Banks, nonprofits, and developers have spent the last two years getting ready for the influx of cash provided by the Greenhouse Gas Reduction Fund, established by the Inflation Reduction Act. Today, though, with the presidential election just days away, they’re “scared to death.”
That’s according to Ken LaRoe, CEO and founder of Climate First Bank, who spoke with Latitude Media about the fate of the $27 billion fund, which was obligated earlier this year, but is largely yet to be deployed.
“Everybody is pretty confident that it will get compromised,” he said; even though the funds are backed by federal law, former President Donald Trump has promised to “gut” the IRA if elected.
LaRoe founded Climate First Bank in 2021 as a full-service bank with a focus on financing climate solutions, such as rooftop solar, renewable energy, heat pumps, and electric vehicle charging. And since its passage in August 2022, the IRA has been transformative, far beyond the impact of the GGRF alone. Spurred by the over $200 billion that the law has injected into clean energy, the bank has experienced quick growth, reaching $850 million since its inception.
Through its solar lending platform OneEthos, which the bank developed for its solar program and then spun into a separate subsidiary under its holding company, Climate First Bank has originated around $150 million in solar lending.
As a for-profit bank, Climate First can’t receive GGRF money directly — it’s for non-profit organizations alone — which is something that LaRoe considers “a mistake” that risks squandering technical expertise. However, the bank’s work includes partnering with four coalitions that have been granted some of the $27 billion of the Greenhouse Gas Reduction Fund, such as the Montgomery County Green Bank. Solar represents around a third of Climate First Bank’s loans.
Urgency to deploy
Because of the uncertainty around what will happen to the funds if former President Donald Trump is elected, there has been a keen sense of urgency in getting GGRF programs such as Solar for All underway.
Amanda Li, chief operating officer and co-founder of Banyan Infrastructure, told Latitude earlier this year that entities tasked with deploying the funding have been operating under a “use it or lose type of mentality,” to get things done before any potential change in government. “And even if there is a change of government, programs that are succeeding tend to be less in the crosshairs,” she said in May.
That said, while there’s still “legitimate concern” that Trump will compromise the IRA somehow, LaRoe is confident that the demand it has created for climate technologies like solar is not going anywhere. Since the law passed, around 1.5 million homes in the U.S. have installed solar, and the industry added 75 gigawatts of new capacity to the grid, according to recent data from the Solar Energy Industries Association.
“It’s created this flywheel effect, that takes us… for at least a couple of generations,” he said. He added that even in the case of a Republican victory next week, he wouldn’t be surprised to see a backlash that leads more customers to seek clean energy products, which could benefit a nascent bank like Climate First.
Climate First is the third bank LaRoe has founded. He sold his first, Florida Choice Bank, to Alabama National Bankcorp in 2005, and his second, First Green Bancorp, to Seacoast Banking Corporation in 2018. The growth of Climate First has already surpassed both endeavors, though. The bank accumulated more assets in three years than LaRoe’s latest one did in nine — a signal that the timing is good for climate and renewables.
LaRoe is now targeting an IPO for Climate First Bank in 2026.
From a future federal administration, be it a Harris or a Trump administration, he’d like to see structural changes in bank regulations and taxation that he believes could enhance the clean energy progress made by the IRA.
“I have long believed that… banking regulators [should] give values-based banks relief,” he said. “Whether it’s a climate bank or a social justice bank, or a racial equity bank, they should allow some slightly different underwriting standards, so that they don’t ding us if we’re doing lending to low- to moderate-income households that don’t have a credit score, for example.”
