About the National Clean Investment Fund
The Greenhouse Gas Reduction Fund’s (GGRF) National Clean Investment Fund (NCIF) is a program established by the Inflation Reduction Act and awarded by the U.S. Environmental Protection Agency (EPA). The program is designed to accelerate the transition to a clean energy economy by creating and expanding financial markets in the clean energy sector.
NCIF provides financing to projects that reduce greenhouse gas emissions and promote clean energy. Three national nonprofits were awarded funds by the EPA to set up NCIF programs: Climate United Fund, Coalition for Green Capital, and Power Forward Communities.
Each of the three awardees has its own specific focus, its own process for distributing funds, its own financing terms and financial products, etc. All NCIF financing will be provided directly or indirectly through these awardees; though the EPA provided the awards, they are not directly involved in running the programs except for things like oversight, reporting, and compliance.
For more general information about GGRF and an introduction to NCIF, please see LIH’s GGRF resource page or the introductory resource “Next Steps for Cities Interested in GGRF Financing.”
This document, which is specifically about NCIF, aims to provide answers to some of the most commonly asked questions about the program and help small and mid-sized communities understand how to access GGRF funds. Please see below are some frequently asked questions about NCIF.
1. Are Cities eligible for NCIF financing?
Yes. Cities and other local government entities are eligible for GGRF financing, including through NCIF. Though financing for local governments isn’t the primary focus of any of the three NCIF awardees, there is room for local government entities to participate in each awardee’s program.
Given the types of projects GGRF funds (see more details in the next question), NCIF financing may be of particular relevance to the following local government or quasi-government entities: utilities, affordable housing departments or authorities, and transit agencies and authorities. In addition, some NCIF programs will focus on small business and consumer lending and local governments can be partners in raising awareness of these opportunities and expanding their reach.
2. What kinds of projects are eligible for NCIF financing?
All GGRF projects must meet the following criteria:
- Reduce greenhouse gas emissions.
- Reduce other air pollutants.
- Deliver benefits to communities.
- May otherwise not have been financed.
- Mobilize private capital.
- Support only commercial technologies.
GGRF prioritizes projects that will benefit disadvantaged communities, and though NCIF will not go exclusively to those communities, at least 40% of NCIF funds must benefit low-income and disadvantaged communities (LIDACs). Projects that serve Justice40 communities or others that meet the EPA LIDAC definition, therefore, have a better chance of obtaining financing.
Similarly, GGRF has 3 specific priority project types:
- distributed energy generation and storage;
- net-zero emissions buildings; and
- zero-emissions transportation.
While not all NCIF projects need to fit into these 3 priority project categories, projects that do will have a better chance of obtaining financing.
Some specific program details about the types of projects each type of awardee expects to support can be found below:
Climate United:
- Expects that 65% of funds will go to priority projects, with 50% of that going to building decarbonization, 25% to electric transportation, and 25% distributed generation and storage.
- The remaining 35% will be for projects that reduce the carbon emissions of a building, farm or small business, or other projects that meet GGRF goals but not the criteria for priority projects.
- Some market segments Climate United will focus on that may be applicable to cities: housing, including through Housing Finance Agencies (HFAs); community infrastructure (especially childcare centers and federally qualified health centers); K12 school buildings; community solar; electric vehicle (EV) trucks and EV charging infrastructure.
Example local government projects that could be financed by Climate United:
- Loan to purchase heavy-duty electric vehicles for city transport, garbage collection, etc.
- Loan to decarbonize or add rooftop solar to a multi-family affordable housing unit owned by the city
Coalition for Green Capital:
- Plans to focus on large scale projects and projects outside of housing, since other two awardees have a strong affordable housing focus.
- Expects to make large-scale investments in energy distribution facilities and high-voltage transmission facilities.
- Expects to do significant work with the commercial sector, including large corporations.
Example projects for a local government through Coalition for Green Capital:
- Long-term financing for a major transition of a utility provider to solar or other zero emissions power sources.
- Up front capital from a local green bank and Coalition for Green Capital member for a public-private partnership project to decarbonize a stadium or sports arena.
Power Forward Communities:
- Primary focus will be on decarbonizing housing, including through: electric appliance conversion, rooftop and community solar, EV charging at housing sites, and weatherization.
