Climate finance without Washington: The new coalition funding community clean energy in America

0:00It was a pilot where we were able to, you know, fund energy efficiency upgrades for 100 of Atlanta's most energy burdened homes. And that means that those are people that are spending anywhere from 6 percent to 10 percent of their monthly take home on energy costs. I think it's really critical. And this is beyond just the benefits for the prior programs that have been sunset or or curtailed. We're also facing an issue of tariffs in this country, and that's going to have a huge issue, a huge impact on the supply chain that's needed in order to do basic, you know, even beyond clean energy projects.

0:37What a hub home is, is, you know, they're equipping local homes with solar panels and battery systems to create kind of these resilient hubs on a block by block level. And they've been really helpful in communities, particularly where it's difficult to get out, where there are flooding risks and people can't get to like a large resilience hub. Then there's a home in their community where they can go. We've got a partner now, Miss Doris, who has a hub home and the power went out on her block and she was cooking dinner. She didn't know the power was out until someone knocked.

1:37unlock additional investment, and expand access to clean energy in communities that need it most. Learn more at justiceclimatefund.org.

1:52Hello and welcome to The Energy Gang, a discussion show from Wood Mackenzie about the fast-changing world of energy. I'm Ed Crooks. And on this show, it's a special episode, we're going to be talking about climate action in the US at a time when the federal government no longer supports it. And we're going to explore a bit about what that means and what action is still going on. To discuss that subject, I'm joined by Amir Kirkwood, who is the Chief Executive Officer of the Justice Climate Fund. Hello, Amir. Welcome to the show. Hi, thank you for having me. Well, thank you very much for coming on.

2:21It's also a pleasure to welcome Melanie Allen, who is the CEO at the Hive Fund. Hi, Ed. So glad to be here with you today. Yeah, it's great to have you on. Thank you very much indeed for joining us. So I want to hear more about your organizations and the work you do in just a moment. Before we do that, it would be great to hear a little bit about your personal stories. As you know, I'm sure when we have new people on the show, we always like to talk to them a bit about their careers in energy, how they got started, how they got to the positions they now hold. So Amir, maybe start with you. What's your story?

2:50What's the path that took you to the Justice Climate Fund? Yeah, great. My story really starts with a long-term 25-year history of working in institutional and community banking. where my focus has always been on the public sector, whether that was early days working at Citigroup, focused on municipal finance, eventually working for amalgamated bank, a social impact bank on a lot of commercial real estate, affordable housing and other really community based and public sector type of financing activity. And eventually down the road, beginning to work more focused on financial institutions themselves.

3:33That means working with what's designated as community development financial institutions, green banks, and other very localized financial intermediaries whose entire focus is to identify and raise capital that then can be deployed on community-based projects. And generally speaking, they are all seeking to sort of achieve some sort of social impact, whether it's affordability, increasing access to energy, or, you know, growth in jobs and small businesses and other sort of vital economic and social needs in a community. So my arc has taken me, although from an institutional level to a community level, there is a common thread that sort of sits behind a lot of that.

4:21Most recently, I was the chief executive officer of the community bank called Locus in my home state of Virginia, where, again, my focus was trying to identify ways to work to bring about more small business lending, affordable housing. And what we started there was also a platform to do clean energy financing. What started with basically essentially$10 million of allocation by our board of directors to do some solar panel installations, largely in markets such as Charlottesville and Northern Virginia, grew to an almost$50 million commitment. And for a bank with a balance sheet of roughly$400 million, that represented a significant amount of the commitment of that institution.

5:10So when I got to my current role at the Justice Climate Fund, it was essentially an opportunity to bring that last 25 years together full circle where I could begin to really bring clean energy finance to the forefront of how intermediaries such as CDFIs and others who I was tasked to help finance can do more clean energy lending within their portfolios. Right. Got it. And just the acronym, then, for people who might not know it, CDFI, is it what? Community Development Financial Institutions? That's correct. It's a U.S. Treasury-fed designation for community banks, minority depository institutions, and loan funds and venture capital funds who all agree as a part of their designation that at least 60 % of the financing activity that they would engage in have to be in communities where the average income sits at about 80 % of the median in that community.

