Despite facing legal obstacles, the Trump administration has accomplished one of its primary goals: undermining a vital component of Joe Biden’s clean energy program—the revocation of $20 billion in climate funding.
Two additional agreements may likely fall through completely in Fort Worth, Texas, and one affordable housing developer has already canceled plans to install solar panels on a 116-unit building. An NC tiny rural institution has put off energy efficiency renovations for the time being. New Mexico’s program to provide below-market financing for low- and middle-income families to install solar panels, furnaces, and other energy efficiency measures is also under jeopardy.
Hundreds of groups that had hoped to receive funding from the EPA’s Greenhouse Gas Reduction Fund—money that had been awarded and distributed during the Biden administration—are now facing what could be a protracted legal battle before they can get their hands on the funds. As Trump and EPA Administrator Lee Zeldin relentlessly criticize the climate grants—which they have said, without proof, are tainted with possible fraud and waste—potential participants also confront the danger of damage to their reputations.
Despite the concerns raised by a former D.C. prosecutor who resigned in February, a criminal inquiry into the grant program has been initiated by the Justice Department.
According to nine groups that have contacted AWN, the climate funding dispute is delaying their projects, which include solar power for wastewater treatment facilities and energy efficiency improvement finance initiatives. They may also have to scrap plans to assist individuals cut their energy bills if the bottleneck continues.
A 116-unit affordable housing project in Fort Worth, a city where both house and rent prices are on the rise, was left scrambling by Megan Lasch, president of the Texas affordable housing developer O-SDA Industries, who claimed that program funds had “evaporated” overnight. She was forced to abandon plans to install solar panels because she was only able to secure $3 million, which was at a higher loan rate, instead of the $4 million she required. Two additional Fort Worth projects, one of which was due to conclude next month but is now questionable in timing, are dealing with private lenders, and she is having trouble plugging multimillion-dollar voids in those transactions.
She went on to say, “A lot of developers could go belly-up over the situation,” and that the situation was “actually really scary.”
The solar developer’s work is in jeopardy due to the non-materialization of the government financing, according to Brian Depew, executive director of the Center for Rural Affairs in Lyons, Nebraska, a rural development group. In order to keep up with its plans to lower energy prices for consumers through the Greenhouse Gas Reduction Fund, Depew is evaluating how the rural development charity can do it.
“Are you seriously going to have this money?” they inquire. Declared Depew. “It has caused widespread uncertainty.”
Several Democrats in Congress, such as Maryland’s Chris Van Hollen, Massachusetts’ Ed Markey, and Michigan’s Debbie Dingell, have criticized the program and the FBI’s “sham” investigations into it. Despite the judge’s rejection of the EPA’s effort to terminate the grant recipients’ contracts, the funds were not immediately restored to the groups. The judge ruled that the agency had failed to provide evidence to support its allegations of waste, fraud, and abuse.
On the other hand, the EPA’s strategies have had results: Nonprofit alliance Power Forward Communities is suing the EPA to recover its $2 billion funding, which was cut off after renowned nonprofits Habitat for Humanity International and United Way Worldwide left. In light of what is expected to be a lengthy legal battle with the EPA, both Habitat for Humanity and United Way have stated that they must save financial resources.
The organization expressed its belief that the grantees will have their concerns addressed, but emphasized the importance of “must remaining committed to stewarding our resources in pursuit of core mission delivery rather than on unprecedented legal battles.”
An individual who was in favor of the climate initiatives claimed that Trump’s appointments were engaging in questionable techniques to hinder the effort.
“They know that a lot of this isn’t legal,” commented Chris Castro, chief sustainability officer of Climate First Bank, who has advised the Coalition for Green Capital, one of the three charity grantees challenging the EPA. “Stopping was the goal.”
Despite Zeldin’s frequent comments on the program, the EPA has stated that it will not comment on the lawsuits. Criticizing the program as “riddled with self-dealing and wasteful spending,” he said that the Biden administration had hurriedly disbursed the monies through a system that left the Environmental Protection Agency (EPA) with little control over the flow of government funding.
