Delivering Equitable and Meaningful Community Benefits via Clean Hydrogen Hubs
Case studies and best practices from advising developers of the DOE’s $7 billion Regional Clean H2Hubs program, plus lessons for future clean energy projects.
To achieve market liftoff, successful collaboration with local communities, labor groups, environmental justice (EJ) organizations, and tribal partners is necessary. Ensuring economic growth opportunities are coupled with true climate benefits and positive financial flows to communities with minimal impacts to environmental resources is a fundamental goal of the Biden administration. The development of the seven selected regional clean hydrogen hubs (H2Hubs) presents a front row seat on how this goal will be achieved.[*]
On October 13, 2023, the US Department of Energy (DOE) announced the hydrogen hubs selected from a competitive request-for-proposal process to receive a share of $7 billion to advance clean hydrogen production and strengthen the American manufacturing base. The hubs chosen for award negotiations will collectively catalyze over $40 billion in private investment, produce more than 3 million metric tons of clean hydrogen per year,[**] and eliminate 25 million metric tons of CO2 emissions from end uses annually. Each of these hubs promises the creation of local jobs, with some outlining additional funding pathways (see Exhibits 1 and 2).
PrimeEnergy & Environmental Research Center (EERC)
Construction Jobs3,067
Permanent Jobs7030
Project Labor AgreementNo
Select Community Benefits
(announced to-date)Equity ownership for tribabl communities via an equity partnership, and for local farmers and farmer co-ops via a private sector partnership that will allow local farmers to recieve more competitive pricing for clean fertilizer.
Select Community Benefits
(announced to-date)$14MM for regional Workforce Development Boards that will serve as partners for community college training and pre-apprenticeships.
The federal government is accelerating the national transition to clean energy development while balancing the needs of local communities and accounting for historic and persistent inequities. The main federal funding packages have paired access to financial incentives with new requirements. Specifically, the DOE’s Office of Clean Energy Demonstrations (OCED) requires all funding opportunity recipients to create and implement a community benefits plan (CBP).[4] OCED’s objective is to “promote broadly shared prosperity in the clean energy transition, reduce project risk, and build public support and trust for first-of-a-kind clean energy technologies.” Developers must create a CBP to discuss intentions to carry out meaningful two-way community engagement; adhere to the White House’s Justice40 requirements; set goals for diversity, equity, inclusion, and accessibility (DEIA); and create local, high-quality jobs. The DOE reviews CBPs for implementation status and effectiveness during Go/No-Go decisions for each phase of the project to ensure these plans are more than simple cursory exercises. These requirements are in addition to nonmandatory incentives such as Opportunity Zones and the Energy Community Tax Credit bonus, which further encourage development in low-income communities or those with previous fossil fuel infrastructure.[5]
The Infrastructure Investment and Jobs Act and the Inflation Reduction Act provide an opportunity for the clean energy transition to create mutual benefit for communities and companies in which their facilities are located. The following brief highlights lessons learned and resources available and discusses areas for process improvement from RMI’s advisory involvement in CBP development. Note that although DEIA and workforce investments are critical to holistic community benefits, this brief concentrates primarily on the two-way community engagement and Justice40 aspects.
Community and Environmental Justice Context
In the current landscape, heavy industry facilities are often located in or near marginalized low-income communities, typically with Black, Indigenous, and people of color (BIPOC) residents.[6] For example, historically redlined communities — those given the worst grades by the federally backed Home-Owners Loan Corporation in the 1930s — have nearly twice the density of oil wells as non-redlined communities.[7] A crucial aspect of this development is that residents of these communities are rarely invited to the table to provide input to shape the policies and practices that impact them, their families, and their neighbors.
Given this past and persistent discrimination, it is understandable that communities are wary and skeptical of heavy industry development, even if the intent is a cleaner energy future. There are legitimate reasons why communities are skeptical of replacing unabated fossil fuels with hydrogen, including health, safety, environmental, and water usage concerns, and that certain hydrogen production methods will perpetuate some fossil fuel industries. Additionally, any large societal change brings reasonable concern about local economic impacts. Quality jobs in renewable energy and related fields are a major thrust of the energy transition, but some question whether quality jobs will materialize where heavy industry development is sited, and whether these benefits will largely flow to external communities, as they have historically.
When communities do not have the opportunity to provide meaningful input on local development, they leverage the tools available to them, such as voicing concerns in public hearings, mobilizing grassroots opposition via social media campaigns, organizing protests, and initiating litigation. Communities deserve a say in development; they should have the opportunity to partake in the benefits, and the absence of inclusion can have consequences.
Highlighting the implications of this absence of engagement, an analysis of 53 utility-scale renewable energy projects revealed seven key sources of social opposition, resulting in a loss of nearly 4,600 megawatts (MW) in potential renewable power generation capacity due to opposition from local communities.[8] Notably, nearly 30% of this opposition stemmed from a lack of procedural equity: project developers failed to meaningfully engage with the local communities. Authors of the analysis stated that “incorporating all stakeholder perspectives from the outset of a siting process will probably save time and money. Better to deal with perceptions of possible risks and potential benefits before opponents have made up their minds, and banded together, to block the project.”
* The DOE has defined clean hydrogen as “hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide-equivalent produced at the site of production per kilogram of hydrogen produced.” In selecting projects for this specific funding opportunity, the DOE will evaluate life-cycle emissions for each project application and give preference to applications that reduce GHG emissions across the full project life cycle (Infrastructure Investment and Jobs Act P.L. 117-58).