6:10So it's really designed to ensure financing in low to moderate income communities. Got it. Thanks. So what about you, Melanie? What's your story in terms of coming to energy and clean energy investment? Well, listening to Amir, I have a very different trajectory, which I think highlights the complementarity of our partnership. But I came like a lot of people to the energy sector through health. When I was very young, I was diagnosed with a health challenge. And like so many people in the U.S. had to fight to get the lifesaving care that I needed. And that, you know, drew at a very young age my focus to policy and working with decision makers.

6:51And so I was healthy and moved to New York to go to college. And while I was there, I got a job at the Children's Defense Fund's New York office and got to be a part of an effort to expand the child health insurance program in the state. We were able to be successful and bring a million more children into coverage by the state children's health insurance program. And so many of the people, the young people that I was working alongside in the South Bronx on that effort, lived in what's called, often called asthma alley. And they had health issues that were deeply related to, you know, the energy system or the fact that they lived in an area that had one of the highest densities of traffic in the United States.

7:34And so that seeded this question that has driven my career, which is what will it take for us to develop an energy system that allows people to allows us to move from place to place, transport our consumer goods and even flip the light switch in ways that don't infringe upon people's ability to have clean air and clean water. And that took me from, you know, working on political campaigns to working in city government to working with nonprofits, really driven by that question. I ended up moving back to my home state of North Carolina for the better part of a decade. I was able to work with the water and land conservation community here, trying to answer those questions and then got a job at a regional foundation that was focused on the U.S.

8:21South. And part of what they hired me to do was to take a look at the energy systems across the South, going from Mississippi, Louisiana, all the way to my home state of North Carolina and up through Virginia and ask what it would take for us to build a more just and equitable energy system. And so that gave me the opportunity to be in conversations with public service commissioners, which are the state level regulators of our energy systems here in the US, with mayors, with CEOs of utility companies. And then to go from those conversations to kitchen table conversations with everyday people who were struggling to pay their energy bills or with the impacts of our energy system.

9:03And so about seven years ago, exactly, to the day, actually, I was honored to be asked to co-lead a new effort with my colleague Aaron Rodgers. And that was the launch of what would become the Hive Fund for Climate and Gender Justice. And, yeah, I have been excited to be at the helm ever since. Right. Very interesting. And fascinating to hear you talk about, as you say, those kitchen table issues and the questions around people's electricity bills. And I noticed you mentioned affordability as well. And I think that's going to be a big part of what we're going to be talking about here. Before we get into that, though, just to talk a bit about your two institutions then and how they work together and what the connections.

9:46And as you say, Melanie, that complementarity is. I mean, Amir, do you want to talk first maybe about the Justice Climate Fund? What exactly is the model then for how that works? Sure. So we were created in 2023 and then operational in 2024, really by a coalition of a network of community development financial institutions at CDFI term again, with the intent of accelerating their ability to do more clean energy lending themselves. So imagine a network of 400 of these lenders, everything from small nonprofits in local towns to national level community banks that are all coming together and saying, hey, the only way that we're going to do clean energy lending is if we build an institution that helps us to focus on that work.

10:41And it was also done with the intent of winning funding under the Greenhouse Gas Reduction Fund of the Inflation Reduction Act. We were awarded a$940 million grant that was intended to be deployed amongst that network of 400 lenders, again, to accelerate their work locally in clean energy finance. with the changes in the legislation moving from the IRA into the Trump administration. We sat back and said to ourselves, a Justice Climate Fund, that access to federal funding obviously now is not only limited, but frankly litigated. So we asked ourselves, what is the future of our organization? And what we realized was, let's stick to our knitting, continue to work in partnership with organizations like Hive and also work through the network of community lenders, but less shift to being less of a grant administrator to more of a facilitator of risk management products and services to that community network.

