Updates from Rural America

The Environmental and Energy Study Institute (EESI) held a briefing about the implementation of the bipartisan Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) in rural America. What programs are uniquely designed for and supportive of rural communities? What types of projects are making a difference in people's lives? What are the remaining barriers preventing small and rural communities, institutions, and companies from accessing IIJA and IRA support?

Panelists addressed these questions and shared the latest updates on U.S. Department of Agriculture, Department of Energy, and other agency programs that provide for rural communities. They outlined how these laws directly help rural communities—from farms and ranches to rural town centers. Using specific examples from around the country, panelists also discussed key topics from a rural perspective, including electricity provision, broadband access, drinking water availability, and pollution reduction.

Highlights

KEY TAKEAWAYS

The United States has not seen major investments in rural America like those from the Inflation Reduction Act of 2022 (IRA) (P.L. 117-169) and Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) since the 1930s. Twenty-five percent of large-scale clean energy projects announced in the first year of the IRA were located in demographically rural areas. This $20 billion investment went towards more than 50 projects across 21 states. Through the IRA, the U.S. Department of Agriculture is providing about $20 billion to farmers across the country to advance conservation practices such as cover crops, minimal tilling, and crop rotation.  The well-being of wildlife and fish populations is intertwined with rural and agricultural communities, especially because of migration patterns. The IIJA and IRA invest in habitat connectivity to protect people living and working in rural areas and bolster ecosystems.

 

Sandra Purohit, Director of Federal Advocacy, E2

• Rural America makes up 97% of U.S. landmass and is home to more than 40 million people. Rural areas also account for 80% of persistent poverty counties in the United States. Since 2013, more than half of U.S. farms have been operating on a cash-negative basis, and since 2011, more than 100,000 farms have ceased operation altogether.
• In 2022, 18 weather and climate disasters each caused over one billion dollars in damage in the United States. These billion-dollar disasters are becoming more frequent and impact farms, driving up consumer costs of food and fiber textiles.
• E2’s report, Benefits to Rural America from the Inflation Reduction Act: Driving Jobs, Investments, and Economic Resilience, looks at investments that seek to address the challenges facing rural communities.
• Twenty-five percent of large-scale clean energy projects announced in the first year of the Inflation Reduction Act of 2022 (IRA) (P.L. 117-169) were located in demographically rural areas. This $20 billion investment went towards more than 50 projects across 21 states, resulting in over 67,000 new jobs, 21,000 of which will be permanent, and nearly $2 billion in worker wages each year.
• These projects will create about $5 billion in tax revenue during their construction phases, and $700 million in tax revenue will be generated every year the projects are in operation.
• One year after the IRA passed, Kia, the South Korean automaker, announced a $217 million expansion of its manufacturing facility in rural Georgia to build electric vehicles, which added 200 direct jobs. Kia designs and assembles cars, but relies on Hyundai for components. Hyundai also expanded its Georgia facility, which created 100 more jobs. Hundreds of new workers will now eat at local restaurants and otherwise stimulate the economy, inducing additional job creation across the community.
• Many small, rural towns struggle to pay for basic services like teachers, first responders, and libraries because smaller populations mean a smaller tax base. IRA-supported projects in these communities diversify and expand the tax base, which increases funding for public services such as road maintenance and school nurses.
• The IRA is also providing about $20 billion to farmers across the country to advance conservation practices such as cover crops, minimal tilling, and crop rotation. These programs are completely voluntary and extremely popular.
• For example, Lucinda Stuenkel is a farmer in Palmer, Kansas, who grows oats, wheat, and soybeans on 1,000 acres. She is part of a conservation program known as the Soil Health Demonstration Trial, which was designed to expand and study the use of regenerative agriculture practices. She receives extra income by letting cows graze on her cover crops, and she saves money on pesticides and fertilizer costs. Her land is more resilient due to the program: regenerative practices increase the rate at which the soil can absorb water, which helped crops survive through devastating droughts.

 

Clare Sierawski, Senior Energy Counselor, Department of Agriculture

• The United States has not seen major investments in rural America like those from the IRA and Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) since the 1930s.
• The U.S. Department of Agriculture (USDA) has three renewable energy programs funded in part through the IRA: the Rural Energy for America Program (REAP), Powering Affordable Clean Energy (PACE), and Empowering Rural America (New ERA).
• In fiscal year (FY) 2023, USDA invested $6.8 billion towards over 100 loans for clean energy implementation, energy resilience measures, and smart grid equipment.
• REAP provides grants to agriculture producers and small, rural businesses for energy efficiency and clean energy technologies. Before the IRA, REAP could only subsidize up to 25% of project costs ($500,000 maximum), but now, with the added support from the IRA, REAP grants up to 50% of project costs ($1 million maximum) for clean energy and energy efficiency projects.
• New funding has increased demand for the already-popular REAP grants by nearly 1,000 times. This demonstrates that more farmers are able to actually make use of the program with the increased level of support from USDA. USDA administered 3,000 awards in FY 2023 and 1,000 awards in FY 2024 so far.
• USDA also established REAP’s technical assistance team with IRA dollars, which helps farmers and small business owners apply for REAP grants and is available in every state.
• The Rural Utilities Service program provides loans to rural electric cooperatives. With funding from the IRA, USDA created PACE through which rural electric cooperatives can receive partially forgivable loans for clean energy projects. This is a $1 billion program, and USDA received $12 billion in requests from cooperatives. Five awards have been announced, and they plan to be able to support about 70 projects in total.
• Congress invested $9.7 billion in the New ERA program, which assists rural electric cooperatives with energy resilience, reliability, and affordability projects. The New ERA program is also very popular and received over $47 billion in funding applications. The first awards will go out in July 2024.
• Another place where more funding is needed is the Rural Energy Savings Program, through which USDA provides no-interest loans to rural electric cooperatives for them to re-lend to their members for behind-the-meter clean energy and efficiency projects. The demand has grown significantly for this program in recent years.

