Rebates or Planning Grants? New Report on Strategies for Climate Justice Funding

However dispiriting the federal pullback of critical climate funding currently feels, it’s essential to play the long game and continue to develop effective strategies for an ongoing clean energy transition.

One such strategy is government funding and, in particular, funding for community-scale resources like building decarbonization, clean transportation, and distributed energy. Building on years of Center for Progressive Reform-sponsored research into California’s long-standing climate funding programs, Member Scholar and University of San Francisco law professor Alice Kaswan has just published “Rebates or Planning Grants? Advancing Equity Through Individual-Based and Community-Based Approaches to Climate Funding” through the Georgetown Climate Center, where she is an affiliated scholar.

When considering community-scale investments, a key variable is the degree to which funds should be provided to individual entities — households or businesses — and the degree to which they should be allocated to community-level players, like local governments or community-based organizations.

Individual incentives are common and well-known. For example, the Inflation Reduction Act has offered tax credits for many resources, including clean cars and solar panels, as well as rebates for clean appliances. California offers businesses vouchers to help offset the cost of cleaner trucks. Some programs provide financing assistance rather than cash. And other programs provide services as well as funds, like California’s programs for low-income building decarbonization and energy efficiency.

Community-based approaches, in contrast, provide resources to local governments and community-based organizations. Recent initiatives like EPA’s Community Change block grants and California’s Transformative Climate Communities have provided funds for community-based planning as well as project implementation. These programs also give local entities considerable flexibility, allowing them to assess their needs and develop projects across different sectors. Somewhat more narrowly, programs like California’s Clean Mobility Options allow communities to assess and consider a range of clean transportation options to meet their unique needs and preferences.

Drawing on examples from California as well as several federal funding efforts, Kaswan’s paper assesses how individual and community-based programs deliver opportunities or pose risks for public agencies and the communities they seek to serve. Funding the clean energy transition can create opportunities to not only reduce greenhouse gas emissions, but also improve housing and environmental conditions, improve climate resilience, enhance transportation mobility, stimulate local economies, and empower community decision-making.

At the same time, funding programs confront risks. One is that resources will not flow to those who most need them. Another risk is that investment processes will be slow, cumbersome, or inefficient. Investments could also be fragmented and uncoordinated. For example, energy efficiency improvements in low-income housing are often stymied by poor housing conditions and can succeed only through a more holistic approach.

The paper analyzes the benefits and drawbacks of individual versus community-scale funding along several parameters, including:

• Access. How easy or difficult is it for applicants to access programs, considering, in particular, barriers for historically under-resourced populations?
• Administrative burden. The administrative burden on agencies affects program efficiency.
• Timeliness. Given the urgency of the climate crisis, the speed at which we deliver emissions reductions matters. 
• Planning. To what degree does the funding mode promote planning that avoids fragmented and piecemeal investments?
• Holistic approach. To what degree does the funding mechanism enable a holistic response to the often-inter-related components of a clean energy transition?
• Promote community participation and self-determination.

Kaswan observes that individual-based programs line up with existing agency expertise and jurisdiction and can be quickly accessed. They allow individual households or businesses to “vote with their feet,” without having to rely on the uncertain fate of community-based grants or the vagaries of community-level decision-making processes.

At the same time, community-based approaches ease the burden on individual households and businesses, who do not have to seek out and apply for resources on their own. They also enable planning, which is often essential to effectively implementing programs and ensuring that funding goes where it is most needed. Cross-sector approaches also tie together related investments, like energy efficiency and habitability improvements, or housing and clean transportation. They can also provide a forum that lets communities decide together about how best to pursue a clean energy transition. 

It is clear that an ideal landscape of clean energy transition funding for community-scale resources would include a mix of programs that individuals can access on their own and programs that support community-based decision-making and implementation. The choice will present tradeoffs, tradeoffs that decisionmakers should resolve based on administrative and community needs, their capacities, and the politics at play.

For further reading:

Alice Kaswan, Governing Grants, 85 Ohio State L.J. 1137 (2024)

Alice Kaswan & Catalina Gonzalez, Funding a Clean and Equitable Energy Transition: Lessons from California (Center for Progressive Reform, 2023)