The EPA is racing to spend $27 billion the GOP wants to repeal

Analysis by Maxine Joselow with research by Vanessa Montalbano

Good morning and welcome to The Climate 202! We hope you had a great Fourth of July. And if you’re in the D.C. area, we hope you found a way to beat the heat.

In today’s edition, we’ll cover the dwindling water supply in a fast-growing Florida county. But first:

Why the Environmental Protection Agency is racing to create a $27 billion green bank

The Environmental Protection Agency in Washington. (Pablo Martinez Monsivais/AP)

It’s an open secret in Washington: The Biden administration is rushing to spend billions of dollars in the Democrats’ climate law before January 2025, when a future Republican-controlled Congress or administration could claw back the money.

Yet little-noticed language in the Inflation Reduction Act requires the Environmental Protection Agency to spend $27 billion by Sept. 30, 2024 — a much earlier deadline — or return the money to Congress.

At issue is the Greenhouse Gas Reduction Fund, which will provide $27 billion worth of grants to states, territories, tribes and others for projects that cut greenhouse gas emissions and air pollution. Implementing the program, commonly known as a green bank, is a tall order for an agency facing depleted staffing levels and persistent funding challenges. 

But Democrats purposely gave the EPA a tight timeline to protect the money from GOP attacks, said a Democratic aide with the Senate Environment and Public Works Committee, which drafted the language.

“We did craft it with the motivation to have EPA stand up the program quickly to save it from the risk of potential future repeal efforts,” said the aide, who spoke on the condition of anonymity because they were not authorized to comment publicly.

Sen. Thomas R. Carper (D-Del.), who chairs the Environment and Public Works panel, said in an emailed statement that he required the EPA to “waste no time” in implementing the program because “the science is clear — we are running out of time to avoid the worst impacts of the climate crisis and we can’t afford any delays.”

A ‘slush fund’

House Republicans already have the program in their crosshairs.

The GOP energy package that passed the House in March included legislation to rescind the program’s unobligated funds. The bill sponsor, Rep. Gary Palmer (R-Ala.), has derided the green bank as a “slush fund” that will do little to lower energy costs for most households.

The program “doesn’t help the American people with their utility bills,” Palmer said during a House Energy and Commerce Committee hearing in February. “Will this $27 billion slush fund lower the cost of heating for these American families?”

Sean Kelly, a spokesman for Republicans on the Energy and Commerce Committee, said the green bank “allocates an incredible amount of authority and resources” to the EPA, yet it lacks measures to ensure transparency and accountability.

“In other words, this provision creates a taxpayer-funded slush fund for Wall Street and heightens the risk for overspending, fraud and abuse,” Kelly said in a statement.

EPA Administrator Michael Regan has defended the program, saying it will “strengthen the ability of communities across the country to finance projects that reduce air pollution, lower energy costs for families, bolster America’s energy security, and create good-paying jobs.”

Need for speed

The EPA is making progress toward standing up the program. The agency last week launched the $7 billion Solar for All grant competition, which will make up to 60 awards for solar energy projects in low-income communities across the country.

But the agency has yet to launch a second $14 billion grant competition to expand clean-energy technologies, or a third $6 billion grant competition to help community lenders finance this clean tech.

“The fraught political battles of the immediate future lend more strength to the argument for speed in obligating the funding,” said Reed Hundt, chairman and chief executive of the Coalition for Green Capital, whose organization has applied for funding from the Solar for All competition.

EPA spokesman Tim Carroll said in an email that the agency “is confident we will obligate funds for the Greenhouse Gas Reduction Fund before the statutory deadline of September 30, 2024.” 

Carroll added that the EPA expects to issue notices of funding opportunity for the other two grant competitions later this summer.

Concerns in California

Meanwhile, some solar advocates are worried that California won’t get a grant under the Solar for All competition. They say the state won’t be a strong applicant for the federal funding until the California Public Utilities Commission authorizes a new community solar program.

“Over 20 states have community solar programs, so California is going to be at a pretty serious disadvantage if it can’t show action out of the commission,” said Brandon Smithwood, senior director of policy at Dimension Renewable Energy.

While California has the most rooftop solar installations in the country, solar panels are still out of reach for the 44 percent of residents who rent their homes. So state lawmakers passed legislation last year that requires the CPUC to consider establishing a new community solar program, which would allow renters to receive electricity from nearby solar projects and earn credits on their electric bills.

Terrie Prosper, a spokesperson for the CPUC, said in an email that the commission expects to make a decision by early November. California Assembly member Chris Ward, a San Diego Democrat who sponsored the community solar legislation, said in a statement that he wants to ensure this timeline doesn’t slip.

“I will be monitoring closely the timeline of the PUC … so California does not miss out on deadlines under the IRA and we do not step back from our push for faster, more equitable transitions to renewable energy,” he said.