** This represents one-third of the 2030 US clean hydrogen production goal.
Key Observations from Federal Funding Announcements
Developers have a wide and varying understanding of how to operationalize community engagement.
The traditional view of community engagement is centered around notifying residents of a development occurring in their vicinity. In some cases, developers hold public meetings, but the engagement approach is often characterized by a one-sided presentation of information, sometimes with a short question-and-answer session. These meetings are generally held at a time when and location at which only a select few community members can attend and at a project phase when design has advanced to the point that alterations become costly. Such one-way engagement is an important aspect of community engagement, but it is insufficient.
A variety of active FOAs outline expectations of comprehensive, meaningful, and accessible two-way engagement that provides surrounding communities early and significant opportunity to provide input on how a project impacts them, including the possibility to request relocation of a proposed facility. This is one of many important elements to operationalize in the engagement process. Given several factors, namely a developer’s experience, organizational structure, and procedures, the methods of conducting engagement or what is considered best practice can vary widely.
The desired outcome between developers and communities, community-based organizations, and EJ groups can appear to sit on either end of the scale.
Some Community Based Organizations and EJ organizations (such as the PEAK Coalition and EarthJustice) acknowledge the importance of hydrogen in the clean energy transition but think that it should be produced solely with renewable energy and used in priority sectors (e.g., steel, maritime fuels).[10] Clean hydrogen production, as seen in the selected regional hydrogen hubs, can vary by method, with some developers pursuing hydrogen production through steam-methane reforming and carbon capture and applying a range of end uses (e.g., power generation, blending in natural gas pipeline for residential use). The federal stance on clean hydrogen remains technology agnostic based on GHG emissions footprint threshold for hydrogen production pathways, and the incentives in place do not have any restrictions on end-use options.
The topics of hydrogen, related infrastructure, required off-take sectors, and heavy industry development are, at times, new to some EJ groups and community-based organizations. These resource-constrained organizations are juggling multiple objectives. Successful engagement necessitates a proactive approach by policymakers and developers to establish a transparent and equitable process of involvement: the onus is on developers to create accessible content that enables an equitable engagement process. What’s more, public engagement does not always lead to public acceptance. How these developers gain understanding of these group’s positions and how they can respect the wishes of the community are still yet to unfold for the H2Hubs.
The FOA leaves room for interpretation.
The FOA for the regional hydrogen hubs (FOA 0002279) and other industrial incentive packages intentionally lead applicants to interpret the requirements differently. OCED has explained that this was to encourage project developers to come up with ambitious proposals, however this presented challenges in the Community Engagement section. Determining the level of community engagement required over a long project timeframe and quantification of benefits that would be considered acceptable has led to varying level of detail and commitment by developers.
The main areas of ambiguity in the FOAs, which could be addressed in further guidance, are as follows:
FOAs under these Justice40 covered programs noted the requirement that 40% of the overall benefits of certain federal investments flow to disadvantaged communities but did not offer further explanation about what qualifies as the “overall benefits” of a project, nor how the 40% should be measured. Additionally, although the government has provided several tools to assist in identifying geographically defined DACs, they also state that non-geographically defined groups can be considered DACs but offer no guidance on how to identify these groups.
The FOA encourages — but does not require at any stage — applicants to negotiate and sign legal agreements with the appropriate communities and labor groups. By not requiring any specific type of agreement (community benefits agreements [CBAs], project workforce agreements, etc.) at project completion, OCED gives applicants the ability to enter into agreements that are appropriate for each relationship. Specific guidance on when and how (including capable organizations) to operationalize these agreements may benefit projects as they develop.
The FOA also does not make it clear what OCED expects for a community to stop or change a project. The announcement asks applicants to explain how much input a community will have and whether there is a pathway for the hub or project to consider changing target sites based on social considerations, but it does not indicate what is considered an acceptable amount of community control. Clarifying what level of project detail is made transparent at what stage will help relations. Organizations have already raised concerns over lack of shared information in the H2Hubs process to date.[12]
OCED has made statements that it will prioritize applications with plans to sign legally binding agreements with communities and labor groups and those that give community groups significant influence in site selection.
Community Engagement Overview
The H2Hubs funding announcement divides the project process and work to be completed into five sections: Application; Phase 1: Detailed Plan; Phase 2: Develop, Permit, Finance; Phase 3: Install, Integrate, Construct; and Phase 4: Ramp Up and Operate (see Exhibit 3). All applicants were required to complete a CBP for the application and are expected to implement the appropriate scope of community benefits activities for each phase. They will also be required to measure and report metrics during each phase and update their plan based on future activities and lessons learned. Progress in the CBP will be considered in the project Go/No-Go criteria at every phase, so it will be important for the selected applicants to set and meet ambitious but achievable milestones.
Exhibit 3. Process Outline: Community Engagement Steps for Hydrogen Hubs
RMI graphic. Source: Adapted from https://oced-exchange.energy.gov/FileContent.aspx?FileID=a3fd4d32-84a8-4fb4-bfef-ebb098c10320
Tools Available for Executing a Successful Engagement Process
As demanding as it may be for developers to initiate a meaningful, two-way community engagement process, material exists to make the process easier. The DOE has developed several tools to help applicants meet the community benefits requirements for new funding opportunities.
