Biden is hoping to spur green energy development to support the regeneration of low-income communities across the U.S. The development of renewable energy projects in low-income areas could promote job creation, economic development could help accelerate the green transition. This has already been seen at the state level in California and New York, with recent announcements for plans to drive climate equity.
How Is the Administration Accelerating U.S. Energy Manufacturing?
In February 2023, the Biden Administration announced plans to accelerate domestic clean energy manufacturing and ensure traditionally underserved communities benefit from clean energy technologies. The U.S. Departments of Energy (DoE), the Treasury, and the Internal Revenue Service will oversee two programs funded by the 2022 Inflation Reduction Act – the Low-Income Communities Bonus Credit Program (48(e)) and the Qualifying Advanced Energy Project Credit(48C). This initiative is expected to support the government’s aim of achieving an equitable clean energy transition. Several of the DoE’s green energy programs will support small- and medium-sized manufacturers in energy communities to ensure that energy workers are not left behind in the green transition.
The U.S. Secretary of Energy, Jennifer M. Granholm, stated, “Underserved communities have the people, the skills, and the willpower, but often lack the opportunities and resources to invest in clean energy infrastructure to revitalize their local economies.” She added, “These transformative programs and grants will strengthen the nation, ensuring U.S. workers and businesses lead us around the globe and deliver on the President’s promise to not leave communities behind during this critical energy transition.”
Which States are Leading the Way in Climate Funding?
And these federal ambitions are spilling over to the state level as, in March, New York State identified 1,736 “disadvantaged communities” that will be eligible for higher levels of climate funding. These communities were chosen based on several factors, considering environmental burdens and future risks, such as flooding, exposure to pollution, health vulnerabilities, income levels, and the proportion of minority households.
Doreen Harris, president and CEO of the New York State Energy Research and Development Authority, stated, “The final adoption of this criteria solidifies New York State’s commitment to climate justice for those underserved communities most impacted by air pollution and harmful greenhouse gas emissions.”
New York is viewed as one of the most ambitious states when it comes to climate action after passing the far-reaching Climate Leadership and Community Protection Act (Climate Act) in July 2019. The state aims to cut greenhouse gas emissions by 40% by 2030 and by at least 85% by 2050, compared to 1990 levels. As part of this plan, New York will focus on achieving climate justice. It hopes to achieve this by providing the identified communities with at least 35% of the clean energy project spending. New York believes the total cost of meeting its climate aims could be as much as $340 billion.
California’s Support of Clean Energy for Disadvantaged Communities
The idea to support disadvantaged communities was based on an existing program in California, which also encouraged the development of the Biden Administration’s “Justice40 Initiative.” The initiative requires federal agencies to give at least 40% of the benefits from federal investments in climate change and clean energy to disadvantaged communities.
In California, the Cap-and-Trade Program dictates that at least 25% of proceeds must be given to disadvantaged communities to improve public health, quality of life, and economic opportunities. And in 2022, California spent almost $1.3 billion in Cap-and-Trade proceeds on nearly 19,5000 climate equity projects.
California aims to achieve net-zero carbon emissions by 2045, which is expected to reduce smog-forming air pollution by 71%. The Cap-and-Trade Program is just one of the ways the state hopes to achieve this aim. The program provides companies with a maximum stipulated amount of greenhouse gas emissions to use, and if they exceed this amount, they are fined. However, companies can sell and buy shares to increase or reduce their allotted emissions.
Setting the Global Stage
California’s ideas are nothing new in theory, but in practice they could be revolutionary, as many countries have failed to follow through on promises to support developing states in the past, driving many to develop a dependence on fossil fuels and unable to invest in establishing a green energy sector.
At the COP27 climate summit in November, leaders from around the world promised to establish a fund for developing countries to tackle the challenges of climate change and support a global green transition. But several state governments and international organizations, such as the World Bank, have been accused of failing to provide this funding.
We have seen how a lack of funding in poorer countries and communities can not only negatively affect the region in question but can significantly limit the success of the transition to green. If the political powers of a city, state, or country are unable to publicly fund renewable energy programs and combat climate change, they must rely on external investment, and if this financing does not come, green resources remain undeveloped. In contrast, greater investment in disadvantaged regions can help promote economic growth and job creation and could enhance climate equity over the coming decades.
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