Thirteen states (plus ten coalition partner states) are celebrating Implementation Grant awards from EPA as part of the Climate Pollution Reduction Grants (CPRG) program to fund measures included in their Priority Climate Action Plans (PCAPs). Many states chose to participate in CPRG and create a PCAP because of the chance of winning these grants, but due to the huge demand for this program, far more measures were left unfunded, leaving states to ask themselves, “Now how are we going to pay for this?” Luckily, there are still billions of dollars in federal grants, tax incentives, and low-interest loans on the table for states to put toward actualizing their priority measures.

The sheer number of programs and combinations of funding streams states can use to bring a project to fruition can be overwhelming. To aid states in navigating these opportunities for their unfunded measures, we present a sector-by-sector guide states can use to strategically leverage federal programs for ten of the most common and impactful measures we identified in our survey of state PCAPs. We provide example capital stacks along with links to RMI’s AFFORD tool and the Conveners Network Menu of Measures so states can explore additional relevant federal funding streams.

With deadlines for many of these programs looming on the horizon, keeping the momentum going is critical for states to achieve their PCAP’s potential pollution and air quality benefits, drive economic investment, and ensure that they don’t leave any federal money on the table.

States had the option to identify “Intersections with other Funding Availability” for each of the measures listed in their PCAPs, but it wasn’t required (though it will be for the comprehensive action plans due to EPA in Summer 2025).

As can be seen above, states identified alternative or supplemental federal funding for just about half of the measures for each sector on average. With so many measures going unfunded through CPRG, states need to fill this knowledge gap — and fast.

One of the biggest reasons that states chose to participate in the EPA’s CPRG climate action planning process was that it made them eligible for Implementation Grants (IG); only measures included in their PCAPs could receive funds from this specific $4.3B pot of money. The state applicants that won IG funding tended to address states’ highest-emitting sectors and are expected to reduce emissions by 809 million metric tons (MMT) of CO₂e by 2050. However, the IG program was hugely oversubscribed, with 299 applications totaling over $33B submitted, leaving most of the climate action measures in PCAPs unfunded after EPA’s announcement.

That means there are still a huge number of state-specific, highly impactful priority climate measures contained within state PCAPs that are just waiting to be enacted. In the process of generating their PCAPs, states already completed the hard work of developing a GHG inventory, identifying priority measures, quantifying impacts, and acquiring stakeholder buy-in for their measures. Those that applied for IG funding then accomplished the even more daunting task of pulling together a project narrative, budget, and (in some cases) a cross-state coalition. Though receiving IG funding would have been a simple way of funding these proposals, there are still several different kinds of capital that states can pull together to make sure that hard work pays off.

Rather than let state’s efforts developing their PCAPs and implementation grant applications go to waste, we’ve outlined a rough combination of grants, tax credits, and financing that could be assembled to pay for some of these impactful measures, referred to in this guide as the “capital stack.”

The size of each row in the stack will vary based on the project type, but most of the measures highlighted in this guide will be eligible for at least one program in each category, reducing the amount of state dollars and debt needed to drive these impactful measures forward.

When taking advantage of these other funding sources, states should consider the following:

• Identify which measures and projects are well-suited to private capital — there is simply not enough federal or state funding to meet the needs of every single project, so states should make sure that they are prioritizing the use of public funds for projects that would not get done without them. Projects that use commercially available technologies or processes, have a well-established return on investment, and are developed by entities with strong credit ratings are good candidates for private financing.
• For projects not suited to private capital, seek out and apply for federal grants wherever applicable. Many formula grant programs authorized through BIL tend to renew every year through 2026, while many Inflation Reduction Act (IRA) grant program deadlines are one-off and closing soon.
• Next, stack those grants with the relevant tax incentives, using direct pay or transferability if the recipient does not have tax liability (like a government agency, public university, or nonprofit affordable housing developer).
• States should then take a pass at their own budget or existing programs to see if any pre-allocated funds or federal formula grants can be used for each measure.
• If they don’t receive federal grants, states can seek out low-interest federal loans from the Loan Program Office’s Title 17 Clean Energy Financing Program to pay for large measures (generally over $150 million). These loans cannot be stacked with federal grants but can be stacked with federal tax credits. Smaller projects seeking low-interest federal financing can seek out Greenhouse Gas Reduction Fund (GGRF) financing, which does not restrict the use of federal grants.
• Private loans can fill in the remainder, as needed. As noted above, many of the measures listed here have firmly established payback periods.

The opportunities and stacking specificities vary between measures, so this guide will provide additional guidance for each of the ten most common measures found in state PCAPs.

See the GHG reduction potential methodology.

