How Biden steered climate money to red states

By Adam Aton | 07/19/2023 06:30 AM EDT

The Inflation Reduction Act presented governors with a choice — control the inflow of climate funding or cede it to Democratic-run cities.

President Joe Biden welcomes governors and their spouses for a black-tie dinner at the White House on Feb. 11.

President Joe Biden welcomes governors and their spouses for a black-tie dinner at the White House on Feb. 11. Andrew Caballero-Reynolds/AFP/Getty Images

New Hampshire is dusting off its climate plan for the first time in 14 years. Georgia officials are drafting the state’s first-ever statewide carbon strategy. Minnesota is analyzing its environmental justice policies.

Conservative or progressive, urban or rural, pro-oil or pro-renewable — states across the country are taking millions of dollars from the Inflation Reduction Act to plan how to cut climate pollution.

At least, most of them are.


Four states — Florida, South Dakota, Iowa and Kentucky — have refused to apply for the climate money. So EPA is sending it to their biggest cities instead. Now, towns such as Rapid City, S.D., and Iowa City, Iowa, will try to compensate for the regulatory power, administrative capacity and budgetary heft that only states can muster.

That’s a feature of the Inflation Reduction Act rather than a flaw, experts said. The law’s Climate Pollution Reduction Grants were designed so that if a state turned down the money, EPA could route those funds through that state’s biggest cities instead.

“These grants are really important — they’re one of the more important pieces of the IRA,” said Craig Segall, Evergreen Action’s vice president of policy.

It’s obviously better if a state takes the money, he said, but cities do have unique power over sectors such as buildings and transportation. “The door’s not closed [on climate action] if a city takes this on,” he said. It’s “potentially still a really big deal.”

Progressives wanted to avoid a repeat of the Affordable Care Act’s Medicaid expansion, which Republican officials blocked in several states by simply refusing to accept federal funds. So this time, the Inflation Reduction Act presented GOP governors a choice: control climate funding themselves or cede it to Democratic-run cities.

“Everyone was concerned after having seen the way that Republican governors had rejected the health care expansion funding from Obamacare. What would happen if they rejected the climate planning funding, too?” said Trevor Higgins, the Center for American Progress’ senior vice president for energy and environment.

The Inflation Reduction Act offered every state $3 million for climate planning, as well as $1 million to the 67 biggest metro regions. If a governor refused the grant, the state’s three biggest cities would become eligible for the state’s money — even if they were originally too small to qualify.

The strategy has been validated, advocates said, by 46 states applying for the climate grants — even GOP-dominated states where officials relish public brawls against President Joe Biden’s climate agenda.

“It actually worked,” Higgins said. “A bunch of cities became eligible and most states decided — even most Republican states — decided that it’d be better for them to accept the funding and do some planning themselves.”

Submitting a climate plan allows cities and states to compete for $4.6 billion in grants to execute their plans.

It remains to be seen, though, how effectively local officials can administer climate funds. And some local opposition to the climate grants already has emerged.

‘We’re missing out’

Coal rules Kentucky’s grid, and electric vehicles remain a rare sight.

The state could have used the Inflation Reduction Act’s grants to plan for decarbonizing those sectors. Or it could have developed programs to support the state’s fossil fuel workforce as the world transitions away from oil, gas and coal. Advocates lobbied Gov. Andy Beshear to take the money.

But facing a tough reelection campaign this year, Beshear became the only Democratic governor to turn it down.

That’s left Louisville, Lexington and Bowling Green to try to step into the state’s role. Officials from those three cities are hoping to share resources, data and perhaps even outside contractors — essentially recreating a statewide action plan, albeit one that excludes the majority of Kentuckians.

“We’re seeing some of our peer cities in other states coordinate with their state agencies on these efforts — and we’re kinda having to go at it ourselves,” said Sumedha Rao, executive director of the Louisville Mayor’s Office of Sustainability.

Louisville, Lexington and Bowling Green do need lots of climate funding, she said, and this funding will help a significant share of the state’s population.

But most cities of Louisville’s size already are partnering with state agencies to multiply the grants’ impact.

“There’s going to be a lot of smaller cities that are left out of this effort entirely,” Rao said. “The two-thirds of the state population (outside big cities) probably will never have an opportunity to go through a process like this without the state backing them. So it is a little unfortunate in the sense that we’re missing out on the statewide opportunity that, for example, Indiana has.”

The Beshear administration claimed it turned down the money because climate planning is better handled by cities.

“The Beshear administration is actively applying for and receiving a number of federal grants to help boost efforts to build a better Kentucky for all our people. In this instance, local governments are best situated to apply for and administer the Climate Pollution Reduction Grant funds,” John Mura, a spokesperson for the Kentucky Energy and Environment Cabinet, said in a statement.

Experts and advocates dismissed that argument as nonsense. Along with the greater powers and the longer reach of state government, Kentucky simply would have qualified for more money by applying for a state grant.

The likelier explanation, some said, is Beshear’s reelection campaign against Daniel Cameron, Kentucky’s Republican attorney general who has crusaded against Wall Street’s climate-oriented investments, fought in court against Biden’s climate regulations and has pushed state regulators to disregard utilities’ climate plans.

Kentucky-based advocates said Beshear still could support cities behind the scenes, for instance by helping them coordinate other federal programs.

“I think the [Beshear] administration is trying to deal with the realities of being a steward in a coal state where there’s still a lot of transition issues,” said Lane Boldman, executive director of the Kentucky Conservation Committee. “The challenges are bigger in this state.”

Cities can reject funding too

Other limits have emerged to EPA’s plan to route state grants to cities.

After South Dakota declined the climate grants, the state’s largest city, Sioux Falls, also declined to participate.

The same happened in Iowa, where Davenport, the second-largest city, declined the grants too.

The office of South Dakota Gov. Kristi Noem (R) said the state rejected the grants because federal spending has been the largest cause of inflation.

“South Dakota invests the money that we receive wisely. We focus on solving long-term problems with one-time investments rather than creating new government programs,” the governor’s spokesperson Ian Fury said in a statement.

Iowa Gov. Kim Reynolds and Florida Gov. Ron DeSantis, both Republicans, did not respond to a request for comment.

While these grants are meant for mitigating climate pollution rather than adapting to climate impacts, some observers were nevertheless astounded that DeSantis, who is running for president, would reject climate money for one of the most vulnerable states.

“DeSantis’ decision to turn down ever larger swaths of money is consistent with the guy who thinks fighting Walt Disney is a good idea,” Evergreen Action’s Segall said.

Robin Bravender, a reporter for POLITICO’s E&E News, contributed to this story.