NEW YORK– The just-passed Inflation Reduction Act offers some big opportunities for community development credit unions (CDCUs) and minority depository institutions (MDIs), according to Inclusiv.
Inclusiv said components inside the 730-page, $430-billion bill will allow CDFIs and MDIs to “expand their green lending and ensure the benefits of a greening economy are felt by all,” according to Inclusiv.
“This is a historic opportunity for community development credit unions to access flexible capital to support households in reducing energy cost burdens and preparing for climate events,” said Inclusiv CEO Cathie Mahon. “The Inflation Reduction Act will enable community lenders to create and scale programs to help their members purchase energy efficient appliances, invest in heating\cooling systems, and access solar either directly on their homes or through community solar projects. It also provides opportunities to invest in and support green businesses creating jobs and opportunity in the greening economy.”
Inclusiv described the Inflation Reduction Act’s $27 billion investment in green lending through the Greenhouse Gas Reduction Fund as a “crucial step forward to address the climate crisis,” and added, “This Fund has the potential to support deeply needed projects that will reduce energy cost burden, increase climate resiliency, and expand energy efficiency and renewable energy efforts. Inclusiv looks forward to working with the many organizations and allies who worked to make this Fund a reality to ensure that capital will be channeled to organizations on the ground that are best positioned to meet local needs.”
‘Critical Investments’
Inclusiv added it believes it is “critical that these investments not only reach, but prioritize people and communities most affected by the climate crisis, which are often the same people and communities who have been shut out of the mainstream financial system by redlining and other discriminatory practices. CDCUs, MDIs and CDFIs, which specialize in serving the people and communities mainstream financial institutions fail to serve, should play a leading role in ensuring this historic investment in climate finance is deployed successfully.”
According to Inclusiv, its Center for Resiliency and Clean Energy trains community-based lenders across the country on green lending, building capacity and infrastructure to meet the energy efficiency, resiliency and other climate finance needs of communities hardest hit by climate change.
Inclusiv reported that more than 350 CDFI, credit union and MDI lenders already offer green lending products and have originated more than $2.68 billion in green loans in recent years.
‘Deep Impact’
“Many of the credit union lenders in this group offer dedicated green loan products for low- and moderate-income and BIPOC communities,” Inclusiv said. “In addition to their deep impact, these community-based lenders are typically able to leverage public investment more than tenfold, putting the potential scale of financing for clean energy and climate resiliency from the Greenhouse Gas Reduction Fund at more than $200 billion.”
Inclusiv said that one alumni of its Center for Resilience and Clean Energy, Cooperativa Jesús Obrero, is already part of the critical infrastructure of its community in Puerto Rico.
“In the event of a natural disaster, we are poised to step in and provide alternative power, access to water, and emergency financing to those who need it,” said Aurelio Arroyo, EVP with Cooperative Jesus Obrero. “The Greenhouse Gas Reduction Fund means we will be able to expand our support to LMI communities across Puerto Rico and accelerate life-saving solar projects throughout the island.”
Filling a ‘Gap’
“We have been serving the Tucson, Arizona community for decades and have adapted our products and services to reflect our members’ needs,” said Vern Babilon, CEO of Tucson Old Pueblo Credit Union. “A few years ago, we noticed a gap in the solar lending market and stepped in to provide affordable solar financing. Fast forward to today and we are the number one solar lender in the Tucson market. In 2022 alone, TOPCU originated over $25 million in new solar loans, providing 759 households with solar arrays. We have created a name for our credit union as a financial institution that cares about the climate, our members, and the local economy.”