As an example, for the most commonly cited measure (energy efficiency and electrification in residential buildings), the following programs might contribute to a capital stack for a low-income multifamily apartment:

• Federal grants: Home Electrification and Appliance Rebate
• Tax incentives: Federal Energy Efficient Home Improvement Credit (25C)
• Financing: The Greenhouse Gas Reduction Fund’s National Clean Investment Fund (NCIF), which includes partially and fully forgivable loans

We completed this exercise at a high level for each of the most common measures found in state PCAPs, sorted by sector.

[1] Because it may take over a year for a state or partner to collect the value of the tax credits, they may be initially covered through a loan.

Public fleet electrification

CO₂e cumulative reduction through 2050 if applied nationwide: 37 MMT

23 states identified electrification of their public fleets as a priority measure within their PCAPs. States should certainly apply for one or both of the grants available to decarbonize their heavy-duty fleets (school buses and transit buses), and use direct pay to access the 45W Tax Credit for Qualified Commercial Clean Vehicles and the 30C Alternative Fuel Infrastructure Tax Credit to provide devoted DCFC charging for these vehicles. With 45W and 30C direct pay included, the total cost of ownership for nearly all electric light-duty vehicle use cases is better than gas- and diesel-powered vehicle equivalents.

If they don’t receive any federal grants, the next best option is for the state to access low-interest financing from DOE’s Loan Programs Office via the State Energy Financing Institution (SEFI) program. They can either pay back the loan through the millions of dollars in operational cost savings or by contracting with an electric fleet company that can provide vehicles as a service for charging, storage, and grid response services to utilities in order to pay back the loan. This financing can be stacked with the tax credits.

There are dozens of additional relevant federal funding programs available — click here to find out what they are and if your measure would qualify.

Private medium- and heavy-duty vehicle conversion

CO₂e cumulative reduction through 2050 if applied nationwide: 16 MMT

Recognizing the outsized impact that medium- and heavy-duty vehicles (MHDVs) have on emissions and air quality,[2] 22 states included a PCAP measure to support private business owners in converting these vehicles to electric models. Electric MHDVs are expensive up-front, and many small business owners and rural businesses are unlikely to afford the capital costs. States can support them in this transition in two ways: first, by applying for a competitive grant like the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) program and using the funds to create a statewide scrap-and-replace program. If they don’t receive a grant, the state can also borrow directly from the Loan Programs Office (LPO) as a SEFI and provide low-cost financing to eligible small or rural companies for their fleet upgrades, recuperating the costs via operating cost savings. Either way, the MHDV purchases should be eligible for up to $40,000 in tax credits via 45W.

States must also ensure that all the new MHDVs on the road have a place to charge — there were several cross-state coalition applicants where freight corridors cross state lines, but only one was funded by an EPA Implementation Grant. The remaining applicants can access the 30C Alternative Fuel Vehicle Refueling Property Credit, which can cover up to 30 percent of the cost of charging infrastructure.

There are 16 additional relevant federal funding programs available – click here to find out what they are and if you qualify.

Reducing vehicle miles traveled (VMT)

CO₂e cumulative reduction through 2050 if applied nationwide: 223 MMT

Transportation electrification can only get states so far, so 30 states included measures designed to reduce the overall number of miles their residents drive at all. These measures range from improved bike and pedestrian infrastructure to more frequent, reliable, and affordable transit. Federal funding for these projects varies based on the specific use-case — investments in active transportation might use formula funds from the Congestion Mitigation and Air Quality Improvement fund and apply for competitive funding from the Department of Transportation’s Active Transportation Infrastructure Investment Program and the Reconnecting Communities Pilot Grant Program (which closes on September 30^th, 2024!). Alternatively, states can “flex” a large amount of their federal formula dollars away from roadway programs and into transit and rail capital expenditure programs.

New transit buses can be funded partially through the Federal Transit Administration’s (FTA’s) Grants for Buses and Bus Facilities (both competitive and formula), and there is specific formula funding set aside for rural communities through the FTA’s Formula Grants for Rural Areas. While there are no federal tax credits that apply specifically to VMT reduction, any new electric buses would qualify for the 45W tax credit of up to $40,000. Though LPO’s Title 17 financing programs aren’t well suited for VMT reduction programs, GGRF can be used for these types of projects.

There are 37 additional relevant federal funding programs available — click here to find out what they are and if you qualify.

[2] Despite accounting for only 8 percent of registered vehicles, MHDVs are responsible for 25 percent of greenhouse gas emissions in the transportation sector, and 60 percent of the nitrous oxide and particulate matter pollution.

Distributed energy resources (DERs)

CO₂e cumulative reduction through 2050 if applied nationwide: 238 MMT

Well over half of the states that submitted PCAPs included one or more measures to encourage distributed energy resources in their state (e.g., rooftop solar or district-scale geothermal). Though many of the grant programs for DERs are now closed (Solar for All for low-income affordable housing is a notable exception that is now being distributed in most states), the tax credit opportunity for small-scale electricity generation can be massive depending on the project context.