Guidance Documents
DOE and OCED have released several guidance documents detailing what is expected for these funding announcements:
CBP Guidance. OCED published tailored guidance on how to develop a robust CBP for H2Hub projects on the main OCED Funding Opportunity Exchange website under the FOA0002779 for Regional Clean Hydrogen Hubs.[13] A similar CBP guidance document was provided on the same OCED-exchange website to developers applying to FOA0002936 Industrial Decarbonization and Emissions Reduction Demonstration-to-Deployment .[14]
OCED has additionally created a CBP template to help guide applicants toward writing a CBP with the best chance of being awarded funding.[15]
The DOE has developed several reports on the Pathways to Commercial Liftoff for clean energy technologies. In particular, the report on Societal Considerations and Impacts provides a succinct overview of what is expected by clean energy developers in terms of the impact that new facilities have on communities.[16]
Stakeholder Mapping
Exhibit 4 is a static visualization of a traditional stakeholder map that illustrates the interrelationships between various primary, secondary, tertiary, and quaternary groups in a hypothetical energy development project, and the respective power dynamics that are unique to a hypothetical local context.
Exhibit 4. Mapping Key Local Players for Stakeholder Analysis
Source: Hadia Sheerazi
Characterization of Existing Burdens
The H2Hubs and Industrial Decarbonization FOAs direct applicants to characterize existing burdens for DACs using “EJScreen, disadvantaged community definition tools, or other analytic tools.” Although EJScreen is the only tool mentioned specifically, the DOE, the White House, and state government agencies have made other geospatial mapping tools available online to help developers understand communities, the burdens they face, and what sort of community benefits may be relevant in the local context.
Two helpful tools include the DOE’s Environmental Justice Mapping Tool and the White House Council on Environmental Quality’s Climate and Economic Justice Screening Tool (CJEST) both of which provide census-tract-level information on community burdens and identify tracts as disadvantaged if they reach certain thresholds. OCED has explicitly stated that identification of DACs via either tool is acceptable.[17] The Environmental Protection Agency also lists many state-specific mapping tools that can provide additional useful information that is not available in the nationwide tools.[18]
The Justice40 Initiative
Justice40 is a relatively new concept that was included in an executive order signed in 2021. Although it has been made clear what agencies and programs are required to adhere to Justice40 guidelines and which geographical communities qualify as disadvantaged, what is not clear is how “40% of benefits” is defined or should be measured. The H2Hubs and Industrial Decarbonization FOAs both fall under the scope of Justice40, but because they are the first two DOE programs to do so, very little information on the appropriate way to deliver and track these benefits is available.
To assist developers intending to pursue these federal funding opportunities and to ensure DACs are receiving appropriate benefits, RMI presents potential Justice40 benefits and the associated metrics in Exhibit 5. Benefits and metrics are listed according to the Justice40 policy priority they most closely align with.
Exhibit 5. Justice40-linked Community Benefits and Associated Metrics
POLICY PRIORITYDecrease energy burden in DACs
PROPOSED BENEFIT AND METRIC
Dollars saved in energy expenditures due to technology adoption in DACs
Energy saved (million British thermal units or megawatt hours [MWh]) or reduction in fuel use by DACs
Provide assistance and inclusive financing for energy efficiency programs in low-income and frontline communities in partnership with utilities
Develop public education campaigns to inform eligible residents and households about enrollment in available energy assistance programs, ensuring accessibility for elderly, disabled, and other vulnerable groups.
Provide assistance to reduce household energy bills (including fuels for space and water heating and cooking) to the percentage of gross income using the “Low-Income Energy Affordability” data tool.
Inform customers who call seeking assistance with paying past due bills about all energy assistance programs and payment options.
Inform customers who call seeking assistance with paying past due bills about all energy assistance programs and payment options.
Improve access to energy-management systems for commercial and residential customers (prioritizing renters).
POLICY PRIORITYDecrease environmental exposure and burdens for DACs
PROPOSED BENEFIT AND METRIC
Avoided air pollutants (CO2 equivalents, nitrogen oxide, sulfur dioxide, and/or Particulate matter ≤2.5µm in diameter) in DACs
Remediation impacts on surface water, groundwater, and soil in DACs
Establish an equity and environment initiative to lead the effort of developing the project’s approach so that those most affected by the combined impacts of hazardous pollutants, climate change, and socioeconomic conditions will participate in decision-making concerning solutions and directly benefit from project investments.
Set up an EJ (or climate justice) board or accountability board comprised of frontline communities that can establish processes and structures for the accounting of investments and disinvestments in energy programs that impact EJ and frontline communities.
Consult with communities to inquire whether there are sufficient monitoring and accountability systems in place and establish procedures for course corrections in case of unintended consequences.
Create formal community agreements for project site remediation that also include plans for monitoring and enforcing environmental standards.
Define and set targeted public health goals, such as improved air quality through the elimination of GHG emissions and co-pollutants, improved water quality related to the impacts of energy infrastructure, and elimination of legacy environmental hazards.
POLICY PRIORITYIncrease clean energy jobs, job pipeline, and job training for individuals from DACs
PROPOSED BENEFIT AND METRIC
Dollars spent and/or number of participants from DACs in job training programs, apprenticeship programs, STEM education, tuition, scholarships, and recruitment
Number of hires from DACs resulting from DOE job trainings
Number of jobs created for DACs because of DOE program
Number of and/or dollar value of partnerships, contracts, or training with minority-serving institutions
Track and publicly report comprehensive employment data (including salaries, wages, promotions, and new hires) disaggregated by race, gender, income, and all other relevant DAC categories in the project area.
