How to transform climate action planning

Advancing the U.S. EPA’s Climate Pollution Reduction Grant program is key for states, local governments, Tribes and territories.

In brief

• The Climate Pollution Reduction Grant program provides funding for developing and implementing plans for greenhouse gas and air pollution reduction.
• The program requires multi-sector collaboration and public engagement to develop policies that are innovative, scalable and in harmony with existing efforts.

The U.S. EPA’s Climate Pollution Reduction Grants (CPRG) program, authorized under the 2022 Inflation Reduction Act, is a stride forward on the United States’ path toward reducing climate pollution. The CPRG program provides funding for states, local governments, Tribes and territories to accelerate greenhouse gas (GHG) and air pollution reduction, address associated burdens on vulnerable communities and generate jobs and economic opportunity. Based on Ernst & Young LLP’s experience supporting diverse CPRG programs across the country, governments that emphasize broad, cross-sector collaboration and strategic implementation planning are well positioned to drive these impacts in their communities.

Collaboration is key in driving a successful CPRG program

The CPRG Phase I climate action plans and Phase II implementation grants underscore that reducing climate pollution is a whole-of-society challenge that crosses sectors, including transportation, buildings, energy and industry. Developing an effective and impactful climate action plan and applying for implementation grant funding requires collaboration from diverse stakeholders. To this end, of the 25 grantees awarded CPRG implementation funds, eight were coalitions of multiple jurisdictions.

One way to support broad and collaborative coalitions is to recognize and build upon existing climate, sustainability and energy planning efforts. GHG reduction policies and programs included in climate action plans can be aligned with existing policy goals. If a state, for example, has existing economic development targets for electric vehicle production, GHG reduction measures pertaining to vehicle electrification are more likely to have buy-in across key stakeholders.

Engaging public stakeholders to meaningfully incorporate feedback is also an important component of climate action planning, and developing a robust public engagement strategy, tailored to local contexts, is critical. Various channels are available to organizations ranging from in-person, town-hall-style meetings to online forums and surveys. Through these avenues, communities can express their priorities, like lower utility costs, and their concerns, like increased construction and noise pollution.

Lastly, given the breadth and complexity of the CPRG’s requirements, collaboration across interdisciplinary teams and subject-matter experts is essential; the CPRG program is bigger than any single department or agency. A comprehensive approach to climate action planning recognizes that experience across sustainability strategy, data analytics, tax planning and compliance, workforce development, public engagement and more are necessary for governments to develop holistic plans that align with broad policy objectives, reflect the priorities of stakeholders and communities and seize the opportunity of implementation grants.

From planning to action

However, the demand for federal funding for climate action plans exceeds award availability, and only a small portion — fewer than 9% — of CPRG implementation applications were awarded. This gap in direct funding presents a challenge but also an opportunity for innovative new implementation strategies that can help ensure that these critical initiatives do not lose momentum. These strategies should be designed to leverage incentives provided by the Inflation Reduction Act (IRA) and focus on collaboration within government as well as with the private sector.

Regarding incentives, the IRA introduces various tax credits to catalyze investment in clean energy in underserved communities, aligned with the policy goals of CPRG. For example, the IRA modifies and extends the Clean Energy Investment Tax Credit and the Renewable Energy Production Tax Credit, providing targeted incentives for projects that are expanding economic opportunity to communities burdened by air pollution or dependent on the fossil fuel industry.

Also, to encourage widespread investment in clean energy, the IRA offers homeowners and businesses credits for energy-saving property improvements and extends tax credits to state, local and Tribal governments, as well as non-profit organizations. CPRG implementation strategies can leverage these incentives to help finance applicable policies and programs, addressing funding gaps.

In addition to leveraging incentives offered by the IRA, implementation strategies for climate action plans should emphasize collaboration between regulatory bodies, policymaking entities, implementation agencies and budget and contract offices. For example, to support plan implementation at the scale and pace necessary to achieve ambitious targets, working with contract offices to identify and address gaps in procurement capacity is critical. Additionally, after evaluating the workforce requirements for plan implementation, human resources offices should be involved in hiring and upskilling project delivery and support staff. 

Forging partnerships with the private sector can also support the need for up-front capital to kickstart projects that promise long-term energy and cost savings. This not only allows the public sector to share risk with private stakeholders, but also allows private companies to pilot and build a market for new technologies, and governments to benefit from these investments. Aligning the innovation and resources of the private sector with the public sector’s goals can further accelerate the transformative potential of the CPRG program.

This article includes contributions from Colin Tetreault, Larry Jones, Margaret Ross-Martin, Julien Joy and Quiana Dawson.