This coverage is made possible through a partnership between BPR and Grista non-profit environmental media organization.
Gwen Christon runs an IGA grocery store in Isom, an eastern Kentucky town struggling with excessive utility bills and few grocery options. Climate change exacerbates both problems. When the state’s record flood of 2022 destroyed her supermarket, the town became a food desert as she scrambled to reopen. She soon turned to a small, local financial institution called the Mountain Association for help. With his support, the store, a stalwart community institution since it opened in 1973, found funding for rooftop solar, and more efficient chillers, heating and air conditioning. These improvements saved Christon enough on her power bills to reopen — and hire 10 additional employees.
“They are reaping the benefits of reduced energy costs, so they can reinvest in their businesses and continue to grow their workforce [and] provide lower-cost groceries,” said Robin Gabbard, president of the Mountain Association.
The organization Gabbard leads is a community development financial institution, or CDFI, one in a network of small local lenders across Appalachia and the country that provide small loans to entrepreneurs and homeowners in rural and low-income areas.
Thanks to $500 million in funding from the Environmental Protection Agency, a new initiative called the Green Bank for Rural America can help channel money to nonprofit lenders like the Mountain Association for community solar arrays, apprenticeships in renewable energy fields, electrified public transportation and other projects. The program will connect more than 75 rural CDFIs, with preference given to those in the Appalachian mountain region. It is part of the EPA’s $27 billion greenhouse gas reduction fund created to support financial organizations with a history of deep community relationships and investment in local projects.
“CDFIs kind of serve as the on-ramp for communities, and banks are on the highway,” said Donna Gambrell, president of Appalachian Community Capital, or ACC. Founded by the Appalachian Regional Commission, the firm raises and distributes funds for community development financial institutions throughout low-income rural communities in Appalachia.
The funding awarded to ACC will help it provide more assistance to its small lender network. The steering committee for the Green Bank includes institutions from across Appalachia, including CommunityWorks Carolina, Grow America and Coalfield Development. These funds are intended to future private investment beginswith Gambrell estimating that ACC’s grant will leverage $1.6 billion in private investment. The bank will prioritize the Appalachian region’s 582 counties and serve other parts of rural America, especially low-income areas, communities of color and energy communities moving away from fossil fuel production.
The Green Bank for Rural America is intended to increase the lending capacity of organizations like Mountain Association and expand investment in all phases of the energy transition and climate resilience. Particular focus areas include workforce training, renewable energy storage, electric transportation, home energy efficiency and disaster relief. The money will support work that many areas have been doing for a long time, Gabbard said.
CDFIs have historical roots in the 19th century, as black and immigrant business owners, refused loans by white-owned banks, developed their own financial institutions. The Treasury Department formally recognized them in 1994 when it established the CDFI fund. Now there is more than 1,000 across the country, support projects that would otherwise not be funded.
The green banking movement began as a way to finance small clean energy projects, but it took some time to gain national recognition. Since 2009, lawmakers from across the country have pushed for the creation of a publicly funded national Green Bank to jump-start potentially expensive but essential renewable energy infrastructure at the grassroots level. In August, the first nationwide green bank — the Coalition for Green Capital — met $5.1 billion from the Inflation Reduction Act.
It is one of more than a dozen green banks across the country. Such institutions endorse residential solar and energy efficiency upgrades, deployment of alternative fuel vehicles and other small-scale climate solutions. The Connecticut Green Bank estimates that it has prevented the release of 11 million tons of carbon dioxide since its founding in 2011.
Jason Spicer, an assistant professor at the Marx School of Public and International Affairs at Baruch College at CUNY, has studied the impact of CDFIs in Appalachia for many years. These projects, Spicer says, address financial inequality on a small scale, but it can be difficult for them to change the underlying conditions that promote inequality. Place-based investments do not always change structural problems, especially in a region that spans such a large geographic area and contains so many economies and material conditions.
“There have long been tremendous amounts in Appalachia,” Spicer said. “The problem is by whom and for what purpose.” As absentee landowners—coal companies, timber companies, speculators—invested in resource extraction, the wealth generated by these resources left the region and enriched the already wealthy.
“What are the models that ensure that this wealth can be retained locally?” Spicer asked and suggested that cooperative ownership and worker ownership could lead to a more equitable distribution of resources. One challenge to making the energy transition change financial relationships between capital and low-income communities is the extent of the necessary transformation; $500 million, Spicer said, could help small lenders scale up, as the bureaucracy involved in microloans is often prohibitive for small borrowers in low-income areas. The Green Bank can help bridge the gap by providing resources where they are most needed.
“A benefit of the CDFI system in theory is that it targets the places that are most in need,” Spicer said. “In theory, you don’t see it going to the strongest counties in the region, right?”
Gambrell said that’s exactly the goal. “We wanted to make sure that these were high-impact projects, green projects, renewable energy projects that were in low-wealth rural communities,” she said. “The projects themselves will help create jobs that stay in hard-hit communities.”