11:46And so that's what we do today. And it's all really still built around partnerships. Right. And so Melanie, then tell us about Hive. What do you do then? And then how does your work fit together with what the Justice Climate Fund does. Sure. Well, High Fund is a collaborative fund that raises money and makes grants to groups that accelerate the transition from dirty to clean energy across the U.S. South. And we do that in ways that, you know, get us closer to our vision, not just of cleaner and more just energy future, but also healthier, safer and more prosperous communities. And so collaborative funds are a part of philanthropy, actually one of the fastest growing forms of philanthropy.

12:25And what that means is instead of having just one wealthy person that is left in endowment or vehicle that's left in endowment, we pool resources from multiple donors, sometimes other foundations, sometimes individuals. And that allows us to support multiple stakeholders over a pretty longer period of time to address complex systemic challenges. And so we pair that funding at Hive Fund with a deep community knowledge to be able to drive impact that individual funders often can't achieve alone. And we rely on an expert staff that lives all across the region that has specific understanding of, you know, the unique energy landscapes, which are very different from state to state in the U.S., the cultural and political realities to be able to identify organizations on the ground who are able to help move us towards a sustainable energy future.

13:18and to resource them in coalition. And that partnership with Justice Climate Fund is a natural one because we specifically fund in the U.S. South where it's been really important for us to make sure that they're enabling conditions for a transition to happen. And one important part of that is a financial ecosystem that allows that to happen. And so since our founding in 2019, we've invested deeply in the financing ecosystem in the South. We helped to seed or start green banks across the region, which are specialized financing vehicles that focus on clean energy or renewable energy. But we've also helped to resource that coalition that Amir spoke of that started the Justice Climate Fund.

14:04So we gave the first grant to bring those folks together to create what will become the Justice Climate Fund. but have also invested heavily in scaling up financial professionals that have this long history in working in CDFIs that we've talked about or credit unions. So they have a long history of lending in low income communities or moderate income communities, but often needed to scale up or develop some expertise in this grain or renewable lending. And so we've invested heavily in making sure that that expertise could live in our region. And I should add that Climate Week is important for us because it's actually the first anniversary of Melanie and I working together on this project.

14:47So it's an exciting time for us. Yeah, that is fantastic. Very nice to be marking that anniversary. So give me some specifics then. What are the types of project that you're supporting and financing? Yeah, I could give just a couple of simple examples. Um, what, what we're looking to finance are a lot of community-based solar projects, for example, uh, things that generate, that are sort of around energy generation and distribution. Um, there's a number of opportunities to help, uh, finance energy retrofits, uh, often on residential or small commercial projects. And again, the driver behind a lot of it is that these businesses, commercial real estate owners, residential real estate owners are trying to find ways to lower their energy expense.

15:41And so what we're really doing is bringing together capital that is, in some cases, concessionary, in some cases, market driven. But it's often just bringing the basic technologies to those communities and to those projects. A lot of the work is not the most innovative things. A lot of it is proven technologies that we're trying to ensure are actually arriving in those communities in ways that, frankly, they're not being introduced normally or there's not a normal market for it. And another part of it that by doing it this way enables is a little bit more ability to quality control installers and other members of the development community working in those communities to ensure that, you know, that you're getting the best outcomes also.

16:29So not just the energy savings, but the quality of installation and all those things as well. And I can give a few examples, some residential examples that we've supported. We worked really deeply in Harris County, Texas, which is the county where Houston is and have supported partners there, a group called West Street Recovery and Solar United Neighbors to build what we call a hub home initiative. And, you know, I think people may think back to 2021 where they remember a deep freeze in Texas where so many people lost power and electricity. And it was kind of in the aftermath of that deep freeze that this project came together.

17:07And it was, you know, community organizers working with a nonprofit solar developer that said, hey, what do we need in our communities for folks to be able to withstand the impacts of climate, be they hurricanes or these deep freezes? And so what a hub home is, is, you know, they're equipping local homes with solar panels and battery systems to create kind of these resilient hubs on a block by block level. and they've been really helpful in communities, particularly where it's difficult to get out, where there are flooding risks and people can't get to like a large resilience hub, then there's a home in their community where they can go.

