Citibank and EPA spar over frozen climate action funds
Each says the other is responsible, but either way the money isn't being put to its intended use. Read More
In a February 12 social media post, Lee Zeldin, newly installed head of the Environmental Protection Agency (EPA), leveled accusations of financial mismanagement and rushed oversight against the Biden-era Greenhouse Gas Reduction Fund (GGRF).
Soon after, nearly $20 billion in GGRF funds held by Citibank were suddenly frozen and the FBI questioned EPA employees about the program, turning the allegations into a criminal probe.
Now, with the funds still frozen, the government agency and banking giant are each claiming the other is responsible.
The EPA says that the “freeze on funds is at the discretion of Citibank.”
Meanwhile, the bank, in its first public comment since the accounts were frozen, said in a statement to Trellis that “Citi was designated as the financial agent of the United States pursuant to the authority of the U.S. Treasury Department and has been working with the federal government in its efforts to address government officials’ concerns regarding this federal grant program. Our role as financial agent does not involve any discretion over which organizations receive grant funds. Citi will of course comply with any binding instructions from the federal government.”
This response once again highlights the question at the core of the issue: Does the EPA and Department of Treasury have cause to freeze the funds? But the consequence remains the same regardless — none of the recipients counting on the frozen money to kickstart climate technology projects are receiving it.
“We have not been able to access funds for two weeks now,” said a senior official from one of three coalitions expecting the financial infusion. “We have not received communication from the EPA or Citibank as to why the freeze has occurred.”
A barrier-buster blocked
The Greenhouse Gas Reduction Fund was created to remove financial barriers that prevented the commercialization of climate technologies, in the hopes that an infusion of government money would prompt private sector investors to increase their involvement. The funds were congressionally approved and appropriated with the passage of the Inflation Reduction Act in August 2022.
Of that money, $14 billion is divided among three coalitions — Climate United, Power Forward, and the Coalition for Green Capital — who are expected to invest it in local climate tech projects deemed too risky to attract private sector funding without government participation. Another $6 billion was designated to the Clean Communities Investment Accelerator, which is meant to provide funding and assistance for sustainable technologies to lenders working in low-income and disadvantaged communities.
“It’s simple,” the senior coalition official explained. “Government money mobilizes private capital.”
Indeed, from just the first few grants awarded since the coalitions were announced in April 2024, more than 49,000 jobs were created from an estimated $16 billion in private capital invested and mobilized, according to a fact sheet created by the three coalitions.
And without private sector buy-in, potential projects aren’t allowed to break ground. That’s why the current freeze has catalyzed fears of a negative domino effect.
“The concern is that the private sector — housing developers, clean energy providers, mortgage lenders — won’t participate if those government funds don’t materialize,'” said the same senior official, who requested anonymity.
Projects and organizations already awarded money plan to continue to work until the capital runs out.