Prioritize recruitment, hiring, and retention for underrepresented groups (Tribal and Indigenous groups, persons with disabilities, minorities etc.).
Conduct evaluations to determine what factors impact retention and recommendations for retaining different groups of DAC workers.
Develop training programs or partner with training centers and community colleges in the project area to support DACs’ access to a broad variety of well-paid energy jobs with comprehensive benefits.
Establish and communicate a clear certification process for relevant trainings for pathways to long-term careers in the energy sector.
Set up a fund to cover the cost of expenses for job skills training programs, such as equipment expenses and training participation allowances to support full participation of minimum wage workers.
Implement training programs for staff and contractors that address areas of bias that may affect hiring or promoting DAC members.
Provide quality family-sustaining benefits, including healthcare, dental, retirement, and other elements of a comprehensive benefits plan.
Develop and report on specific plans for ensuring worker safety and protections, rights to meal breaks and rest periods, anti-harassment and anti-discrimination policies and their enforcement protocols, as well as universal labor rights, including the right to organize in the workplace and the right to collective bargaining for better wages and working conditions.
Provide trainees and apprentices with living wages and benefits.
Fund education and workforce development programs with a priority focus on historically underserved communities.
Ensure funding and access to support services for women and families in the workforce, including childcare, paid family leave, work equipment and protective clothing, and designated spaces for on-site breastfeeding.
POLICY PRIORITYIncrease clean energy enterprise creation and contracting for minority and disadvantaged businesses in DACs
PROPOSED BENEFIT AND METRIC
Number of contracts and/or dollar value awarded to businesses that are principally owned by women, minorities, disabled veterans, and/or lesbian, gay, bisexual, or transgender persons
Provide staff with comprehensive equity, inclusion, and/or cultural disparity training.
Provide funding for eligible Minority and Women-owned Business Enterprises (MWBEs) to obtain certifications, maintain a list of certified MWBEs, and create targeted marketing and procurement procedures to ensure access to opportunities.
Implement supplier diversity programs to ensure equal opportunity in all competitive bid events for qualified minority-owned, women-owned, disabled-owned, and veteran-owned small businesses.
Develop requirements for prime contractors and major suppliers to provide opportunities for diverse supplier subcontractors and businesses.
Develop a plan for community outreach to provide information about upcoming contracting opportunities within the projects.
Require all contractors to provide a living wage for minority-owned businesses.
Set up a fund to support development of MWBEs to meet procurement requirements for the projects.
POLICY PRIORITYIncrease energy democracy in DACs
PROPOSED BENEFIT AND METRIC
Number of stakeholder events, participants, and/or dollars spent to engage with organizations and residents of DACs, including participation and notification of how input was used
Number of tools, trainings for data sets/tools, people trained and/or hours dedicated to data set/tool and technical assistance and knowledge transfer efforts to DACs/li>
Dollars spent or number of hours spent on technical assistance for DACs
Dollar value and number of clean energy assets owned by DAC members
Compensate community participants, advocates, and experts for their consultation and time.
Provide childcare and language translation services and conduct meetings after regular working hours in a space that is Americans with Disabilities Act (ADA) accessible.
Commit to respectful, comprehensive and transparent processes for seeking consultations with Tribal and Indigenous leaders (that is mindful of existing burdens and capacity limitations)
Ensure that Tribal and Indigenous stakeholders’ input is incorporated into all relevant aspects of project decision-making (DOE is responsible for formal two-way government-to-government dialogue and engagement).
Provide assistance such as subsidies for access to information technology for households without internet access to participate in relevant trainings and other activities (prioritizing underserved and rural communities)
Staff public information centers with representatives who meet the community’s language needs to ensure access, equity, and inclusion in programs and service delivery.
Convene community planning and visioning workshops for developing community energy assistance programs.
Invite and include all parties affected by environmental decisions of projects to contribute to all stages of the decision-making process and disclose next steps to incorporate local feedback in project plans.
Determine the appropriate level of engagement for each project and be clear up front about the level of decision-making the community will have in each process and use appropriately matched methods and tools.
Contract with representative CBOs already working on equity issues to host community events.
Establish an advisory board to provide oversight on equity in the distribution of programs and services and in future development and planning initiatives.
Conduct comprehensive mapping of all DACs in the project territory and identify all historical impacts on marginalized and overburdened communities due to infrastructure projects.
Develop two-way information sharing processes and adjust plans as community priorities and concerns shift.
Develop processes to ensure that those affected by the outcome of decisions have proportional input to decision-making processes.
Use a community impact assessment early on and throughout all major decision points (e.g., program and service policy changes, budget and resource allocation decisions, development, and planning).
POLICY PRIORITYIncrease access to low-cost capital in DACs
PROPOSED BENEFIT AND METRIC
Dollars spent by source, purpose, and location
Leverage ratio of private to public dollars (%)
Loan performance impact through dollar value of current loans and of delinquent loans (30-day or 90-day default)
Develop programs that cater to making fuel cell and/or electric vehicles more accessible and affordable for low-income communities.
Develop programs that support access to affordable and sustainable public transportation options that are responsive to local contexts (I.e. rural or transit-desert communities)
Support access to distributed energy generation and distributed energy storage.
Establish a tribal infrastructure fund to finance energy infrastructure and projects that increase energy access in tribal communities.
Democratize access to energy efficiency appropriate for rural communities.
