptualization of the GGRF as a single
to the U.S. government; (3) specific project or recipient
national entity—a design supported by some stakeholders
eligibility; (4) project prioritization; (5) means of
and Members of Congress. EPA announced six public
capitalization; and (6) governance, administrative, and audit
listening sessions and requested written technical feedback
structure. The establishment of a national green bank would
and comments on the implementation framework by May
likely require resolving policy specificities within these
12, 2023.
items.
Green Banks
Richard K. Lattanzio, Specialist in Environmental Policy
Statutory provisions for the GGRF reflect the
characteristics of entities commonly referred to as “green
IF12387
banks.” Green banks are relatively new types of financial
https://crsreports.congress.gov
EPA’s Greenhouse Gas Reduction Fund (GGRF)
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https://crsreports.congress.gov | IF12387 · VERSION 1 · NEW