17:46We've got a partner now, Miss Doris, who has a hub home and the power went out on her block and she was cooking dinner. She didn't know the power was out until someone knocked. And, you know, folks were able to come and charge their phones. They were able to be in the air condition on one of the hottest days of the year, they were able to plug up medical devices that were life-saving for members of the neighborhood. And so that is actually a project that grew to be part of Harris County's Solar for All application that ended up winning actually the largest Solar for All grant from the federal government under the Inflation Reduction Act.

18:22That's a type of project at the residential level that we're able to support. And then I'll just share a community level project. Amir talked a little bit about, you know, the after the Inflation Reduction Act funds kind of were frozen, the impact. And what we saw is, you know, that a lot of our partners who had built powerful energy solutions for their communities that they were already building had to pause work and that left communities abandoned. And we have a partner named Inner Wealth Solutions in North Carolina that decided to step up. They called in new partners to see if some of those projects could continue going.

19:01And they partnered with a town called Huntersville that's right outside of Charlotte, North Carolina. And they ended up developing what is now going to be the largest scale kind of solar facility of a rural electric co-op in North Carolina. And that facility will power the wastewater system and the water treatment system of that community. And so without federal funds, that project was stalled and we didn't think it was going to happen. And what our partners do are able to bring people back to the table, bring creative capital like the Capital Justice Climate Fund can provide philanthropic capital that we provide and make these projects happen in ways that move communities forward and lower the cost of communities.

19:44So energy costs for communities because water treatment and wastewater facilities are often the largest budgetary item after public safety on unimmunicable books. Yeah, because you mentioned cost then. That is presumably absolutely critical in all the discussions you have with communities and when you're thinking about which projects to support. I don't want to say people don't care about climate change, but it is obviously the case that energy affordability has risen up everybody's agenda in the past couple of years. electricity bills have on average in the united states been rising faster than inflation it's of course a very hot topic of discussion in connection to data centers and the impact that they're having on power demand and therefore bills and as i'm sure you know and something we've covered quite a bit on this show there is a very hot debate over the cost of low carbon energy um is it really cheaper than fossil fuels if you add up you know solar plus batteries you've got to invest in those things?

20:46Is it really possible to reduce people's bills? And presumably, very much particularly in the lower income communities where you're operating, those issues of affordability are absolutely paramount. So how do you think about those questions? How do you make sure that the projects that you're supporting do actually deliver benefits in terms of affordability for the communities they're serving. I can take that more from the financing side and maybe Melanie can address it a little bit more granularly. One of the important decisions that we made, and again, I'm even going back to that night at Climate Week last year when Melanie and I sat down and really talked about this issue, was a recognition that if federal funding that was initially designed to bridge some of that affordability was not going to be available, what would be the tool that we could build and develop that combined philanthropic money, private sector capital, and other sources to be able to generate that project volume that would still be affordable in those communities?

21:54Because to your point, Ed, it's not just affordability, it's also just access in many cases that's missing. Sorry, access to what, to finance or to what? Access to financing to even do the simple improvements, whether it's a commercial pace or residential pace transaction where you're doing weatherization improvements. If you are a renter in a multifamily project, you're disconnected, obviously, from what a homeowner has, which is the ability to have a HELOC to finance that change. So how do we help the typical low-income resident who is living in a rental situation be able to take advantage of energy savings in their community?

22:38In New York, they have laws that force it, but that's not the case across the country. So a lot of what we tried to do and what we're building is actually developing a model around credit enhancement and credit risk mitigation. So providing loan losses, reserves for a lender or an investor, for example, by saying to that lender or that investor, we get it. You want to do the project. You're willing to do the project at a rate that's affordable, but you have some hesitancy because of the risk associated with it. So what we're willing to do is come in and provide that loan loss reserve funding or credit enhancement funding or help to syndicate the loan out so it's not sitting on your balance sheet forever so that you're comfortable financing that activity.