The IRA expanded the production tax credit (PTC) (section 45 and its successor, Section 45Y) and investment tax credit (ITC) (section 48 and its successor, Section 48E) to include a variety of potential bonus adders that can be leveraged if the necessary criteria are met. In the case of the ITC, the adders can enhance the value of the credit to as much as 70 percent of eligible project costs. Specific adders available include: a 10 percent adder if a sufficient percent of materials are domestically sourced (often referred to as domestic content); a 10 percent adder for projects located in energy communities; and a 10–20 percent bonus credit for projects that are located in or provide sufficient benefit to low- and moderate-income communities (ITC only). Additionally, these tax credits are eligible for elective pay or transferability depending on recipient. The Residential Clean Energy Credit (25D) remains a 30 percent investment tax credit that is not refundable. The rest of the costs can be covered through GGRF or one of DOE’s loan programs, or through a private mechanism such as a Power Purchase Agreement.

There are 54 additional relevant federal funding programs available – click here to find out what they are and if you qualify.

Transmission/distribution

CO₂e cumulative reduction through 2050 if applied nationwide: 197 MMT

In order to meet the demands of our increasingly electric world, the country’s transmission and distribution system needs to expand rapidly, and even double by some estimates. Twelve states included measures to speed up and streamline this process. However, due to the unique nature of transmission planning and utility financing structures, both state involvement and federal grant opportunities are less appealing for most utilities pursuing transmission upgrades.

The most powerful role for states to play in building out the transmission and distribution network is likely in convening regional players, appointing strong transmission advocates to the public utilities commission, and applying for enabling funding, rather than corralling direct federal funding. Even if the money does not or cannot go directly to states for transmission construction, there are a number of grant programs that can be used to support transmission more indirectly. For example, the Grid Deployment Office's Transmission Siting and Economic Development (TSED) grant program aims to reduce transmission permitting and siting barriers, and its Wholesale Electricity Market Studies and Engagements program has $9 million set aside specifically for states to perform analytical studies in support of a more integrated regional transmission planning approach, among other topics.

As opposed to grants, low-interest loans maintain the utility’s debt-to-equity ratio and therefore protect utility earnings. For smaller utilities without access to significant capital, LPO’s National Interest Electric Transmission Corridors (NIETC) program could provide nearly $2 billion in low-interest federally backed loans without jeopardizing their rate base.

There are 25 additional relevant federal funding programs available — click here to find out what they are and if you qualify.

Industrial decarbonization

CO₂e cumulative reduction through 2050 if applied nationwide: 862 MMT

While industry measures were not the most numerous across state PCAPs (with 21 states including a measure, industrial decarbonization ranked seventh out of the top ten measures), they were by far the most impactful in terms of potential GHG reduction.

Because industries vary so widely state to state, the decarbonization priorities will also differ, as will the relevant and available funding. For example, some states will be focused on electrifying low- to medium-heat facilities like chemical plants, food assembly facilities, and paper and pulp processing plants. High-heat industries like steel and iron will require large facility conversions to run on green hydrogen, while cement will require efficiency improvements and carbon capture, among many other solutions.

Most federal grant timelines for industrial decarbonization have already passed, so states should focus on the (often generous) federal tax credit opportunity. In addition, LPO has indicated that they are eager to finance capital stacks in the industrial sector, whether it’s through the Title 17 Innovative Technologies program (for non-commercialized technologies like hydrogen and CCUS), the SEFI program (for commercialized technology projects like industrial heat pumps, if they receive meaningful financial support from their state), or the Energy Infrastructure Reinvestment program (when installing a renewable energy source that replaces an on-site fossil source or reducing emissions at a refinery).

There are 23 additional relevant federal funding programs available — click here to find out what they are and if you qualify.

Methane/refrigerant monitoring and reduction

CO₂e cumulative reduction through 2050 if applied nationwide: 472 MMT

Methane and other high-potency greenhouse gases were a hot topic in state PCAPs — 27 states had at least one measure that addressed monitoring and/or reducing their release into the atmosphere. There are some tax credits available for projects that use captured biomethane as a feedstock or fuel (e.g., 40B, 45Z), and there is funding through EPA’s Methane Emissions Reduction Program (MERP) and Department of the Interior’s Orphaned Well Program to curb methane emissions from the oil and gas sector. States can build on these programs with rulemaking approaches (such as improving air regulations) that are relatively inexpensive for states compared to providing direct incentives, and by leveraging free methane monitoring data through the Carbon Mapper portal to inform mitigation.

Find additional federal funding opportunities in the 2023 report, Accelerating Progress: Delivering on the U.S. Methane Emissions Reduction Action Plan.

