With previously obligated funding for programs backed by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act beginning to be reinstated, individuals and businesses are fearing whiplash as they restart programming against a backdrop of increasing political and economic uncertainty.
Take David Funk, the founder and president of Zero Emissions Northwest, which works to connect farmers and small business owners in the rural Pacific northwest with grant opportunities through the Department of Agriculture’s Rural Energy for America Program. The last time I talked with Funk, he had just laid off his three employees in the wake of President Trump’s day one freeze on funds granted under the IRA and infrastructure law. Without these federal grants, Funk had no money to pay himself or his employees, and a number of his customer’s energy efficiency projects — things such as solar installations, upgraded appliances, or heat pumps — hung in limbo.
Last month, the USDA restored funding for Rural Energy for America, as well as a number of other related programs, so long as project applicants “remove harmful DEIA and far-left climate features” from their project proposals. I caught up with Funk today about what ZEN has been up to since its funding has been reinstated, and how his organization and customers are reacting to a moment when nearly everything seems to be in flux. Our conversation has been edited for length and clarity.
So we last spoke at the very end of January, soon after Trump’s funding freeze went into effect and you had to lay off your employees. What’s happened with ZEN since then?
About a month later, I was able to bring [my employees] back because of a Washington state unemployment program called SharedWork. [The program allows employees to work on a part-time basis while also collecting unemployment to help compensate for lost wages.] But I didn’t have the cash flow to pay everybody for this indefinite amount of time with our major contract being frozen. And then about a month after that, you get this press release from the USDA that they have reauthorized the Rural Energy for America program and several other ones. And maybe three days after that, we got our check.
Simultaneously, we won an additional contract with the USDA called the Energy Audit and Renewable Energy Development Assistance Program. It allows us to work with agricultural producers and do more comprehensive energy audit work, so sitting down with a farmer in a more consultative approach to say, here’s where you’re using energy today, and here’s some easy, low-hanging fruit that we can work on.
What were the repercussions for your staff and for your customers of that two-month funding freeze?
It’s a lot of wasted effort. For the first month when this was happening, I was trying to keep the ship afloat, trying to figure out how to take care of my employees, communicating so much uncertainty to my customer base, and recognizing that there’s a very wide spectrum of political viewpoints with my customer base. It takes so much delicate wordsmithing to write an email to all of my customers to say, this is the news that came out this week and this is how I’m interpreting this.
Now what we’re doing is calling our customers being like, “let’s restart your project, grants are getting paid.” I fully anticipate, as we’re going through our long tail of customers, that some projects are just going to stall out and never happen, which is disappointing. People’s attention goes elsewhere. Farmers are not really interested in taking on more debt than they need to. If you don’t have the cash reserves, and your commodity prices are low, and you’re looking at increased fertilizer costs and everything, there’s a limited window to make this all happen, and the uncertainty and the volatility in the economy has increased. So I anticipate there are going to be some people going, this was a great idea nine months ago, but not a good business decision right now.
Did you have to — or are you planning to — change any of the language in your grant applications to remove any mention of climate benefits or equity?
No, we haven’t. And largely, that’s because what we’re deploying, it’s technical, it’s hardware, it’s insulation. There’s no DEIA component. We’re trying to help businesses control their energy and financial future, and energy efficiency is apolitical. So if you can find an opportunity that has a good payback period, it’s a good use of your dollars. It just needs to make financial sense.
What we do focus on is energy production, energy dominance. We use a lot of that language because especially in our communities, resilience is important.
What other unknowns are making this a tricky business environment for your customers at the moment?
We’re looking at solar and going, what’s it going to cost? It’s so hard to plan for all of this stuff, because the supply chain is becoming a risk. I’ve had contractors after tariffs are announced go, “let me call my vendor and reprice this.” So that just doesn’t make anybody feel super comfortable. We know that the [clean electricity] tax credits are going to probably be on the negotiating table this summer. And I don’t want anybody to start a project that might not finish this year because who knows what the tax credits are going to be. So I can absolutely see some people just say, I’m not going to do anything right now. I’ll wait it out, or I’ll focus on my core business of farming.
Farmers are no strangers to the turbulence of Trump’s trade policies, as they were also hit hard after Trump imposed tariffs on China in his first administration. How are Trump’s latest tariffs, as well as China’s retaliatory tariffs, impacting your customers?
Under the first Trump administration, there was a bailout for agriculture. Under this administration, there might be a bailout for agriculture, but it’s nowhere near compensating these farmers enough for losing out on the commodity prices. If China stops buying wheat, that might be $1 off the wheat price, which is going to be a lot more significant than a $50,000 bailout that a farmer might get to compensate them for that.
Already the supply chain was pretty challenged through COVID, and now with tariffs,if you have a mission-critical piece of equipment — whether it’s irrigation or electrical or a tractor — and a part is manufactured abroad, and tariffs are throwing that supply chain into chaos and something breaks, how quickly can you get it? And what are you going to have to do to harvest your crop?
I don’t see many things going in the right direction. And I think that’s the common sentiment, which is, where’s the good news? It’s definitely going to be a lot clearer in 12 months after we get through a growing season.
How are you thinking about the future of ZEN given the general atmosphere of uncertainty and changing priorities?
As a small company, this funding pause really highlighted that a lot of our eggs are in one basket. What happens in the future if the USDA is not here and our contract goes away? We are trying to find new markets and find new programs and new opportunities. One of the areas that we’re looking at is really schools, because we’ve built up a strong professional reputation in rural areas — well, rural schools need help too. And you know, when I think about rural communities, it’s impossible not to think about resiliency. I think resiliency is always going to be a winning argument if you can make the numbers work.
Probably because we provide services to rural agricultural communities, many of which voted largely in favor of this president, we are benefiting from that favoritism. But there are so many programs that I think are being paused or unjustly canceled, and a lot of good work is being stalled out or just terminated. So it’s very bittersweet. And while you know we’re on the winning team right now, I think overall it’s a net loss.
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