Climate Pollution Reduction Grants: A framework for planning and implementation

The Climate Pollution Reduction Grant (CPRG) program presents a massive opportunity for states and municipalities to develop their climate plans and obtain resources to put those plans into effect. Forty-six states have decided to accept $3 million each from the Environmental Protection Agency (EPA) in these planning grant funds and started to receive the awards in late June. In 2024, those states, in addition to certain municipalities, will compete for the remaining $4.6 billion of implementation funding.   

The Priority Climate Action Plan (PCAP) is the first CPRG deliverable, due March 1, 2024. The PCAP is intended to identify top climate priorities for the state resulting from the planning grant. There are many sectors the PCAP can focus on, including economy-wide emissions reductions, transportation, industrial decarbonization, energy production, workforce development, and much more. Only a month later, on April 1, 2024, CPRG implementation grant applications are due. Given these short timeframes, PCAPs and implementation grant applications must be developed in parallel.  

The CPRG program was designed to be flexible so that it can support the efforts of the many differently situated states and jurisdictions across the United States, each with their own unique resources, economies, and politics. This flexibility is laudable, but the range of possibilities is so vast that states can have difficulty knowing where to start, what to focus on, and how to organize their plans.  

This paradox of choice is further complicated by the fact that best practices and successful programs in one state may be ill-suited in another. The transition to a clean energy economy requires a wide range of innovative technologies to provide practical solutions that work across our diverse economy and states.  

Climate Pollution Reduction Grant framework for project application development 

CATF developed the following framework to help guide state officials in designing competitive CPRG implementation grant applications, given the broad flexibility and discretion afforded to each. The framework includes five categories for emission reduction measures states can undertake. 

1. Critical analysis. To identify focus areas for decarbonization and to ensure complementary programs are well designed and implemented.   

2. Regulatory programs. Develop, staff, and enforce regulatory programs, one of the most direct tools for emission reductions. 

3. Financial incentives. Provide subsidies and loans, enforce fees, and enable other mechanisms that alter the underlying economics of an activity. 

4. Economic and community benefits. Successful plans will have community support and develop the workforce necessary for long-term viability of decarbonization technologies. 

5. Leveraging additional funding sources. State plans should leverage non-CPRG sources of funding to maximize impact and develop the strongest grant applications. 

For CPRG implementation grants in any given sector, the application can take a holistic approach by including activities in each of these categories and explaining to EPA how they are coordinated to maximize impact. A well-designed application will achieve significant emission reductions, while providing community benefits and leveraging additional resources and existing authorities. 

States have unprecedented opportunities to decarbonize their economies

States have a wide array of options for CPRG funds as they develop their own state specific PCAPs. Using clear guideposts and frameworks to narrow and tailor those priorities will enable better plans and stronger implementation applications. A framework that asks the right questions and establishes a foundation for sector specific projects should include critical analysis, regulatory programs, financial incentives, and community benefits. This unique funding opportunity and historic decarbonization potential demands states make informed choices with clear metrics and meaningful results. CATF works with states to maximize the impact of their efforts. 

CATF is available to assist states in developing their PCAPs across sectors and in different aspects of their framework. We also can provide assistance developing strategic plans, technical expertise and insight, and conduct qualitative and quantitative analysis to assist in grant applications. Reach out to John Carlson at [email protected] for more information. 

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Climate Pollution Reduction Grant framework applied to the medium- and heavy-duty vehicle sector

Below is an example of how this framework can be applied to medium- and heavy-duty transportation decarbonization, with specific suggestions for programs and projects. CATF’s state policy and transportation decarbonization teams are available to expand on and assist with any of the concepts below. In future pieces, we will apply this same framework to industrial decarbonization and other critical sectors in a decarbonized economy. 

Medium- and heavy-duty transportation decarbonization

1. Critical Analysis 

For any sector of the economy there is a need for critical analysis to identify focus areas for decarbonization and to ensure complementary programs are well designed and implemented. In the medium- and heavy-duty vehicle (MHDV) space, this may include: 

• Cataloguing of medium- and heavy-duty fleets already in operation or planned to be in operation in the near term. This could include both on-road and off-road fleets, each with their own unique challenges. 
• Transportation corridor mapping to determine when and where the highest volumes and usage exists. If basic corridors have already been identified, then specific locations and needs for charging and alternative fuel depots can be identified. 
• Conducting a grid congestion study in coordination with corridor mapping can help states understand the potential impact of the new electricity demand on the grid as the transition to zero-emission vehicles increases load and adjusts demand curves. 
• Conducting an air quality analysis to quantify the burdens from MHDVs and help direct resources to frontline communities most susceptible to negative health outcomes from such pollution.  
• Developing an inventory of existing infrastructure that services MHDVs, along with the ability of that infrastructure to be updated or repurposed, to give a state clear targets and sites for potential investment.  

2. Regulatory Programs 

Regulatory programs and standards are one of the most effective tools a state can use to achieve tangible emission reductions. CPRG funds can provide states with the resources needed to develop, staff, and enforce regulatory programs. 

