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The Greenhouse Gas Reduction Fund, Green Banks, & Nature-Based Solutions: an Interview with Matt Carney, Quantified Ventures


By Aditi Srivastava

Nature-based solutions are defined as “actions to protect, sustainably manage, or restore natural or modified ecosystems to address societal challenges, simultaneously providing benefits for people and the environment” ( They include actions like protecting forests, restoring wetlands, increasing carbon storage in soil through improved agricultural management, and reconnecting rivers to their floodplain. They can address the climate crisis not just by restoring natural resources, but by at the same time drawing down carbon and making both human and natural ecosystems more resilient.   

There is growing interest in nature-based solutions and the role that private capital – including innovative financing mechanisms utilized by “green banks” and community lenders including community development institutions – can play in combatting climate change. In April 2024, the EPA announced $20 billion in grant awards from the Greenhouse Gas Reduction Fund towards initiatives aimed at mitigating climate change, ensuring economic competitiveness, and fostering energy independence, with a strong emphasis on benefiting low-income communities.  While the majority of these funds will support traditional renewable energy solutions like rooftop solar and community solar projects, there is the potential for Nature to play a role.  

CFN’s Aditi Srivastava sat down recently with Matt Carney, Senior Director for Green Banks and Resilient Finance at Quantified Ventures, who’s been monitoring the EPA awards, to learn more about the opportunities and challenges to elevate nature-based solutions in this new funding program.  

Note: this interview transcript has been lightly edited for clarity.   

What inspired you to work on issues related to green banks and climate finance? How did you get interested in this topic? How did you first learn about green banks? 

I have a background in both business and environmental policy. I joined Quantified Ventures in 2020. My involvement with green banks began in 2021, starting with a project in New Orleans. We collaborated with a local housing finance agency to develop a green mortgage program that offered reduced rates to homeowners who implemented solar and other energy-efficient upgrades in their homes. Following that, we partnered with the Connecticut Green Bank, which had recently broadened its scope to include a variety of environmental infrastructure projects. This work represents a convergence of traditional finance and environmental sustainability, a niche that felt like a hidden treasure.  

The EPA has recently announced significant investments in green banks. Could you describe these awards and the coalitions and programs they funded? 

The Greenhouse Gas Reduction Fund is divided into two main components: $7 billion directed by Bernie Sanders for the Solar for All program, focusing on residential solar in low-income areas, and $20 billion for financing institutions like Green Banks. These funds are further segmented into the National Climate Investment Fund (NCIF) and the Clean Communities Investment Accelerator (CCIA), where $14 billion of the NCIF was awarded to three organizations to establish national green bank lending institutions. These institutions are poised to enhance private capital mobilization. The remaining $6 billion for the CCIA targets Community Development Financial Institutions (CDFIs) and credit unions, including groups like the Opportunity Finance Network, Inclusive Justice Climate Fund, Appalachian Community Capital, and the Native CDFI Network. This press release from EPA describes these awards and the coalitions in more detail, as do the images below.  

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How are green banks investing in nature-based solutions (NBS)? Is this an area of increasing interest? 

Traditionally, green banks at the state level have focused on residential solar and energy efficiency programs. About a decade ago, the residential solar industry was still emerging and required subsidies. It was less developed in terms of lending practices, making these projects relatively straightforward and easy to quantify, which made them attractive initial targets for green banks. More mature state green banks such as those in Connecticut, Rhode Island, and California have progressively incorporated programs related to environmental infrastructure and nature-based solutions, covering areas like water management, climate-smart agriculture, and forestry.  

Though the Greenhouse Gas Reduction Fund (GGRF) priority remains on traditional programs, there's a significant opportunity and growing demand for projects focused on nature-based solutions and environmental infrastructure. At Quantified Ventures, we've been actively working to expedite this evolution by helping green banks quickly develop and scale programs to invest in environmental infrastructure, sharing lessons and best practices. We are doing so by offering transaction development support to selected entities who submit their projects through our website by June 16, 2024:   

What proportion of total funds might be deployed for NBS, and what impact do you hope these funds will have on the ground? 