- At least 75% of funds will be focused on LIDACs.
- Main markets will be: developers and owners of affordable multifamily rental properties; owners and tenants of single-family homes; and nonprofit builders of single-family homes. Also expect a small amount of financing for developers and owners of community facilities.
Example projects for a local government through Power Forward Communities:
- Loan for a homeowner to electrify their home
- Loan for a multifamily owner to electrify their property
- Loan to install EV charging in or near affordable housing.
3. If I am interested in applying for financing, how can I get in touch with lenders?
Contact the NCIF awardees directly. Most have not yet set up their full, formal processes yet, and so this is a way to express your interest early and to hear from them as soon as the programs are launched.
4. Why should I seek this financing?
The NCIF program is designed to accelerate the green energy transition by creating a sustainable financial market for green energy projects. What that means for folks that receive a loan or other financing through the program is that they can reduce up front costs and get below market rates for projects that reduce greenhouse gases and air pollution.
5. How will the financing work and what are the terms?
Each program will offer its own financial products and terms. Below are some specifics for each of the 3 awardees.
- Anticipated Climate United financing products:
- Bridge loans to provide up-front capital, to be paid once direct pay tax credit is received Direct pay (tax equity) or other incentive bridge loan
- Leases, such as for an EV;
- Standardized loan products, including:
- Long-term financing for electric vehicles (EVs) that keeps monthly vehicle payments low;
- Financing for installing solar or solar/storage on buildings;
- “Save a Ton” loan product to finance projects in existing buildings that will substantially reduce greenhouse gases and make significant progress towards net-zero;
- “Clean Air” and “Clean Air Boost” lending products to build or retrofit buildings to be highly energy efficient, either meeting Zero Emissions Buildings or Zero Emissions “Ready” standards.
Climate United has not yet specified what interest rates or loan terms will be for these products but has said that they anticipate that they will be below market rate for a borrower’s risk profile, but will vary by market segment and whether a project serves LIDACs. For the standardized loan products, Climate United will provide more details on these specifications as they roll out each product.
- Anticipated Coalition for Green Capital financing products: Many of the financial products that Coalition for Green Capital will offer directly, for example credit enhancements and loan loss reserves, are designed to boost the overall clean energy financing ecosystem. While CGC does expect to create it’s own lending platform, much of CGC’s lending will also go through its member green banks and community lenders. For it’s direct investments, CGC will place special emphasis on investing directly or indirectly in Priority Projects located in LIDACs.
- Anticipated Power Forward financing products:
- Green or Net-Zero new construction loans;
- Energy efficiency rehab loans;
- Net-zero over time loans;
- Net-zero rehab loans;
- Solar energy loans; and
- Incentive bridge loans (for example for direct pay tax credits).
Each of these is described in more detail in Power Forward’s NCIF work plan.
6. What is the timeline for getting funds?
Each of the the NCIF awardees will have their own individual timeline, but generally they expect to begin lending as early as Fall 2024 and fully ramp up in early 2025. For example, Climate United said in its application narrative that it expects to deploy a portion of the funds at the end of 2024, with the full suite of products and the investment platform fully operational in early 2025.
7. How long will this program exist?
The period of performance for NCIF awards is up to 7 years, but grantees are required to recycle capital and mobilize private capital so that the funds can contribute to long-term transformation of green energy financing markets.
For local governments, what this means is if you do not yet have a “shovel ready” priority project, there will be multiple opportunities to access financing in the future.
8. What are the compliance/reporting requirements?
Federal requirements like Build America, Buy America and Davis Bacon prevailing wage laws apply to GGRF funds. As with federal grants, subrecipients of more than $750,000 of federal funds are subject to a single audit and annual review. Entities that receive loans over $10 million are also subject to organizational and ongoing disclosures.
In addition, because one of the primary goals of GGRF financing is to reduce greenhouse gas emissions, recipients of GGRF financing can expect to be required to calculate the emissions reductions as a result of their project.
9. Where can I go to learn more about each awardee’s NCIF program?
The GGRF NCIF webpage also has a brief description about each awardee’s program as well as links to their full work plans.