POLICY PRIORITYIncrease reliability, resilience, and infrastructure to support reliability and resilience in DACs
PROPOSED BENEFIT AND METRIC
Increase in community resilience hubs in DACs
Number and size (MWh) of community resilience infrastructure deployed in DACs (e.g., distributed solar plus storage, utility scale, distributed energy resources, microgrids)
Target investments to help underserved communities prepare for and recover from man-made or extreme-weather disasters.
Invest in weatherization assistance for homes (including rentals), buildings and key community infrastructure in underserved communities.
Support access to distributed energy generation and distributed energy storage.
Mitigate displacement of DACs with any transit-oriented development elements.
Establish procedures for restoration and/or redress for Indigenous lands, territories, and resources that have been taken, confiscated, or occupied by (current or past) project development.
After the first steps of stakeholder identification and engagement with community groups, the process for developers inevitably should lead to two outcomes — an executed agreement with community leaders or re-evaluation of the project.
CBAs are negotiated and legally enforceable agreements between local community representatives and developers (plus other project partners) outlining the concessions and incentives offered to local communities in exchange for their buy-in. Developers can leverage CBAs to secure zoning permission, substantial public subsidies, and tax exemptions for large-scale projects billed as vehicles to stimulate economic activity and generate tax revenues. CBAs have become popular instruments for securing benefits for impacted communities. Community representatives, developers, or local government agencies can initiate CBAs in the development of sporting arenas, airport or university campus expansions, mixed-use complexes, renewable power projects, etc.
The following sections explore both possible outcomes, looking at lessons learned from previously executed CBAs across multiple industries, and two case studies on unsuccessful projects in energy and infrastructure development. Exhibit 6 illustrates the key stages in conducting inclusive and responsive community engagement implementation strategies and methods.
Exhibit 6. Stages and Milestones Leading up to a CBARMI graphic. Source: RMI analysis
Lessons Learned from Previous CBAs in the United States
RMI research on past agreements between communities and developers concludes that the signing of a legal agreement is important for proper two-way engagement but is not sufficient in and of itself. Many failed community engagement examples exist from the past two decades, giving us insight into several common issues:
The groups representing the community in negotiations must represent the interests of the whole community.
In several instances, community signatories to legally binding agreements were selected by local government, were government employees, were a group representing a small subset of the community, or were paid by developers to agree to more favorable terms. Each of these situations resulted in strong and continued backlash from the community because the terms agreed to did not reflect the community’s desires.
The New York City Atlantic Yards CBA signed in 2009 demonstrates these issues. The developers engaged only community organizations that were already committed to the development (including one that was created just before negotiations started and disbanded shortly after the CBA was signed). This was presumably done by the developers to expedite the community engagement process, but local pushback and legal challenges have delayed the expected completion of the project to 2035, 10 years later than initially planned.
Although the community must decide who most faithfully represents their interests, affected parties that come together to form a coalition to negotiate with developers will have more leverage than disparate organizations and can ensure none of their interests are being ignored to placate other groups. Developers that engage groups that most accurately represent the community can benefit by making future community pushback less likely.
Insufficient or failed benefits can lead to poor results for developers and communities alike.
Developers often receive large subsidies from local and state governments in exchange for locating facilities within their jurisdiction, with the rationale that the project will benefit the community by bringing more wealth and economic development to the area. The subsidies can be sizable and can engender resentment if they far overshadow the total benefits agreed to in a CBA.
This is especially true when the agreed-upon benefits fail, as was the case in a 2008 CBA in Pittsburgh. Developers received $245 million in subsidies and promised $8.3 million in benefits, some of which went toward opening a grocery store that closed after five years of operation. Cases like this harm communities, which are left with nothing additional for agreeing to the development. They can also harm developers; failed benefits can lead to a damaged reputation and decreased economic activity in the area, which may make the development less attractive to investors and tenants.
Legal agreements should be written to account for developers that go out of business or sell development rights.
Even if negotiations between developers and communities are productive and result in successful CBAs, developers may not control the project site through the timeframe for which community benefits are to be delivered. If the developer goes out of business or sells the development rights, the new owner benefits from a partially or fully completed project without a requirement to fulfill commitments to the community (unless transfer of commitments is written into the CBA as a condition of sale).
For example, developers of Port Covington in Baltimore originally planned a $5.5 billion project and negotiated $660 million in subsidies with a CBA promising $139.5 million in community benefits. The developers sold majority rights to the project when two major tenants scaled back their plans for the area. It is now unclear whether the agreement is enforceable because the CBA does not explicitly state what happens in these circumstances. This not only puts the community benefits at risk but also prompted local government to rethink whether the $660 million in subsidies for the project was appropriate.
Actions agreed to by either side may be outside the groups’ legal abilities.
As obvious as it may seem, CBAs are likely to fail if the signatories agree to actions they are not legally able to deliver. Community groups may not have the authority to provide assurances to a developer, such as access to certain tax dollars, just as developers may not be able to promise certain benefits if they run into disputes with other entities.
A good example of both signatories unintentionally overstepping their legal authorities is the 2005 CBA for a light rail loop around Atlanta. Local government and community groups agreed to give developers access to money from school district taxes, which the Georgia supreme court ruled they did not have authority to do. The developer, which had agreed to construct the light rail loop, ran into land- and track-ownership issues with the Georgia Department of Transportation and Amtrak. These issues were both eventually solved, although many residents were upset that school funds would be given to a corporation, but they underscore the same point: CBAs need to be written to stand up to a wide range of legal issues.