 

Toniqua Hay, Stakeholder Engagement Lead for Energy Improvements in Rural or Remote Areas, Office of Clean Energy Demonstrations, Department of Energy

• The Department of Energy’s (DOE’s) Office of Clean Energy Demonstrations (OCED) Energy Improvements in Rural or Remote Areas (ERA) program was established under IIJA to improve the resilience, safety, reliability, and availability of energy in rural America. Fulfilling these goals means delivering measurable benefits to energy customers in rural and remote areas by supporting their energy systems and building clean energy knowledge, capacity, and self-reliance.
• ERA will provide $50 million in grants to fund small clean energy demonstration projects and applications for these projects are currently under review.
• ERA has an additional $300 million in funding for medium- and large-scale clean energy demonstration projects. This funding opportunity received 365 concept papers requesting $23 billion in federal investments, of which 78, representing $1.6 billion worth of investment, were encouraged to submit full applications. Of those 78, 75 submitted full applications and funding was announced for 17 projects spanning 20 different states. Thirty tribal nations will benefit from seven different types of clean energy projects across Alaska, Wisconsin, California, and New Mexico.
• While most of the selected clean energy projects will serve the contiguous United States, projects will also take place in very remote locations in Alaska, exemplifying how the ERA program supports some of the country’s most hard-to-reach communities.
• Many ERA projects deploy more than one technology, such as coupling solar power with energy storage systems.
• Prioritizing community benefits is crucial for programs within OCED. Clean energy demonstration funding applications must include a community benefit plan to ensure the advantages of the clean energy transition are broadly distributed. There are four pillars for assessing community benefits:
  • Community and labor engagement,
  • Diversity, equity, inclusion, and accessibility,
  • Workforce development, and
  • The Justice40 Initiative, which aims to target 40% of the benefits from federal clean energy investments to disadvantaged communities.
• The Hopi and Navajo Nations will receive ERA dollars to install solar panels with battery-based systems. These tribal nations have some of the best solar resources in the country, and, at the same time, thousands of tribal homes still lack access to electricity. Providing off-grid solar energy and battery storage will electrify these homes in a faster and more affordable way than connecting every home to the grid.
• ERA funding is also going to Old Harbor, a remote tribal village on Kodiak Island in Alaska. The new hydropower project will generate electricity for local utilities and improve energy security, lower costs, and reduce health impacts associated with diesel.
• The National Association of Community Health Centers developed a model to bring solar energy and microgrid storage to individual community health centers, which will be funded by the ERA. This project is important because many rural community health centers do not have the capacity to take on an energy storage project like installing a microgrid, even though self-contained energy systems are critical to keeping health centers powered during grid outages. This project will benefit up to 175 community health centers across the Southeast.

 

Zach Bodhane, Director of Government Relations, Theodore Roosevelt Conservation Partnership

• The Theodore Roosevelt Conservation Partnership’s (TRCP’s) mission is to guarantee all Americans quality places to hunt and fish. TRCP focuses on public lands, private lands, water resources, climate solutions, and marine fisheries. It also coordinates an IRA and IIJA implementation working group.
• The well-being of wildlife and fish populations is intertwined with rural and agricultural communities, especially because of migration patterns.
• Throughout the West, migrating wildlife must pass through private, agriculture, and Bureau of Land Management land annually. The diverse ownership of land creates obstacles for big game, like fences and roads, that they cannot cross.
• IIJA provides support for wildlife conservation via Department of Transportation programs, such as the Wildlife Crossings Pilot Program (WCPP), which received $110 million. The goal of the program is to reduce wildlife-vehicle collisions and improve ways for wildlife to safely cross transportation infrastructure. The program is new and is already oversubscribed.
• The IRA invested $20 billion in the USDA for conservation, climate resilience, and climate mitigation work.
• Eight federal agencies are working together to administer $2 billion from the IIJA to support aquatic ecosystem restoration, infrastructure improvement, and culvert removal to improve fish passage. Projects can be found on the Federal Interagency Fish Passage Portal.
• The USDA Migratory Big Game Initiative is supported by IRA funding to expand migratory big game conservation on private land. The initiative expands conservation in big game corridors and partners with the Conservation Reserve Program and Environmental Quality Incentives Program to subsidize wildlife-safe agricultural practices like wildlife-friendly fencing.

