Trump's 'green bank' freeze puts Michigan climate, housing efforts in limbo

• Michigan was expected to draw down hundreds of millions from a $20 billion federal climate financing initiative funded by the Inflation Reduction Act
• The Trump administration has frozen the funds, accusing groups that received them of a left-wing conspiracy to defraud the government
• How would the money be spent in Michigan? Building houses and insulating old homes, among other things

Easing the state’s housing shortage. 

Offering low-interest loans for people to insulate their homes and replace drafty windows. 

Putting solar panels on the roofs of schools and churches.

These are the sort of tasks officials hoped to achieve with hundreds of millions of dollars set to reach Michigan through the $20 billion federal “green bank” network funded by the Inflation Reduction Act. Modeled after similar programs in Michigan and other states, the money is supposed to attract private investment in projects that boost clean energy and promote energy efficiency.

But all of those projects are now in limbo, after the Trump administration froze the funds while insisting — without evidence — that they’re part of a left-wing conspiracy to defraud the US government.

It’s a political maelstrom that involves allegations of criminal conduct, lawsuits, and fundamental questions about the executive branch’s power to terminate Congressionally approved grants that have already left government coffers.

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But in Michigan, the bigger question is how the drama could affect the decidedly less controversial plans that governments, nonprofits and businesses had for the money. 

Michigan was due to receive $35 million to build and rehab housing across the state, $24 million for a public housing project in Detroit, and likely hundreds of millions more to finance climate-friendly, cost-saving projects like boosting energy efficiency in factories and insulating old homes.

“All of those programs were on the table in different ways, and it’s all stalled now,” said Aaron Seybert, a managing director at the Kresge Foundation, which has been supporting efforts to draw green bank funds into Michigan.

Commonsense solution, or criminal scam?

Green banks are nonprofit financial institutions set up to finance climate-focused projects that have a societal benefit, but might not appeal to private investors. 

They often work like a revolving loan fund, partnering with private lenders to offer low-interest loans that are eventually repaid, freeing up money to finance new projects.

The state established the nation’s first green bank, Michigan Saves, back in 2009 to help Michiganders finance home energy-efficiency projects. In the years since, the bank  has expanded to finance lead paint abatement, septic system repairs and other projects that protect human and environmental health.

In its 15 years, Michigan Saves has supported $600 million worth of home energy efficiency projects alone.

After witnessing its impact in Michigan, US Rep. Debbie Dingell, D-Ann Arbor, pushed to create a federal green banking fund, known as the Greenhouse Gas Reduction Fund, as part of the 2022 Inflation Reduction Act. Eight national groups were awarded $20 billion, money that was placed in Citibank accounts with plans to eventually redistribute it to tens of thousands of climate projects across the country, including in Michigan.

“These funds are going to projects that otherwise would not be possible, are shovel ready, and will have real impacts in their communities, while bringing down energy costs and creating jobs,” she said.

But the grants were quickly targeted by a Trump administration that generally opposes green energy, supports oil and gas and downplays the risks of climate change.

In a February social media video, EPA Administrator Lee Zeldin decried them as a Biden administration ploy to shovel “boatloads of cash to far-left activist groups.”

The EPA then ordered Citibank to lock the green groups out of their accounts. Three of those groups have filed lawsuits challenging the funding freeze.

“This isn’t about politics; it’s about economics,” said Beth Bafford, CEO of Climate United, one of the groups. “This program was designed to save money for hard-working Americans who are struggling to pay for groceries and keep the lights on.”

Green bank advocates tout them as commonsense solutions that save taxpayers money while improving public health and the environment. 

Take home energy loans, for instance: Insulating old homes lowers energy use, which means utilities can build fewer power plants and solar farms. That’s a win for ratepayers, who would otherwise foot the bill for that costly infrastructure.

A recent report from the Michigan Public Service Commission concluded that every dollar spent on reducing energy waste saves utility ratepayers $2.54.

“These programs have multiple societal benefits, beyond just reducing emissions,” said Steve Clemmer, director of energy research for the Union of Concerned Scientists' Climate and Energy program.

“The public money that's going into this is really leveraging a much greater amount of private investment.”

Impact in Michigan

While the national green bank network is ostensibly a climate initiative, Michigan officials planned to use the money to fulfill the dual goal of curbing emissions and alleviating Michigan’s housing crisis.

Michigan Saves had been set to receive $97 million from the Greenhouse Gas Reduction Fund, spending $35 million of that on a partnership with the Michigan State Housing Development Authority to build and renovate rental housing with energy efficiency in mind.

“It’s going to provide critical gap funding for housing development deals that otherwise would not get done,” said Josh Pugh, a spokesperson for the housing authority. 

The state is short 141,000 housing units, in large part because building costs are higher than the average Michigander can afford to pay. That has created a statewide housing squeeze, leaving some workers unable to afford to live in the communities where they work.

State officials hope to shrink the shortage to 26,000 by September 2026, and green bank financing is a key piece of the strategy. For every dollar invested by the state, Pugh said, projects tend to attract $5 to $10 of private investment, a recent analysis shows. 

With the federal grants now frozen, the state is recruiting developers with little certainty that the promised financing will be available when it’s time to begin construction.

Also uncertain is the fate of a $24 million green bank award designed to promote energy efficiency in the $180 million rebuild of the dilapidated Villages at Parkside public housing project in Detroit.

If the green bank money fails to come through, the project will still happen, said Amin Irving, president and CEO of Ginosko Development Company, which is developing the project. But “the real question is, how do we want to build?”

Officials with Michigan Saves declined to discuss the impacts of the Trump administration’s attempts to terminate green bank funding, but said in a statement that “while uncertainties exist, we remain committed to executing on our grant award by implementing programs that provide meaningful benefits to Michiganders.”

Briefings in the legal battle over the Greenhouse Gas Reduction Fund are due in early April. It’s not clear when a judge will rule on the case.