Maintaining Momentum: Alternative Funding Guide for State Energy Projects

This guide by RMI provides strategies for U.S. states to fund priority climate measures that were not covered by the EPA's Climate Pollution Reduction Grants (CPRG) Implementation Grants. It outlines how to build 'capital stacks'—combinations of federal grants, tax credits, and low-interest loans—across transportation, electricity, industry, buildings, and waste sectors to maintain momentum on state Priority Climate Action Plans (PCAPs).

• The EPA's Climate Pollution Reduction Grants (CPRG) Implementation Grant (IG) program was significantly oversubscribed, with 299 applications totaling over $33 billion submitted for a $4.3 billion funding pool. While 13 states received awards, the majority of climate action measures in state Priority Climate Action Plans (PCAPs) remain unfunded.
• RMI recommends that states construct 'capital stacks' to fund unfunded measures, prioritizing private capital for projects with established returns on investment and strong credit ratings. For other projects, states should stack federal grants, tax incentives (using direct pay or transferability for non-taxable entities), state budget funds, and low-interest federal loans.
• In the transportation sector, states can fund public fleet electrification using the 45W Tax Credit for Qualified Commercial Clean Vehicles and the 30C Alternative Fuel Infrastructure Tax Credit. For private medium- and heavy-duty vehicle conversion, states can use the RAISE program for scrap-and-replace initiatives or the Loan Programs Office (LPO) via the State Energy Financing Institution (SEFI) program.
• For electricity and distributed energy resources (DERs), the Inflation Reduction Act (IRA) provides production tax credits (PTC) and investment tax credits (ITC) with bonus adders. These adders can increase the ITC value to 70% of project costs based on domestic content, location in energy communities, or benefits to low- and moderate-income communities.
• Industrial decarbonization is identified as the most impactful sector for GHG reduction, though most federal grant timelines have passed. States are encouraged to utilize federal tax credits and LPO financing, including the Title 17 Innovative Technologies program for non-commercialized technologies like hydrogen and CCUS.
• Residential building decarbonization is the most common measure in state PCAPs. Low-income households can stack the Home Efficiency Rebate (HER) and the Home Electrification and Appliance Rebate (HEAR), potentially receiving up to $8,000 for insulation and $14,000 for electric appliances per unit, provided states use modeled performance.
• Commercial building retrofits have fewer federal programs than residential ones, but can utilize the 179D Energy Efficiency Commercial Buildings deduction, which offers up to $5 per square foot. MUSH market buildings (municipal, universities, schools, and hospitals) may also access specific DOE and EPA grants.

APA

RMI (2024). Maintaining Momentum: Alternative Funding Guide for State Energy Projects. https://rmi.org/resources/maintaining-momentum-alternative-funding-guide-for-state-energy-projects/

Chicago

RMI. Maintaining Momentum: Alternative Funding Guide for State Energy Projects. 2024. https://rmi.org/resources/maintaining-momentum-alternative-funding-guide-for-state-energy-projects/.

Wikipedia

{{cite report |author=RMI |title=Maintaining Momentum: Alternative Funding Guide for State Energy Projects |date=15 August 2024 |url=https://rmi.org/resources/maintaining-momentum-alternative-funding-guide-for-state-energy-projects/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024maintaining, author = {{RMI}}, title = {{Maintaining Momentum: Alternative Funding Guide for State Energy Projects}}, institution = {RMI}, year = {2024}, month = aug, url = {https://rmi.org/resources/maintaining-momentum-alternative-funding-guide-for-state-energy-projects/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }