Other recipients of a portion of the $20 billion in frozen funds have also sued to regain access to the money. The Coalition for Green Capital filed a lawsuit against Citibank on Monday, and Power Forward Communities sued Citibank on Tuesday.
The Trump administration’s efforts to freeze funding have been rebuffed in several court battles over the past months. Lena Moffitt, executive director of advocacy group Evergreen Action, said in a Tuesday response to Zeldin’s termination announcement that the “11th-hour move to terminate $20 billion in clean energy funding is a lawless, desperate political stunt ahead of a court fight they know is an uphill battle.”
Moffitt added that the blocking of funds from the green bank program will “raise energy costs for low-income households, stall job creation, and kill investments in home energy upgrades, community solar, and small business clean energy projects across the country.”
It’s also hampering the ability of the recipients themselves to operate. After more than two weeks of being unable to access its funds, Climate United is running out of cash to pay operating expenses such as salaries and rent, its lawsuit states. It’s also unable to honor its financial commitments, which will “erode trust in Climate United as an institution, damage its reputation, and cause profound harm to the local organizations that rely on Climate United funds to develop critical energy projects that reduce energy costs and create jobs,” the lawsuit says.
“Our borrowers can’t draw funds, which means projects are stalled,” said a representative of one of the nonprofits, who was granted anonymity to speak frankly amidst online attacks against the organizations involved in the green bank program.
Unlike grants that are paid directly to recipients, the Greenhouse Gas Reduction Fund is set up as a lending and financing institution, this person added. That means that the $20 billion in federal funding will flow to companies and groups with the expectation that they will pay it back, often with additional interest payments, to the lenders, which can then use that incoming capital to make more investments.
This model was adopted from the green banks now operating in at least 17 states that have for more than a decade offered low-cost loans and other financial support for carbon- and pollution-reducing projects, with a focus on low-income and disadvantaged communities.
Longer-running green banks have successfully expanded their scope of lending by “de-risking” commercial opportunities such as solar and energy-efficiency projects for affordable housing. That’s allowed them to grow their pool of capital for making future loans, as well as brought in private-sector lenders to expand the markets they’ve helped de-risk.
In that sense, the program is “one of the savviest investments the federal government could make,” Adam Kent, director of green finance at the Natural Resources Defense Council, said in a Wednesday statement. Under the program’s guidelines on pulling private-sector capital in to match its financing, “every federal dollar can deliver an additional seven dollars of private investment,” he said.
“If the Trump administration really cared about lowering energy bills, creating jobs, addressing the budget deficit and growing the American economy, it would be leaning into this program,” Kent said. “Not cancelling legal contracts.”