Within the MHDV space, two main pathways are available for regulatory action: (1) vehicle sales and purchase requirements and (2) utility regulation. 

• The Clean Air Act authorizes states to adopt the Advanced Clean Trucks rule (ACT) to require manufacturers that sell MHDVs to meet zero-emissions vehicle (ZEV) sales targets as an increasing percentage of their annual sales from 2024 to 2035. States and stakeholders have access to billions of dollars in federal funding that can be used to implement ACT. 
• Purchase requirements to complement ACT can be adopted via the Advanced Clean Fleets rule, which requires fleets (such as trucks and buses) that are well positioned for electrification to transition to zero-emissions vehicles.  
• By adopting a Low Carbon Fuel Standard (LCFS), the state can reduce and eliminate MHDV GHG emissions by requiring the use of cleaner fuels. An LCFS requires fuel providers to demonstrate that the mix of fuels they supply meets a carbon intensity (CI) target. If the fuel is less than the applicable CI standard, the provider generates credits. If the CI of the fuel exceeds the standard, enough credits must be purchased from another party to offset the deficit generated. CATF can assist with the design and analysis required for such a program. 

Additionally, utility regulations can enable the decarbonization of medium- and heavy-duty transportation.  

• Public utilities commissions (PUCs) can require medium- and heavy-duty infrastructure upgrades and buildout to be included in utility integrated resource plans. These plans offer a roadmap for utilities to reach electric demand requirements while considering the risks and tradeoffs associated with those options. 
• Regulations could also require utilities to offer time of use rates, where electricity rates vary according to season, weekday, and time of day. Policymakers could encourage utilities to offer lower rates for fleet owners to charge off-peak, thereby increasing revenue to the utility but not doing so during peak demand, which could result in higher costs and the need to build out new electricity generating units. 

3. Financial Incentives 

Financial incentives have been instrumental in the deployment of clean technologies, and CPRG awards can be used to design, staff, and fund incentive programs that support transportation decarbonization (or other state priorities). Incentive programs can receive CPRG (and other) funds and subgrant them to businesses and residents. Incentive programs can provide subsidies and loans, enforce fees, and enable other mechanisms that improve the underlying economics of an activity. 

• Clean MHDV purchase incentive programs. CPRG may be used to provide funds for purchase incentives but also can help determine truck class eligibility, support deployment in specific communities, or determine where in the supply chain incentives would be most effective. 
• Charging/fueling station incentive program. To speed the development of charging depots and alternative fuel stations, the program could offer grants, loans, or tax credits for costs such as equipment purchases, installation, grid interconnection, and fuel transportation. These efforts can align with the results of the DOE funded Alternative Fuel Corridor studies currently underway. 
• Program start-up and operating costs. Funds can cover costs such as consultants to design and promote incentive programs. CPRG grant criteria favors programs that leverage other funding sources, such as those that support the incentives themselves.  
• Partnership with green banks. Many states have recently established or expanded green bank programs. States could use CPRG funds to design products within those institutions that support MHDV deployment by underwriting loans for fleet conversion and associated infrastructure. The CPRG grant criteria gives additional weight to programs that leverage other funding sources. Melding CPRG resources with established funding streams for green banks could result in an attractive implementation grant proposal. 

4. Economic and Community Benefits 

The most durable and successful public sector programs build a meaningful coalition of stakeholders, including community support, workforce development, and real-world benefits to residents and citizens. Benefits to low-income and disadvantaged communities will be considered as part of CPRG implementation grant applications, as will the quality of jobs produced from any grant. A holistic decarbonization plan addresses the careers and skilled employees required to create the long-term demand and viability required for continued investment and deployment of the technology. 

• The establishment or expansion of workforce training programs with community colleges related to the installation, manufacture, servicing, or operation of MHDV infrastructure.  
• Support union apprenticeships on MHDVs, such as mechanic training, manufacturing, operating, or other organized labor opportunities.  
• Air quality monitoring networks that can quantify the reduction in particulate matter and air pollution would benefit from CPRG funding, allowing host communities that are disproportionately impacted by MHDV pollution to understand and track benefits of decarbonizing the transportation sector, including in specific neighborhoods.  
• Decarbonizing public MHDV fleets can lead to highly visible impacts for overburdened communities. CPRG funds can support the transition of transit buses, garbage trucks, school buses, and other public fleets. 

5. Leverage Other Sources of Funding 

EPA’s guidance for implementation grant applications makes clear the agency wants CPRG funds to be used to fill funding gaps. In other words, CPRG funds should not be used for activities that other federal funding programs are designed to address. At the same time, applications will be strengthened by showing that a CPRG award will be leveraged alongside other funding sources.

Review a full list of federal funding programs that support the Advanced Clean Trucks program.

Review a fact sheet on Climate Pollution Reduction Grants in the medium- and heavy-duty vehicle sector.