The four previous issues have plagued many project development processes, leading to failed CBAs and canceled or delayed projects. Few CBAs can be thought of as truly successful in retrospect, but examples do exist. Two of the first CBAs in the United States, both in the Los Angeles area, are considered effective and have been used as templates for future CBAs. Two of the CBAs listed above (Pittsburgh and Atlanta), although flawed, provide examples of strong two-way engagement allowing development to go forward with significant community input. Examples in Minneapolis (Minneapolis Digital Inclusion CBA), Denver (Gates-Cherokee CBA), Seattle (Dearborn Street CBA), and other cities also show successful two-way engagement, although before the CBAs were voided due to financial issues with the developers. All these successes are due to strong partnerships between developers and communities (see Exhibit 7).
Exhibit 7. One-Way versus Two-Way EngagementRMI graphic. Source: RMI analysis
Exhibit 8 spotlights prominent CBAs negotiated for projects that have elicited a range of public reactions and responses, secured a wide variety of benefits, and led to positive and negative outcomes for communities and projects over the past two decades in the United States.
Exhibit 8. Select CBA Case Studies Illustrating a Range of Community Benefits and Outcomes
See notes 20 - 33 for the 14 CBA case study references
Knowing When to Walk Away
Investing significant time, resources, and good-faith efforts in incorporating best practices for inclusive and responsive community engagement can still result in a local community declining a developer’s proposal to site a project in their neighborhood.
A “no” from the local community can result from a multitude of factors, including but not limited to:
Insufficient financial and in-kind incentives and/or misalignment of proposed benefits with the actual (and expressed) needs of the local community
Project developer’s ambitions being out of sync with the local community’s vision for land use and/or with energy- and industrial-development pathways for their future needs
Objections to any (real or perceived) further environmental harms in communities overburdened by legacy pollution
Public safety risks and potential harms not being clearly communicated or disproportionately affecting certain community segments
Community concerns about gentrification and displacement of low-income and communities of color, and adverse economic impacts on the labor force and local businesses not being adequately mitigated
Lack of transparency and/or deep public mistrust of the developer(s) and/or government agencies based on past engagement and experiences of other communities
Perception of a lack of sufficient and/or representative consultations and engagements with impacted groups within the community
A “rushed” or expedited negotiation timeline that does not facilitate building in-roads or rehabilitating fractured trust with impacted communities
The two case studies described subsequently are recent examples of developer-led community engagement in the United States that ultimately failed to secure community buy-in. However, the respective developers’ different approaches to engagement, and subsequent responses to (continued) community opposition, have resulted in very different experiences and outcomes for all parties involved.
Case Study #1. A No, No and Thrice, No to Biogas: Nature Energy and the Village of Roberts, Wisconsin
Since 2018, there have been three failed attempts to develop a manure digester biogas facility in the county of St. Croix, Wisconsin — just east of Minneapolis, across the state line. In 2022, a Danish Nature renewable natural gas company, Nature Energy (founded as Naturgas Fyn), proposed developing an anaerobic digester and nutrient recovery facility in the Village of Roberts, under the name Nature Energy Roberts (NE Roberts).
Over the next few months, Nature Energy conducted several two-way engagements and information-sharing activities with the local community in the Village of Roberts to address questions and concerns about the siting of a biogas digester in their community. Exhibit 9 is a timeline of major milestones in engagement efforts with the local community and Exhibit 10 provides a summary of events.
Exhibit 9. Timeline of Two-Way Engagement with Local Community in Roberts, Wisconsin
2022
Nature Energy proposes that the “NE Roberts facility,” be sited on 130th Street north of the Union Pacific railroad and south of Roberts Business Park (an existing industrial area)
A publicly accessible website is created by the developer to Publicly post information about the proposed project
August 4, 2022
A 3-hour long public hearing was convened by Nature Energy representatives at the Roberts Park Building to address local residents’ questions and concerns about the proposed biogas project in their community ranging from environmental impacts.
A 103-page document was made publicly available to the public with the developer’s responses to over 80 questions, the official environmental impacts summary, digestate and digestate products, detailed project proposal and operations (blueprints, 3-D visualizations etc.) and expected community benefits
September 7, 2022
The Village’s Plan Commission had convened a special meeting to discuss a number of matters pertaining to Nature Energy’s conditional use permit (CUP), particularly the project’s proposed site within the Village’s Wellhead Protection District
2022
A member of the Village of Roberts Board of Trustees made a motion to deny Nature Energy’s application based on its location within the district
October 7, 2022
Danish biogas company, Nature Energy, formally withdrew its application for a conditional use permit (CUP) to establish a manure digester in the Village of Roberts after several months of negotiations, a 3-hour long, standing-room only public hearing, and two-way community engagement (Nature Energy, 2022)
October 7, 2022
Nature Energy’s CEO and leadership thanked the Roberts’ Board Trustees and Village Staff for their time and consideration of their application and stated that Nature Energy’s team would regroup to determine the best path forward for developing their biogas project
RMI graphic. Source RMI analysis
On October 7, 2022, Nature Energy formally withdrew its application for a conditional use permit to establish a manure digester in the Village of Roberts. The developer failed to secure buy-in from local residents and the Village’s Board of Trustees, which had raised a variety of concerns about and objections to the project. In November 2022, Nature Energy announced that it would bring its technology to two communities — Benson in central Minnesota and Wilson in southeast Minnesota. In February 2023, Shell acquired Nature Energy for $2 billion and subsequently announced a “strategic suspension” of all its US projects.
