Community Benefits Plans: Driving Equitable Clean Energy Development
Learn what community benefit plans (CBPs) and community benefit agreements (CBAs) are, how they work, and what they contribute to the energy transition.
The Department of Energy (DOE) is emerging as a leader in ensuring that communities and workers benefit directly from federal investments in infrastructure and clean energy. DOE requires community benefits plans (CBPs) as a part of all funding opportunities and financing programs made available in the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) of 2022. DOE has developed a framework and scoring criteria to evaluate CBPs as part of all IIJA and IRA programs. And this is not a check-the-box exercise; for most grant programs, CBPs are worth 20 percent of an application’s overall technical merit score. In this article, we provide an overview of CBPs, the key differences between CBPs and community benefit agreements (CBAs), and what DOE’s requirements are for successful CBPs.
What’s the difference between a CBP and a CBA?
First off, community benefits plans (CBPs) and community benefits agreements (CBAs) are distinct, although the different components or specific benefits can appear in either.
CBPs are non-binding agreements that are typically developed by community organizations and developers. They outline the community’s priorities for a development project and the developer’s commitments to those priorities, which can include things like affordable housing, job creation, local hiring preferences, etc. CBPs are not legally enforceable, but they can be a valuable way for communities to engage with developers and influence the development process. For most funding opportunities and financing programs, DOE requires that applicants submit a CBP that explains how it has or will engage with community stakeholders and workers and how its project will support local needs.
CBAs, on the other hand, are legally binding agreements that are negotiated between community organizations and developers. They outline the specific benefits that the developer will provide to the community in exchange for the community’s support of the project. CBAs are enforceable in court, which gives communities a stronger guarantee that the developer will follow through on its commitments. While a formal CBA is not required as part of a CBP for a DOE application, a CBA can be an outcome of a CBP.
In general, CBAs are more powerful tools than CBPs in ensuring that projects truly benefit the community. However, CBAs can be more difficult to negotiate, implement, and enforce. CBPs are a more flexible option that can be used for a wider range of development projects. Successful DOE applications will include a strong CBP that explains how the developer has engaged or will engage with local stakeholders and how the project will benefit workers and residents (specifically those from underrepresented groups).
What can be included in a CBP?
Community benefits can vary depending on the specific project and on community needs or priorities. They may include commitments to hire locally, contributions to economic trust funds, guarantees for local workforce training, or really anything that all parties can agree to prioritize. These agreements need not create winners and losers; instead, they can create a mutually reinforcing relationship where developers, communities, and government entities all stand to gain unique benefits. Here are some examples:
- Financial contributions to community organizations: The developer agrees to make financial contributions to community organizations that provide services to the community. This can help to support programs that address issues such as poverty, homelessness, education, and wrap-around services.
- Investments in affordable housing: The developer agrees to invest in affordable housing in the community.
- Protecting the community’s health and natural resources: The developer agrees to take steps to protect the community’s health and natural resources, which can include measures such as reducing air, land, and water pollution, conserving energy, using sustainable materials, and site remediation, among others.
- Targeted hiring: The developer agrees to hire a certain percentage of local residents for the construction and/or operation of the project. The agreement may also specify that a portion of jobs must be filled by people from specific underrepresented groups, such as low-income residents, people of color, formerly incarcerated individuals, or people with disabilities.
- Training and apprenticeship programs: The developer agrees to provide training and apprenticeship programs for residents who are interested in working on the project. These programs build career pathways and can ensure that community members have the skills they need to get good jobs in the construction and/or operation of the project. They also ensure that the developer has the skilled workforce in place to complete the project.
- Worker benefits and protections. The developer agrees to pay prevailing wages (a floor for each occupation that all workers and contractors on a project must receive), include strong benefits (i.e., health care and retirement), and allow workers the free and fair right to form a union. The IRA further incentivizes this benefit by requiring project developers to meet prevailing wage and apprenticeship requirements to be eligible for the full value of many clean energy tax credits.
While CBPs can indeed offer significant potential for communities to engage in project development, it’s important to acknowledge the various ways in which they can veer off track. When communities engage in negotiations for a CBP with a developer, they hold the opportunity to influence the project’s development trajectory and the array of benefits it could potentially offer. However, the success of CBPs can be hindered by challenges such as power imbalances and lack of follow-through in ensuring the fulfillment of agreed-upon terms. Addressing these challenges requires fostering transparent communication, establishing mechanisms to redress power imbalances, and implementing robust monitoring frameworks to ensure that CBPs are executed as designed.
How does DOE evaluate CBPs?
The guidelines for a strong CBP are intentionally flexible to suit the specific needs of projects and communities, but they must be specific, actionable, and measurable and address each of four key pillars:
- Meaningful Community and Labor Engagement: Projects should foster meaningful engagement with the community and labor organizations, ensuring that their voices are heard and that their needs are addressed. This includes seeking input, conducting consultations, and incorporating feedback throughout the project lifecycle.
- Investment in America’s Workforce: CBPs should outline strategies to invest in the development and advancement of the local workforce. This may include job training programs, apprenticeships, and initiatives that enhance the skills and employability of individuals in the community.
- Diversity, Equity, Inclusion, and Accessibility: Projects should prioritize diversity, equity, inclusion, and accessibility in the workplace. This involves creating opportunities for underrepresented groups, addressing systemic barriers, and promoting equal access to employment and advancement.
- Justice40 Initiative: Community benefits plans should contribute to the Justice40 Initiative’s goal of ensuring that at least 40 percent of the overall benefits of clean energy investments flow to disadvantaged communities. This ensures that the benefits of clean energy development are shared equitably, addressing historical disparities and promoting social and economic justice.
While most of DOE’s programs are funding opportunities, the Loan Programs Office (LPO) is different in that it provides low-cost financing to energy projects in several different categories. Although applications are not scored on technical merit as are grant applications, LPO still requires CBPs as part of its application process. Specifically, LPO considers the quality of a CBP when assessing loan repayment prospects. Early and meaningful engagement with communities and labor, a clear plan for ensuring that a skilled workforce is ready to staff the project, and a focus on community engagement can significantly reduce or eliminate project implementation risks, opposition, and slowdowns, strengthening LPO’s confidence that the loan will be repaid.
Why Should I Care?
While drafting a quality CBP may be new territory for potential applicants, it can be a mutually beneficial element of a successful project. For applicants (utilities, renewable developers, manufacturing companies, states, and more), going through the process of creating a CBP can substantially increase chances of success. By building trust, project developers can design and implement projects that communities will support rather than fight, which is especially important for large projects that have significant impacts on communities.
From the community perspective, a CBP cannot solve all its problems. Still, for community stakeholders like environmental justice organizations, labor unions, local government officials, and trusted local institutions, the CBP is a foot in the door — it gives communities and often underrepresented groups a seat at the table as projects emerge. And the process of developing a CBP in coordination with community stakeholders can help ensure that projects address rather than ignore or exacerbate historical harms and inequities.
By fostering collaboration between developers and local communities, community benefits plans can be leveraged to ensure that clean energy projects deliver tangible benefits to all stakeholders. When implemented with thorough monitoring and evaluation mechanisms, they can support long-term community and labor engagement, workforce training and investment, and the advancement of diversity, equity, and justice priorities. Community benefits plans pave the way for a cleaner, fairer, and more inclusive energy transition.