“This scheme was the first of its kind in EPA history and it was purposefully designed to obligate all of the money in a rush job with reduced oversight,” he said last month.
Eight NGOs were chosen by the Biden administration to receive $20 billion in grants from the Greenhouse Gas Reduction Fund, which is stored at Citibank under a federal government agreement. These groups have pledged to provide a portion of the monies to hundreds of other community development organizations in the area so that they may work on renewable energy, energy efficiency, and housing initiatives. Each public dollar, according to the Biden administration, would attract $7 more in private investment.
Now that the Trump administration has spoken out strongly against the program, NGOs who were expecting to receive the funding are claiming that private sector interest has been dampened.
“There are substantial headwinds. North Carolina Clean Energy Fund co-director Melissa Malkin-Weber stated, “The disruption just makes it hard to proceed.” The fund is relying on the funding to support $51 million worth of projects in North and South Carolina. The true tragedy right now is the opportunity to help the people of the Carolinas that was passed up.
Even if funding starts rolling in, private investors will still have to decide if they want to work with a program that Trump is hell-bent on destroying.
Indiana Energy Independence Fund executive director Alex Crowley warned that the program might become politically poisonous due to the constant assaults, especially in a Trump-loving state like Indiana.
He predicted that “the willingness of private capital to become involved” would be dampened as a result. “Regardless of the reduction in federal funding, there is a residual effect.”
A sub-recipient from a conservative Western state expressed concern that the program’s ability to recruit private investors is being hindered by Trump’s anger and false information. The individual, who wished to remain anonymous in order to discuss sensitive financial matters, said that the group could have to drastically reduce programs like its energy efficiency retrofit assistance program if it loses government funding. This would leave projects worth millions of dollars without support.
“It definitely helps with the temperature,” the individual stated.
All over the nation, communities that have had a hard time attracting private investment—like rural areas and neighborhoods without access to traditional forms of credit—are feeling the pinch as a result of this fact. As a result, culling operations are being implemented.
“Hesitation from private capital sources — and also hesitation from developers, contractors that we might hire to do the work,” stated Depew of the Center for Rural Affairs in reference to the freeze. “Uncertainty is dreaded by capital markets.”
“Losing these funds would hinder our ability to leverage private capital and sustain impactful projects,” stated John Harris, executive director of Missouri Green Banc. Private marketplaces, he added, “are critical to sustainable community support.”
Homewise, a community lender in New Mexico, will need to “redirect our strategy” and “be creative” if it wants to implement a new plan to fund energy efficiency upgrades that would lower energy costs for low- and middle-income homes in the state, according to Johanna Gilligan, the deputy CEO of Homewise. The blocked funds from the Greenhouse Gas Reduction Fund were what the mortgage lender was banking on.
However, nobody can say for sure how long this will take to finish. “I will not rest until these hard-earned taxpayer dollars are returned to the U.S. Treasury,” Zeldin declared in a statement he put on X Tuesday, indicating his determination to continue opposing the program.
The investigation by the Justice Department has added doubt beyond what was already there in the case, according to other organizations.
In an email, Chris Meister, the executive director of the Illinois Finance Authority, expressed his “equally concerned” feelings about the way the Trump administration is trying to deny their organization access to the $109 million sub-award that they sued the Environmental Protection Agency and Citibank for on Wednesday. He cited stories in the media that revealed political officials in the FBI and the Justice Department had begun investigations notwithstanding the counsel of professional employees.
Furthermore, the federal government’s limitless resources make it impossible to oppose EPA’s assertions. Adam Kent, director of blended and inclusive finance at the Natural Resources Defense Council, an environmental group, is leading calls to coordinate over a hundred groups interested in the financing. He described litigation expenses as “a significant factor and variable” for the charities.
Castro, an officer in the Biden administration’s energy department who helped establish the fund, stated that many NGOs waiting for funding from the principal grantees cannot afford a protracted legal battle. Castro worked for Climate First Bank. He also hinted that the Trump administration may be planning to end the grant program or lay off employees.
“They’re suggesting that [this] may not be worth the grant funding, and we may need to change our approach,” he explained. “Which, once again, aids [EPA] and their overarching goal.”
