Credit Unions Are Key to Reaching Climate Justice Goals

The time to create equitable environmental, energy and financial policy in the U.S. is now. The Greenhouse Gas Reduction Fund (GGRF), a key component of the Inflation Reduction Act that will provide $27 billion in funding for clean energy projects and energy efficiency upgrades with a focus on “low-income and disadvantaged” communities, is not just a new capital source. It’s an opportunity to advance equity while addressing the climate crisis, and credit unions are poised to play a key role in this crucial work.

This week Inclusiv had the opportunity to testify before the Senate Climate Change Task Force to highlight how credit unions’ participation in GGRF will be critical not just to ensuring that the program reaches the low-income and under-resourced communities that Minority Depository Institution (MDI), Community Development Financial Institution (CDFI) and Low-Income Designated (LID) credit unions serve but also to meeting GGRF’s air pollution and emissions reduction goals.

GGRF is a groundbreaking program that has the potential to catalyze more than $200 billion in investments in clean energy and energy efficiency projects, and will create good jobs, improve health outcomes by reducing air pollution and address deep disparities in energy cost burdens in communities of color.

The GGRF’s combined focus on climate and equity is a natural fit for credit unions and will create important opportunities for emissions reductions as historically redlined and under-resourced communities are typically more pollution burdened, and residents have longer commutes and less efficient homes and appliances than residents of affluent communities. Addressing these disparities by investing in clean energy solutions, electric vehicle lending and energy efficiency home upgrades in low-income and under-resourced communities will result in significant greenhouse gas emissions reductions.

In addition to lowering emissions, energy efficiency upgrades and clean energy projects can support communities of color in lowering utility bills, which is particularly important because households of color spend a disproportionately large share of their incomes on energy costs compared to white households. This is called “energy burden” – the percentage of household income spent on energy costs. According to the American Council for an Energy-Efficient Economy, Black households have an energy burden that’s 43% higher than white households’ energy burden, while Native American households have an energy burden that’s 45% higher and Hispanic households 20% higher than white households’ energy burden.

Many credit unions already have green lending expertise, and every day more and more are working to develop new green loan programs to help their members address skyrocketing energy costs and build resiliency in their communities. According to research conducted by Inclusiv in 2022, 338 credit unions offer or are developing dedicated green loan products. In addition to the products that are marketed as dedicated green loans, hundreds of other credit unions around the country finance thousands of green home improvements and electric vehicles every day via standard home improvement and vehicle loans. Inclusiv member credit unions are leading clean energy and energy efficiency work in their communities and are ideally situated to reach individuals, households, and micro and small businesses with consumer and small business loans that are tailored to meet local needs and incorporate state and local incentive programs to magnify GGRF’s impact. And a sample of just 30 credit unions offering dedicated green loan products reported investing about $1 billion in green projects over the last three years.

A few examples of ongoing work that could be scaled with GGRF include:

National: Clean Energy Credit Union ($57.3 million, Englewood, Colo.) is an LID credit union with a national footprint that finances solar photovoltaic systems, electric vehicles, insulation, weatherproofing, air-source heat pumps, geothermal heat pumps, electric bicycles and more. In its first six years, Clean Energy has provided $197 million in clean energy loans for 8,500 households, helping to offset nearly 700,000 tons of carbon dioxide equivalent.

Arizona: Tucson Old Pueblo Credit Union ($229 million, Tucson) has been serving Arizona since 1935. It provided $25 million in solar loans in just the past year. It is one of the largest solar lenders in Tucson and a CDFI, demonstrating you can build a scalable business financing clean energy projects for low- and moderate-income households. It uses its green loan program to help make utility bills more affordable for these households.

Deep South: Since 1994, Hope Credit Union ($535 million, Jackson, Miss.) and its affiliates (HOPE) have served people in economically and socially vulnerable communities across Hope’s five-state footprint of Alabama, Arkansas, Louisiana, Mississippi and Tennessee. HOPE’s members face the highest energy burdens in the country, and HOPE is actively working to reduce this high energy burden. For example, HOPE supported energy efficiency improvements to housing in a majority Black neighborhood in Moorhead, Miss., that had fallen into disrepair. Energy audits revealed that the upgrades by HOPE’s partner Delta Design Build reduced energy leakage by 72% per home, saving homeowners more than $171 in utility expenses per month

Minnesota: Affinity Plus Federal Credit Union ($4.1 billion, St. Paul, Minn.) is an LID, member-owned cooperative, serving communities across Minnesota since 1930. Affinity Plus has led the green financing charge in Minnesota, becoming one of the first credit unions in the state to offer its members dedicated solar loan products. To date, Affinity Plus has funded over $15 million in clean energy loans to 95 households, helping members save on energy costs, reduce their carbon footprint and increase their home’s value.

In addition to the examples above, Inclusiv, in partnership with the University of New Hampshire, has provided green loan product development training to 400 lending professionals from 200 community-based financial institutions over the past 2.5 years. If your credit union would like to launch a green loan product, applications are open for the September cohorts of the Inclusiv-UNH Solar Lending Professional Training and Certificate program. Apply now, or contact Inclusiv’s Center for Resiliency and Clean Energy at cleanenergy@inclusiv.org to explore how your credit union and your members can access the wealth of Inflation Reduction Act programs and tax credits that can help lower the cost of clean energy improvements.

Cathie Mahon is President/CEO of Inclusiv in New York, N.Y.