Every single PCAP included at least one priority measure related to buildings. While many states combined commercial and residential decarbonization into a single measure, they are eligible for very different funding streams and so are separated below.

Residential energy efficiency and electrification

CO₂e cumulative reduction through 2050 if applied nationwide 612 MMT:

Decarbonizing housing was the number one most common measure across state PCAPs — states clearly recognize the economic and public health benefits of building and retrofitting cleaner and more efficient homes. Luckily, there are a vast array of federal funding streams to meet this need, though navigating different application requirements can be complicated. RMI has released several resources to support developers, building owners, and states in stacking these incentives as strategically as possible across various project sizes and occupant income.

Generally, low-income households should begin by claiming both IRA rebates — the Home Efficiency Rebate (HER) and the Home Electrification and Appliance Rebate (HEAR) can be used on the same retrofit project but cannot be used to pay for the same technology or efficiency measure.[3]  So, for example, a low-income residential retrofit could receive up to $8,000 per unit for insulation upgrades through modeled HER and an additional $14,000 per unit for installing electric appliance and equipment replacements through HEAR.

Market rate housing projects are eligible for the 25C Energy Efficient Home Improvement Tax Credit, which covers up to 30 percent of project costs post-rebate, up to $3,200.[4] Note that any state benefits provided in the form of a tax credit (instead of a rebate) do not have to be subtracted from the costs under 25C. Low-interest and forgivable federal loans — like the Energy Efficiency Revolving Loan Fund, the Greenhouse Gas Reduction Fund, Housing and Urban Development loans, and loans from the DOE’s SEFI carveout — can stack with the rebates to cover any remaining costs. Many states and utilities may also offer relevant rebates and/or financing.

There are 50 additional relevant federal funding programs available — click here to find out what they are and if you qualify.

Commercial energy efficiency and electrification

CO₂e cumulative reduction through 2050 if applied nationwide: 434 MMT

In general, there are significantly fewer federal programs available for commercial retrofits compared to those for residential buildings. The most prominent opportunity is the Energy Efficiency Commercial Buildings deduction (179D), which can pay up to $5 per square foot for new and existing buildings when prevailing wage requirements are met. Commercial buildings in the MUSH market (municipal, universities, schools, and hospitals) could be eligible for specific federal grants as well, such as the DOE Renew America’s Schools grants or EPA grants for School Indoor Air Pollution and can access their tax credit benefits through direct pay despite not having a tax appetite.

States with an existing C-PACE program can finance commercial retrofit projects through that mechanism, and those without can access relatively cheap capital or forgivable loans from federal loan programs like the Energy Efficiency Revolving Loan Fund and GGRF. As with residential upgrades, many states and utilities also have existing rebate and financing programs.

There are 50 additional relevant federal funding programs available — click here to find out what they are and if you qualify.

[3] These two programs can only be stacked if states choose to model performance — they cannot be used together if the state chooses to use measured performance.

[4] Note that the project owner must have tax liability to take advantage of this incentive, as it is not eligible for direct pay.

Landfill diversion

CO₂e cumulative reduction through 2050 if applied nationwide: 197 MMT

Rather than simply monitor and capture methane, many states are hoping to intervene earlier in the process by diverting organic waste from the landfill. Community Change Grants, Solid Waste Infrastructure for Recycling Grant Program (SWIFR), Composting and Food Waste Reduction (CFWR) Cooperative Agreements, and GGRF funds can all be used for landfill diversion projects at the local level. On the tax credit front, the ITC can be used for anaerobic digesters beginning construction before 2025 that divert organic waste from landfills.

Like methane capture, states with unfunded incentives could consider regulatory approaches, such as requiring large waste generators to reduce/recycle organics or instituting disposal surcharge fees or pay-as-you-throw policies to limit landfilling.

There are 13 additional relevant federal funding programs available — click here and here to find out what they are and if you qualify.

Even though only 13 states received CPRG Implementation Grants from the EPA, ample federal funding is still available to support the other priority measures. Every state that applied now boasts a ready-to-implement climate action plan, backed by unprecedented federal support. Now it’s time to build on this momentum by pulling together capital stacks and market mechanisms that can turn these well-crafted plans into reality.

CPRG is just one of many federal programs where demand exceeded available funding — there is a clear hunger for climate action at every level, and RMI is building a variety of resources to address this need. We will continue to develop creative solutions across all the sectors and actors needed to secure our clean energy future.

GHG pollution reduction estimates were made using the national Energy Policy Simulator (EPS). Inputs to the EPS were based off a representative common measure from a state Priority Climate Action Plan, and then scaled-up to apply at a national level. The GHG pollution reduction estimates are based on the whole United States deploying the common measure, rather than just a subset of states. The common measures modeled, in keeping with the CPRG implementation grant requirements, scale-up or expend funds over a 5-year period 2025–2029, but usually have long-lasting pollution reductions.