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Daily Briefing

A Second Act for Biden’s Green Banks?

A D.C. appeals court upheld an injunction preventing the Trump administration from clawing back $20 billion in climate grants.

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Pillars and leaves.
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One of the Biden administration’s most interesting — and contentious — climate programs might get a second lease on life.

Earlier this week, the D.C. Circuit Court of Appeals ruled that the Trump administration could not end the $20 billion Greenhouse Gas Reduction Fund program, which would have capitalized several national green banks. The court also ruled that the Environmental Protection Agency needed to give the nonprofits access to the funds while the case proceeded.

That would amount to a victory — if it holds. But the ball is now in the EPA’s court. If the agency appeals the ruling in the next week, then the case will go to the Supreme Court, setting up what could be a major battle over the program, according to The New York Times.

My colleague Emily Pontecorvo wrote about the background to the case last year, when the nonprofits looked more likely to lose:

Congress created the grants, known as the Greenhouse Gas Reduction Fund, as part of the Inflation Reduction Act in 2022. It authorized Biden’s EPA to award $20 billion to a handful of nonprofits that would then offer financing to individuals and organizations for emission-reduction projects, mostly geared toward low-income or otherwise disadvantaged communities. The agency fully obligated the funds last August to eight nonprofits that would “create a national financing network for clean energy and climate solutions across the country.

Then Trump took office and ordered his agency heads to pause and review all funding for Inflation Reduction Act programs. EPA Secretary Lee Zeldin targeted the Greenhouse Gas Reduction Program for termination, making a big show of a covert recording of a former agency employee comparing Biden’s efforts to get climate money out the door after the election to “throwing gold bars off the edge” of the Titanic. Never mind that this particular program had been fully obligated prior to the election, and recipients had already started to announce investments as early as October.

The nonprofit awardees sued the Trump administration, and the District Court for the District of Columbia issued a temporary injunction on the EPA’s grant terminations in mid-April, mandating that the funds continue to be paid out while the case proceeded.

That’s the injunction that 10 judges on the D.C. Circuit upheld this week.

I’m curious to see what would happen if the eight nonprofits do eventually get their money. As the Times notes, the ensuing months have been tough on the organizations — the chief executive of Climate United, which would have been one of the three national green banks, left the organization last year and hasn’t been replaced.

These green banks always ran the risk of being seen as a kind of out-of-government slush fund for the Biden administration’s favorite causes. But if implemented, they had the potential to unlock a virtuous cycle where successful green investments begat more green investments. Another promising scheme would have used them to bridge the U.S. economy’s “missing middle,” the lack of financing for first-of-a-kind projects and other innovations that require long-term investment but are more than five years out from market. Such a scheme would have helped technologies like fusion, hydrogen, or plain-old nuclear make their way to market. The Trump administration has since turned to other sources of government financing to boost nuclear.

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Daily Briefing

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1. Permitting bill’s worst-case climate scenario is still carbon neutral

The Senate’s grand compromise to simplify federal permitting on energy projects would likely drop emissions slightly as the benefits to accelerating deployments of clean energy infrastructure outweigh the boost the legislation could give to fossil fuels. Even under the worst-case scenario, emissions remain on the same trajectory as today. That’s according to a hotly anticipated new analysis by the Rhodium Group, the consultancy whose U.S. emissions estimates are among the most widely cited in American politics. The report, shared first with my colleague Emily Pontecorvo, found that provisions in the Bipartisan American Affordability and Jobs Act largely counteract each other on climate. The bill makes building transmission lines much easier, a key step to patching more renewables onto the grid. But it also makes new gas pipelines simpler to permit, clearing the way for a buildout of the infrastructure for the fossil fuel already dominating U.S. electricity and heating systems. Still, under the best-case scenario, the legislation could cut U.S. economy-wide emissions by 5% below where they would otherwise go in 2040. The bill could also slash energy bills by $78 per year and support construction of more than 200 gigawatts of clean energy capacity, as compared to a world where it didn’t pass. The Rhodium report is at least the second analysis yet to find that the bill could modestly lower emissions. The first, as I reported last week, came from the think tank Resources for the Future, which saw a slight drop in power-sector emissions relative to a world without BAAJA.

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The analysis examines the policies in the Bipartisan American Affordability and Jobs Act, or BAAJA, that would have the most-clear cut effects on climate pollution and the energy system. It is the most comprehensive account of the bill’s effects on emissions so far, although it does not examine all of its provisions.

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