Governors' Wind Energy Coalition

Some local governments are much more prepared than others to apply for money and programs under the landmark federal law.

The passage of the Inflation Reduction Act last fall was like turning on full-blast spigots of money for city governments to help pay for climate and energy programs that they’ve long wanted and needed.

But many cities and other local governments lack the expertise to identify the programs available, or to navigate the sometimes arduous process of applying for a share of an estimated $391 billion. And, the programs are a moving target as the federal government is still in the process of writing and updating rules.

So the spigots are there, but they’re difficult to operate, and the owner’s manual is a work in progress.

“Cities are really central implementers of the IRA,” said Amy Turner, a senior fellow at the Sabin Center for Climate Change Law at Columbia Law School.

She explained that the law was written in a way that empowers local governments, with provisions that allow for “direct pay” of tax credits, which means that an entity with no tax liability—like a local government—can receive credits.

This is different from the way major clean energy tax credits have worked in the past. Before direct pay, cities needed to do projects in partnership with companies that would receive the tax credits. Cities can still work with outside developers, but now they have flexibility to consider more options than before.

So what should cities do to respond to this opportunity? They need to work hard and fast, and brace for a lot of paperwork.

“It’s a great problem to have,” said Erick Shambarger, environmental sustainability director for the city of Milwaukee’s Environmental Collaboration Office. “But it is a real challenge.”

Milwaukee has some built-in advantages because the Environmental Collaboration Office had a wish list of projects that existed before the IRA, and its staff knows how to navigate the application process.

One example of a project: The law includes grants for urban forestry that could be used for a tree-planting initiative.

“This is an opportunity to plant thousands and thousands of new trees in the city of Milwaukee and help address a lot of environmental justice issues, like urban heat islands and things of that nature,” Shambarger said.

To put together an application, the city government reached out to community groups, public schools and others to meet and draft the specifics of what a project would look like.

This is one of eight applications related to the IRA and the 2023 Bipartisan Infrastructure Law that his office is working on, and that number is likely to grow. Others include applications for climate pollution reduction grants and EV charging infrastructure.

Meanwhile, many other cities aren’t large enough to have staff that can devote the time needed to explore opportunities and apply for grants.

“In my opinion, cities need to look at sustainability staff as a core function of their work now,” Shambarger said. “And that’s not just large cities. I think there’s a huge opportunity in cities across the country. Climate change is a major threat, as is [a lack of] environmental sustainability, and cities of all sizes can stand to allocate some staff to these issues.”

Residents can play a role by asking what their local governments are doing related to the IRA and advocating for the kind of staffing that Shambarger is talking about.

Universities and nonprofits can help cities that are smaller or have fewer resources. The Wisconsin Local Government Climate Coalition, a partnership between some of the state’s city and county governments, is an example of the kind of organization that can be essential.

Turner wrote a blog post for the Sabin Center last week that explores some of the challenges for cities related to the IRA. She expects that all but the largest cities are not going to be able to fully commit to getting the most from the law. If too few cities and other entities step up, then the actual spending on the law could be less than the projected $391 billion.

“The vast, vast majority of our communities around the country” are starting at a disadvantage, she told me.

The inequity goes beyond size and resources. Some local governments are in states that have restrictions on clean energy projects, or cumbersome processes for getting projects approved (and some state governments, like in South Dakota, are making a point of refusing to participate in some IRA initiatives).

This dynamic of some cities being more forward-thinking than their states on climate issues is nothing new, although the potential for negative consequences is greater than before.

The larger point, and a recurring theme in much of what I’ve written about the IRA these last few months, is that there is a vast amount of work ahead for the country to come anywhere close to taking full advantage of the law.