ImpactAlpha, Sept. 13 – Green jobs in South Los Angeles. Low-carbon retrofits and cost savings in New York public housing. Electric vehicle and battery factories in the Rust, er, Battery Belt.
The green energy transition, which had sometimes seemed destined to leave many people behind, is going mass market.
Federal policy breakthroughs, including the recently signed Inflation Reduction Act, are catalyzing climate funding and investment opportunities in energy retrofits of old buildings, community solar, climate-resilient infrastructure and other hard-to-fund sectors. It’s also channeling capital to long-neglected regions of the country and low-income communities.
The climate and health spending bill, as well as the earlier infrastructure bill, are creating green jobs even faster than they can be filled. The Biden administration’s “modern supply side economics” favors broad-based investment in people and communities over “trickle down” tax breaks. The initiatives are beginning to deliver on the administration’s Justice 40 Initiative, which aims to ensure that at least 40% of the benefits flow to disadvantaged communities.
“Some of the best opportunities for growth occur when we invest in people and places that have been forgotten and overlooked,” Treasury Secretary Janet Yellen said in a speech at a Ford electric-vehicle factory in Detroit last week. “We expect to see dollars catalyze innovative investments across cities and towns that haven’t seen such investment in years.”
Entrepreneurs and investors are seizing the moment to scale the climate opportunity. The IRA’s incentives are making heat pumps, induction stoves, EVs and solar upgrades affordable for a wider swatch of consumers. And its incentives for projects that benefit low-income communities are making projects that previously did not pencil suddenly viable.
That will turbocharge efforts like those of BlocPower, which retrofits low-and-middle income residences with low-carbon energy upgrades. The Brooklyn company is already working to retrofit buildings at scale in cities including New York, Ithaca, and Menlo Park.
The incentives, tax breaks and grants in the IRA “will dramatically accelerate investments in green infrastructure across America,” BlocPower’s Donnel Baird told ImpactAlpha.
The federal funding and incentives will also open opportunities for local companies familiar with communities to help guide deployment.
“Dozens of brilliant social enterprises, private companies, and nonprofits work to slow climate change with a focus on low-income people: PosiGen, BlocPower, Neighborhood Sun, The Nature Conservancy, and others are well positioned to absorb this capital with equity at the center of their strategies,” Boston College Carroll School of Management’s Lourdes Germán and Aaron Seybert of Kresge Foundation wrote in a recent guest post.
“Now is the moment for impact investors and their partners to take decades of experience investing in the built environment and apply their knowledge to rebuilding communities across the country.”
The clean energy sector already employs more people globally than fossil fuels. And the IRA is expected to spur millions of new jobs installing solar panels, installing heat pumps and assembling batteries and EVs. The challenge will be ramping up a skilled workforce to meet the demand.
Energy workforce investments and funding for a Civilian Climate Corps were dropped in the final Inflation Reduction Act, but the law includes incentives for projects that meet “prevailing wage requirements,” apprenticeships and union-level rates.
Agents of impact are working to fill that demand and ensure that a diverse range of Americans participate in the economic opportunity. Climate-Resilient Employees for a Sustainable Tomorrow, or CREST, a $25 million partnership between Jobs for the Future and World Resources Institute, aims to train and place at least 25,000 individuals in U.S. clean energy jobs, including candidates from historically Black colleges and universities, Hispanic-serving institutions and community colleges, says Include Ventures’ Taj Eldridge, who leads the initiative.
ChargerHelp, an EV charger repair company in South L.A. is creating an onramp to good green jobs accessible to anyone with a high school degree (see, “Agents of Impact: Evette Ellis and Kameale Terry of ChargerHelp”).
In New York, BlocPower is training individuals in neighborhoods impacted by gun-violence to install heat pumps and other energy-saving technologies, as part of a partnership with the city for a local Civilian Climate Corps. The company is expanding its upskilling programs to other cities.
“A tech enabled green construction workforce is critical to addressing climate change through this bill,” says Baird.
The influx of funding to build out a resilient supply chain for the growth sectors of the future is already benefiting ailing Rust Belt communities, including in red states whose representatives opposed the legislation. EV and battery factories are announced weekly in places such as Georgia, Ohio, Tennessee and Kansas. First Solar plans a $680 million factory in Ohio. Texas is already home to nearly 225,000 clean energy jobs.
To help rural and underserved communities prepare for funding opportunities, Sorenson Impact Center is releasing today a Rural Opportunity Zone and Recovery Playbook. Qualified investments in low-income Opportunity Zones qualify for capital-gains tax reductions.
“We know that rural communities are often overlooked because of a lack of investor confidence, when in fact, there’s a lot of opportunity there in terms of both economic and social impact,” Sorenson’s Megan Brewster told ImpactAlpha. The playbook is intended as a resource “to shortcut the learning process for community leaders and rural policymakers to come to investors prepared with investable projects that they can then recruit capital for.”
Reconnecting Communities, part of the Infrastructure and Investment Jobs Act, provides $1 billion over five years to repair communities riven by transportation projects such as highways that cut off once-vibrant communities, in cities such as Las Vegas, Nashville and St. Paul.