Exhibit 10. Summary of Nature Energy’s biogas plant in Roberts, Wisconsin
Community
The Village of Roberts is home to 1,636 residents, part of the larger St. Croix County community (population 93,539) in the state of Wisconsin (5.8 million).
Developer
Denmark-based Nature Energy (founded as “Naturgas Fyn”) is experienced in anaerobic digestion and the design, implementation, and operation of anaerobic digesters. Nature Energy employs approximately 400 people worldwide and operates 14 biogas facilities in Denmark and France and an operating plant in the Netherlands, with plans for expansion in Canada and the United States. Nature Energy’s North America operations are headquartered in St. Paul, Minnesota.
Proposed Project
The proposed manure digesting facility would have consisted of 27 structures, including three exhaust stacks of 100, 100, and 197 feet, located on a 23-acre parcel in the village’s industrial rail park. The developer believed that Roberts was an “ideal location providing access to a quality workforce, reliable infrastructure, access to a gas pipeline interconnect, and the proximity to local farms to supply manure. The Nature Energy Roberts facility will promote and support agriculture and businesses in St. Croix County while helping protect water quality.”
The developer expected that the NE Roberts facility would produce an average of 24.5 million cubic meters of biomethane annually from anaerobic digestion of turkey, dairy, and food-processing waste. The NE Roberts facility would upgrade the biomethane to renewable natural gas, which would be injected into an existing natural gas pipeline system and be available for commercial sale (for transportation and home heating). Participating farms would receive digestate in the form of fertilizer products tailored to the specific soil profile of their farms.
Case study #2. Permit(s) denied = Project delayed: Summit Carbon Solutions’ Midwest Carbon Express CO2 Pipeline in Iowa, Minnesota, Nebraska, and North and South Dakota
In 2021, Summit Carbon Solutions, an affiliate of the Summit Agriculture Group, secured $1 billion to develop a point-source carbon capture network to transport 12–20 million tons of pressurized liquid CO2 emissions from ethanol plants across the Midwest to permanent, deep geologic storage locations in North Dakota. The proposed pipeline (see Exhibits 11 and 12) would be the longest CO2 pipeline in the world. Summit actively began securing voluntary easement agreements along 75% of its pipeline route, but there were some holdouts opposed to the project.
Exhibit 11. Summit Carbon Solutions’ Midwest Carbon Express CO2 Pipeline Project Source: Siri Hedreen, Map by: Jonathan Paul Lalgee for S&P Global (2023).
After announcing the intent to construct the pipeline across multiple states, Summit began conducting outreach to 62 Native American tribes and hosting town hall meetings, public hearings, and community forums across the Midwestern region. The developer confirmed that the proposed pipeline would not pass through tribal lands. However, there has been strong and persistent local opposition from tribal and Indigenous groups, landowners, and major environmental advocacy groups across Iowa, Minnesota, Nebraska, and North and South Dakota. Representatives have voiced strong opposition to the five-state CO2 pipeline because of concerns about public health and safety, environmental impacts, the effect on soil and crop yields, below-market offers to landowners, disturbing sacred tribal sites, and the potential use of eminent domain to obtain rights-of-way for the project.
In August 2023, North Dakota’s Public Service Commission unanimously rejected Summit’s siting permit for the 320-mile segment of the pipeline in the state. Reasons included insufficient plans from the developer to address environmental impacts and public safety risks, such as potentially unstable geologic areas and concerns from landowners. South Dakota Public Utilities Commission followed suit, also unanimously denying Summit’s application for the proposed 469-mile portion of the pipeline in the state. The proposal was in direct violation of “setback” ordinances that mandate specific minimum distances between pipelines, homes, and other property lines in Brown, McPherson, Minnehaha, and Spink Counties. By October 2023, another blow was dealt by an Iowa utilities board that denied the developer’s request for an environmental impact survey.
Despite multiple rejections (and the recent cancellation of the competing Heartland Greenway pipeline by Navigator CO2 due to similar permitting denials), Summit’s CEO and leadership remain committed to the project and will reapply for siting permits on new routes in North and South Dakota. Summit stands to lose hundreds of millions of dollars in easements (i.e., sunk costs) if it is unable to secure the necessary state and local permits and alleviate the many concerns expressed by the public and regulators. To date, Summit has postponed its expected startup date from 2024 to 2026. The developer faces an uphill challenge in navigating the regulatory landscape and staunch community opposition from multiple stakeholder groups.
Exhibit 12. Summary of Summit Carbon Solutions CO2 Pipeline project
Community
Over 12.5 million individuals live in the five target states of the project: Iowa (~3.2 million), Minnesota (~5.7 million), Nebraska (~1.9 million), and North (77,000) and South Dakota (89,000).
Developer
Summit Carbon Solutions, LLC, is an affiliate of the Summit Agriculture Group, a global agricultural production, investment, and farm management company, headquartered in Iowa. The developer faces a maze of state and local regulatory hurdles to obtain the necessary siting permits.
Proposed Project
The $4.5 billion, 2,000-mile-long pipeline will traverse five Midwestern states (Iowa, Minnesota, Nebraska, and North and South Dakota) and carry liquefied and pressurized CO2 captured from smokestacks of ~34 producers of ethanol, a biofuel made from fermented corn, to deep storage reservoirs at multiple sites in western North Dakota. The developer estimates that the project will create 18,000 jobs and generate millions of dollars in tax revenue for communities along the pipeline route.
