Jahi Wise joined the EPA last week with an unusual mandate: decide who spends $27 billion in federal climate dollars.
The money comes from the Inflation Reduction Act that President Joe Biden signed into law four months ago, and is intended to help American communities, particularly those in low-income and disadvantaged areas, make efforts to combat global warming. .
It is up to Wise and EPA Administrator Michael Regan to come up with a plan for how to inject this capital into the economy in the most beneficial way. And the law gives them until February 12 - barely two short months - to do so.
It's about a lot. This new climate fund has the potential to encourage additional investment from the private sector in heat pumps, solar panels, electric vehicles and a wide range of other clean energy projects. The money could be spent on new transmissions to bring renewable energy to the grid, electric vehicle charging stations at highway stops, or heat pumps in low-income apartment complexes.
Experts say the success of the program will depend on its design, which determines what kinds of investments the historic fund can support and how well it serves the historically underserved communities Biden has vowed to prioritize. These design issues were at the center of the more than 3,000 public comments the agency collected last Monday.
“Here at EPA we are working diligently to think about all the different exchanges and make sure we implement them in accordance with the statute, in line with the vision of the president and with the contribution of the community that these funds go to,” he said. . Wise said in an interview with E&E News last week.
About a quarter of EPA's $27 billion fund, or $7 billion, goes to state and local governments.
But the rest, or $20 billion, is still up in the air. And this is where the debate comes in.
Wise, and ultimately Regan, has three main options.
One option is to create a national green bank that would be responsible for distributing the $20 billion to secondary recipients, such as local lenders and nonprofit organizations. That's the approach advocated by the Green Capital Coalition, an advocacy group for which Wise has spearheaded policy. But critics say this could make it harder to ensure disadvantaged communities get their fair share of the benefits.
Another option is to skip the green bank idea and hire multiple intermediaries to do the job. Skeptics say this approach could prevent investment in large projects on a national scale that would produce breakthrough climate results.
And a third option is a hybrid approach, where part of the financing is provided through a centralized national green bank, while other parts are made available to a broader universe of lenders.
Wise enjoys broad support from advocates on all sides of the debate and does not appear to be linked to his previous work with the Green Capital Coalition. Wise told E&E News that the first step is to process public comments.
"We've got our heads down, really processing that input, synthesizing it and putting it into the thinking that's necessary to put together a program that can deliver on the promise of the program," he said.
Who is Jahi Wise?
Wise, 36, is familiar with the ins and outs of the Inflation Reduction Act. As a White House climate policy adviser, he helped shape the legislative language for financing clean energy in what became the landmark climate bill.
Before joining the White House Office of Climate Policy, where she worked with climate leaders Gina McCarthy and Ali Zaidi, Wise led policy at the Green Capital Coalition, an umbrella organization for state and local green banks and a longtime advocate of creating a national green bank. He also worked for BlocPower, a venture-backed start-up focused on helping small and medium-sized buildings make energy-efficient upgrades.
"I have been very fortunate in my career to have worked on clean energy projects from some of the largest wind farms in the country, from transmission lines to tens of thousands of dollars to installing a heat pump in a building in the Bronx" . he said.
He has a law degree and an MBA from Yale University and a bachelor's degree in management. from Morehouse College, a historically black men's liberal arts college in Atlanta.
Green finance experts welcomed Wise's appointment.
Dale Bryk, who leads state and regional climate work for Harvard Law School's Energy and Environmental Law Program, said Wise has a rare combination of politics and experience "on the ground, trying to make real things happen." ". 🇧🇷
And Eric Hangen, a senior fellow at the University of New Hampshire's Center for Impact Finance, called Wise "a great listener" who has spent time speaking with a variety of stakeholders.
Hearing clearly will be part of Wise's job, especially during those first hectic months of thorny issues to solve.
He and his team are now on tour for more than3,000 public commentssubmitted to EPA before the December 5 deadline, offering competing views of how the program should work, what investments it should prioritize, and how it should maintain transparency and integrity (climate wire, 6th of December).
On December 15, outside experts from EPA's Environmental Finance Advisory Council will provide input. Early in the new year, the agency will publish additional guidance and accept proposals from candidates who wish to be eligible to manage the fund.
The money must be spent before September 30, 2024.
Debate on the Green Bank
Much of the uncertainty about the EPA's new climate fund project stems from its legislative history of more than a decade.
Since 2009, legislation has been circulating on Capitol Hill to create a national green bank that would accelerate the development and deployment of clean energy technologies in the United States.
But they struggled to gain ground until the Senate last year approved a reconciliation measure that included about $27 billion for a new fund that their Democratic supporters said would use public money to mobilize big climate investments (climate wire,21.09.2021).