 

Frances Sawyer, Founder, Pleiades Strategy

• Clean energy and conservation investments in rural America are transforming the economy, improving quality of life, and reducing energy costs for families. The federal government is unlocking these benefits and opportunities through collaborations with rural electric cooperatives.
• Looking back, President Franklin D. Roosevelt’s Rural Electrification Act (REA) (P.L. 74-605) made transformational investments that electrified rural America, bringing rural Americans the same energy resources that urban Americans already had had access to for 40 years. Present-day programs replicate the REA by connecting federal resources and expertise with projects built with local community leadership.
• Rural electric cooperatives serve 92% of persistent-poverty counties, and today’s programs connect these cooperatives to clean energy technologies, which may otherwise be inaccessible to them. This has an outsized impact, including poverty reduction, pollution reduction, and increased energy reliability in rural communities.
• Energy costs are 40% higher for rural Americans than for the average urban resident, so improved weatherization and energy efficiency as well as clean energy technologies can have disproportionate benefits for rural homes.
• New ERA and PACE are very popular and were massively oversubscribed just in their first year. Cooperatives are excited to put clean energy projects into action.
• The transition to clean energy and investing in the electric grid require collaboration and community engagement. Collaborations among federal agencies, local governments, nonprofits, cooperatives, and labor groups can be difficult and take time, but they are necessary.
• Community engagement and benefits are core to USDA’s IRA-funded programs. Project developers and utilities have the responsibility to incorporate community opinions into their plans and contracts so they can best deliver benefits across multiple values and goals.

 

Q&A

 

Q: Is USDA’s technical assistance to assist farmers in applying for funding free of cost? How often do farmers reach out for assistance, and from what states?

Sierawski

• Technical assistance is free for farmers looking to apply for USDA programs.
• This is the first time USDA has been able to offer such assistance, so there is not much data yet on how producers are accessing the technical assistance.

 

Q: Does USDA have a resource with information about investments and projects funded organized by state? Does USDA have a chart which specifies the types of renewable energy receiving funding?

Sierawski

• USDA has project and investment data on REAP because it is a long-standing program. Most investments from REAP are for solar energy projects.
• A new effort called the Rural and Agricultural Income and Savings from Renewable Energy (RAISE) initiative works to promote underutilized renewable energy technologies.
• USDA put together a fact sheet on the first year of project funding from the IIJA and a fact sheet on the first year of project funding from the IRA.

 

Q: What processes are in place to track the progress of renewable energy projects funded through the IRA and IIJA?

Purohit

• Programs funded through the IRA and IIJA are durable because many of them are loans. When loans are paid back, the funds can be recycled towards more projects.
• There is no expectation for all the funded projects to be entirely successful as the IRA and IIJA are, in part, investing in innovation.
• IRA and IIJA programs are bringing more government organizations and communities together to work on implementation.

Sierawski

• All federal government programs have requirements for reporting on funding and project progress.
• USDA has strong relationships with rural electric cooperatives and rural communities, which makes it easier to gauge program progress and uphold reporting requirements.

Hay

• To ensure project durability, DOE considers long-term viability as a big part of the evaluation process before a project begins. These projects are planned as long-term, self-sufficient projects.

Bodhane

• USDA programs have conservation compliance monitors built in that are meant to work with producers and ensure that programs are working for all stakeholders. USDA also monitors projects based on predetermined management plans.
• Project durability must include political durability. By demonstrating long-term project success, projects can continue to receive funding from Congress, even if the political climate changes.

Sawyer

• Investments in the grid are generational investments designed to provide durable and reliable electricity.

 

Q: Is there a way to find out how funding is allocated by state? Are there states with more appropriated funding than others?

Sierawski

• The REAP dashboard communicates state-by-state funding. Constituents in some states are more active in applying for REAP awards than those in other states, which is why REAP’s technical assistance team aims to reach out to states that do not use REAP as much.
• Investments from the IRA allow USDA to administer REAP funds quarterly rather than every six months.

 

Q: How much of the IRA and IIJA has been implemented?

Purohit

• The ten-year timeframe for the IRA means only a bit has been implemented thus far.
• It takes time to build up partnerships and programs, so current success from the IRA and IIJA is only the tip of the iceberg.

Sierawski

• While only a little bit of the IRA and IIJA has been implemented, there has been great progress.
• Communities are still learning about programs.
• IRA-funded projects must be completed by 2031, so USDA is administering funds to rural communities as fast as possible to start projects. USDA was able to administer over 3,000 awards in 2023.

Hay

• It takes time to begin IRA- and IIJA-funded projects, but we are seeing progress in implementation.

Bodhane

• Agencies and organizations first pursued “shovel-ready” projects, which get money to communities as fast as possible. Now, agencies and organizations are looking for innovative projects that have not yet been pursued.

Sawyer

• For communities that were not ready with projects as soon as funding became available, they have time throughout the next 10 years to benefit from IRA tax credits and direct pay.

 

Compiled by Kylie Tugend and Meghan Tinnea and edited for clarity and length. This is not a transcript.

Photos