Large industrial projects involve complex stakeholder engagements and thorough evaluation of technical, financial, environmental, and social aspects. The regional H2Hub applicants that have been selected are now in the process of award negotiation. Although the hubs moving forward in the process are not expected to receive any funding until these negotiations are completed, they can receive up to $20 million for the detailed planning phase (i.e., Phase 1). The initial phase should take 12 to 18 months, during which broader community engagement should begin in earnest. By the time Phase 1 is complete, applicants should have laid the groundwork to eventually negotiate and sign some type of agreement with the local community.
From the lessons presented in this brief, both communities and developers can form processes for better engagement, not only for the regional hubs but also for other large industrial developments. An understanding of benefits that are typically requested by communities will be helpful to companies hoping to take advantage of funding through current and future DOE FOAs, especially if they can be tied to any of the eight Justice40 policy priorities (see Exhibit 5). These benefits typically fall into one of two categories: (1) community assistance funding above and beyond the project scope, and (2) requirements within the project scope to ensure benefits flow to specific groups (see Exhibit 13).
Exhibit 13. Categories of Justice40 Benefits
Category
Example Benefits
Funding beyond project scope
Community development funding. Examples include donations or low-interest loans for local nonprofits, community services, and local business development.
Environmental benefits. Remediation of brownfield sites or requirements for mitigation of environmental impact during construction and operation are possible.
Financial incentives. Can include shared project ownership or subsidization of specific costs (such as residential energy bills) by the developer.
Benefit flow requirements
Local hiring and workforce training. In some cases, this can target specific groups in the community, such as previously incarcerated residents.
Wages. A high percentage of jobs (70% or more) related to the project, including tenants of any commercial space, must pay a living wage.
Affordable housing. Typically this is 20% or more of any housing built in the development.
Commercial tenant specifications. Can include restrictions on the type of tenant or set-asides for local business.
RMI graphic. Source: RMI analysis
Requirements for CBPs and CBAs offer a gold standard for all developers to adopt. Looking forward, all key stakeholders will have a part to play as we continue to develop the technologies and industries to move to a clean energy economy.
Industry: The social license for project development is changing. As more federal grant opportunities require meaningful two-way engagement to receive funding, residents will no longer allow industry to continue building new facilities in their communities without ensuring the benefits of new facilities are shared and negative impacts are minimized.
Proactive communication with EJ and other community groups early in the project development process will help industry understand what production and use cases are more acceptable and adapt designs to lower the risk of project delays or cancellation. Industry should also consider maintaining transparency during scoping studies and clarifying how resources will be allocated. Early engagement with academia and labor representatives will help ensure the workforce development pipeline can train the needed number of highly skilled workers and that these workers can be attracted and retained by high-quality jobs.
CBOs and EJ groups: Assisting in the creation of a community development vision for industrial zones ahead of time can solidify a community’s thoughts and concerns on future clean energy development without the pressure of an imminent project development decision. The opportunity that H2Hubs and similar clean energy/industrial development projects could provide for EJ and DAC communities must be balanced with transparent information and agency in the process.
Tribes: As sovereign nations, tribal entities hold more power than CBOs in negotiation and can use this opportunity to set the standard to make sure clean energy projects truly benefit the communities where they are located.
Nongovernmental organizations (NGOs) and academia: These organizations should continue to produce unbiased materials that can be used by both industry and community groups to improve and facilitate the community engagement process. NGOs and academia play a vital role in (1) developing materials to deepen the fact base on clean transition pathways, and (2) working with EJ groups and industry as a third party to streamline and facilitate the engagement process. These efforts help industry and community groups understand each other’s viewpoints on technologies and use cases and facilitate dissemination of resources for productive agreements between communities and companies (i.e., best practices for CBAs).
Federal government: Although the H2Hubs FOA has provided an excellent first step to incorporate community engagement into the project development and federal grant-making processes, there are still questions to be answered. Policymakers can clarify the specific requirements (e.g., Justice40) and expand on the metrics in Exhibit 5. Increased guidance will make the process clearer for developers, continue to encourage community engagement, and support investment in DACs.
OCED’s framework for community benefits provides guidance on how to approach successful community engagement in the United States. This and other relevant resources will be critical as clean energy and industrial projects grow to meet our climate goals. As federally funded projects simultaneously attract enthusiastic support and concerned opposition from various parties, maintaining accountability on stated CBP objectives, metrics, and CBA clauses will ultimately be vital to the success of these projects to show true climate and economic benefits for the long term.
As these projects mature, meaningful two-way community engagement can lead to mutually beneficial relationships between project developers and local communities and should be adopted as the standard operating procedure for all projects, not just for those hoping to receive federal funding.
Centering equity and community engagement in project design will be a critical lever for delivering a just clean energy transition in the United States.
Endnotes
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Copyrights and Citation
Hadia Sheerazi, Gareth Westler, Chathurika Gamage, Moana McClellan, and Patience Bukirwa, Delivering Equitable and Meaningful Community Benefits via Clean Hydrogen Hubs: Case studies and best practices from advising developers of the DOE’s $7 billion Regional Clean H2Hubs program, plus lessons for future clean energy projects, RMI, January 28, 2024, https://rmi.org/delivering-equitable-and-meaningful-community-benefits-via-clean-hydrogen-hubs.
RMI values collaboration and aims to accelerate the energy transition by sharing knowledge and insights. We therefore allow interested parties to reference, share, and cite our work through the Creative Commons CC BY-SA 4.0 license, https://creativecommons.org/licenses/by-sa/4.0/.
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