The provision eventually survived the reconciliation process and was included in the Inflation Reduction Act, but not without significant changes from previous iterations, which were explicitly aimed at creating a single national entity to inject dollars into the growing network of banks. state and local greens.
Instead, the statue set up a fundraising program with two main buckets of money. A portion of the $7 billion total will go to state, county and tribal governments to help "disadvantaged and low-income communities adopt or benefit from zero-emission technologies."
The remaining $20 billion, of which $8 billion is expected to benefit "low-income and disadvantaged communities," will go directly to one or more nonprofit organizations that will take the lead in administering the fund. To be eligible, organizations must be designed to finance clean energy, be publicly or non-profit funded, be able to invest in projects alone or with other funders, and receive no customer contributions.
These organizations will distribute the money to a national network of local financial players, including state-owned green banks and "community-focused low-income lenders" with deep historical ties to low-income and black communities (climate wire, December 6, 2021).
The change to the "national green bank" language in the charter was due in large part to the rules of the budget voting process that Democrats used to enact their climate bill in the face of unified Republican opposition. That prevented Congress from directing dollars to a single entity or developing strict criteria for requesting funds.
A former Hill aide involved in the talks said it forced green bank advocates to consider other ways of working and convinced many that a different approach might be more effective in limiting financial and political risks and achieving goals. On the other hand, the adviser said, the general conversation moved quickly and forcefully away from capitalizing a single institution.
Adam Kent, senior adviser at the Natural Resources Defense Council's Center for Green Finance, reiterated the point.
He said the NRDC had lobbied for years for federal legislation that would create a national funding body. But the organization has since changed course, as the final legislation's language is less prescriptive than previous iterations and gives EPA more flexibility to effectively reach underserved populations through community funders.
"The liability of an eligible recipient will be immense," Kent said, meaning prospective recipients must have strict policies, liability processes and credit history before receiving billions in taxpayer money.
“We are not against the idea of a national green bank,” he added. "But we also believe that the risks outweigh the rewards under current legislation in putting all that money in one entity."
The question of whether the EPA should fund a national bank, go through multiple intermediaries, or take a hybrid approach that offers both is one for Wise and his team to resolve early next year.
"Not an Accident"
The Green Capital Coalition, for which Wise served less than a year in 2020 and 2021, has been particularly vocal. Many acknowledge that the organization has played an important role in passing the legislation.
The group's enthusiasm for the 13-year idea hasn't changed in the past year. CGC says the best approach is to put the fund's $20bn into capitalization of a single national green bank, and do it.intends to applybecome that entity.
Reed Hundt, the organization's CEO, attributes this position to the text itself, which states that direct recipients of funding must demonstrate four key characteristics, including "design" to provide capital and other forms of financial support for service implementation. and clean energy technology. According to Hundt, this is just one aspect that excludes community development organizations, which do not specialize in climate but can and increasingly do, to provide green financing.
“That means you have to be a national green bank,” Hundt said. "That's what the words say. By the way, it's no coincidence that the words say this; the sponsors wrote this to benefit the National Green Bank, which they said publicly.
Others disagree. “The legislation did not create a national green bank. It is up to the EPA to decide how this funding will be structured,” said Hangen of the University of New Hampshire. He is among those who say they don't think Wise feels compelled to implement the fund because of the position of his former employer.
Sens. Chris Van Hollen (D-Md.) and Ed Markey (D-Mass.), two key legislators who have championed the idea along with the CGC over the years, have long supported the green banking model. But they also signaled an opening for the flow of dollars through additional channels.
A Van Hollen spokesman said the funding will be more effective if it is channeled to a few national networks rather than "thousands of recipients," and that the senator still supports using the lion's share of the dollars to fund a national network. of banks to benefit. Van Hollen also expects the EPA to adopt a competitive licensing process.
A spokesman for Markey said the senator supports a model that uses national networks and other channels to achieve the fund's dual goals of emissions reduction and environmental justice.
As such, there seems to be a growing consensus, including within EPA's Environmental Finance Advisory Council, that there are multiple ways to structure the effort.
the board hashighlightedseveral possible courses of action.
Among them: a national green bank that the board said could reduce the EPA's administrative burden and channel dollars to communities through the existing network of state green banks and other financiers.
Proponents of this approach say that a national bank would be better positioned to invest in large projects at the national level, such as transferring or reconditioning the country's fleet of electric vehicles. In terms of weaknesses, the board said that bringing all the money together in a single entity would require a "longer ramp-up period," could involve financial and political risks, and difficulty engaging with such a diverse set of sectors and communities.
EPA may also choose to reach a variety of direct audiences with a regional or industry focus. The board said this approach may raise coordination issues, but may be the most efficient approach because "the facilitators and their network relationships already exist."
Reporter Peter Behr contributed to this.