23:28And so that's a real critical part of how we're addressing it. We can't make up for the loss of the IRA and all the funding that would have come through the Greenhouse Gas Reduction Fund. But if we know that a credit enhancement,$1 of credit enhancement, can generate$20 of capital from the private sector, why don't we focus on bringing that$1 of credit enhancement to the market? And sorry, a couple of quick footnotes on acronyms there. HELOC, that's Home Equity Line of Credit, right? Which is another way of borrowing against your home. And then, sorry, PACE is one I can never remember. What does PACE stand for?

24:04Property Assessed Clean Energy Financing. Right. So that's a way of, again, what being able to use the value of your home to get financing for investment in solar or whatever. Right. And with PACE, it's really tied to your tax bill in many ways. So it's even more specific that your financing is working to benefit. I'll just give some illustrative examples of Amir's point. I think philanthropy, again, cannot replace what the federal government would have done in terms of scale. But one of the things that we can do is, you know, really support pilots. As Amir said, many of these are models that have worked in other places.

24:42We just haven't tried them or invested in them in low income communities or often rural communities across the U.S. And so what we've been able to do is partner with communities to be able to run a pilot, have good data that then they can prove, hey, this is worthy of investment. The assessments that we have had around risk because of our assumptions of this community actually don't bear out. And so we get good data and are able then to move more of those projects. The market is able to move those. And I think one good example is we did a partnership with the church, New Bethel AME Church in Lithonia, Georgia.

25:22And, you know, it is a church on Sunday. They hold church service, but they also have a community center. They've got a community pantry. They feed people, I think, five days a week. And we were able to support them and developing a solar and battery system for their church and also EV charging station for their church. And after the first month that it was operational, their energy bill decreased by twelve hundred dollars, twelve hundred dollars a month. And so when you think about even if there's an upfront investment, that long term kind of saving of twelve hundred dollars a month is something that not only kind of proves to investors that they'll get their money back on the end, but it also proves to other churches or other community centers that this is an investment worth making in the sustainability of your organization.

26:13And it will be the project of people saving money on their energy bills that makes them commit to this kind of project. Those climate arguments would figure some way down the list of reasons for going ahead with it, right? I think that, you know, people are moving for many reasons, but I think that you're right. Pocketbook reasons, those affordability reasons are at the top and they don't just bear out at the organizational or the residential level. You know, we do a lot of work in Texas. And as people think of Texas, they think about it as the energy capital of the world. And for most people, that means oil and gas.

26:48But a lesser known part of the story is that Texas actually rivals California for production of clean and renewable energy. And so Texas ranks number one in the United States for wind production with wind supplying more than 20 percent of Texas electricity mix. And they also, you know, lead the nation and utility scale. So that's large scale solar production. And if you think about a place like Texas, it is, you know, likely not a climate argument that is leading the charge. I think what it points to is this reality that renewables are common sense solutions that work for a broad range of communities.

27:27And, you know, especially those that are seeking to address issues of energy affordability and reliability, they're going to turn to renewables more and more.

27:40Clean energy projects can transform communities, lowering energy costs, supporting cleaner air and water and building economic and environmental resilience. Justice Climate Fund mobilizes catalytic capital and works with a national network of more than 400 community lenders and partners to make that happen. By bringing together capital, flexible financing tools, technical assistance and partnerships with investors and philanthropic funders, JCF unlocks the capital needed to move clean energy projects forward in under-resourced communities across the United States. The result? Lower energy costs for families and businesses, quality clean energy jobs, greater energy independence and stronger, more resilient communities.

28:18See how Justice Climate Fund is powering clean energy investment in communities across the United States at justiceclimatefund.org. I think another part of it that's really, and this is tied to what Melanie is saying, and not being so narrow and thinking about how you win the day and moving forward with clean energy financing opportunities, is recognizing that a lot of what is going to drive energy financing is correlated to something else that's critical in that community as well that needs financing and needs financial support. So if you go across the Southeast, for example, yes, there's clearly a energy affordability challenge.