I wouldn't want to speculate on exact percentages, but it's safe to say that the proportion of the total $14 billion dedicated to nature-based solutions and environmental infrastructure will be relatively small. However, even a small slice of such a substantial fund represents a significant amount of money. 

Looking forward, the true benefit goes beyond the initial financial allocation. We aim to transform the market for financing nature-based solutions and environmental infrastructure beyond these awards. Currently, many lenders lack familiarity with these types of projects, leading to higher underwriting and tracking costs and a disproportionate assessment of risk, which in turn increases the cost of capital. Our goal is to shift this paradigm by demonstrating successful models, thereby reducing perceived risks.  Just as the solar sector has matured to become a staple in sustainable investments, we envision a similar trajectory for nature-based solutions and environmental infrastructure, ultimately standing robustly on their own.  

Furthermore, we find the broad spectrum of community benefits that come with nature-based solutions and environmental infrastructure particularly promising. Beyond the direct environmental impacts like reducing greenhouse gases and air pollutants, these projects intersect significantly with public health, community wellness, and economic benefits. They act as multifaceted solutions that address a wide range of systemic environmental justice issues, providing significant climate resilience and economic benefits to communities. This versatility is why we are enthusiastic about integrating these solutions into the framework of green banks, as they have the potential to tackle multiple environmental and social challenges simultaneously.  We believe that even if very little of EPA’s funding goes into nature-based solutions, it can help catalyze a broader market for this work.  

Could you share any recent examples of successful nature-based projects (funded by Community Development Financial Institutions (CDFIs) or Green Banks) and their impacts? 

Nature-based projects are largely outside the current scope of green banks since this is a relatively new area for them. At present, our focus isn't so much on individual success stories but rather on institutional achievements and commitments to investing in nature (as Rhode Island and Connecticut’s green banks have done). However, you can look at this set of case studies from Duke University’s Nicholas Institute illustrates how nature-based solutions can be financed and how a green bank might be involved in such a transaction. Additionally, the Rhode Island Infrastructure Bank has several case studies about environmental infrastructure projects they’ve financed, including  removing impervious pavement surrounding Almy Pond to reduce stormwater runoff and improve resilience, replacing the contaminated soil at  Central Falls High School’s stadium with a new field that captures 778,000 gallons of combined sewer overflow discharges, and improving climate resilience in Woonsocket by moving their water treatment plant out of the floodplain.  

How do Justice 40 and state-level commitments to racial and socio-economic justice, influence deployment of funds?   

Community engagement plays a crucial role in deployment of these funds. The Justice40 initiative significantly influences the eligibility of projects for the Greenhouse Gas Reduction Fund (GGRF), as it requires projects to align with specific categories under Justice40 guidelines. Essentially, this ensures that funding is directed where it's most needed. For instance, the Clean Communities Investment Accelerator (CCIA) allocates 100% of its $6 billion to disadvantaged communities, while the National Climate Investment Fund (NCIF) directs 40% of its funding to these areas. This demonstrates a substantial commitment from the EPA and the Biden administration to channel a significant amount of money toward disadvantaged communities. Every decision made by the awardees is influenced in some way by Justice40, highlighting its importance in guiding funding and project selection. 

What are the major challenges in using green banks to fund NBS? 

There are several challenges that need addressing.  

The primary challenge now is that many green banks are not yet fully funded and are operating with limited staff capacity. They need substantial support, technical assistance, and guidance to elevate their readiness for when substantial funding becomes available, ensuring they have well-designed projects and programs in place. GGRF provides limited support for such activities, and green banks and others will have to raise funds separately to cover them. 

There's a noticeable gap in knowledge and awareness among lenders about environmental infrastructure and nature-based solution projects. Many green banks, CDFIs, and credit unions work with private lenders who are more familiar and comfortable with financing projects like rooftop solar rather than ventures into nature-based solutions or water projects. This established comfort level creates a higher barrier for new types of environmental projects. 

Another significant challenge lies in the nature of the funding itself. Programs under the Greenhouse Gas Reduction Fund (GGRF), such as NCIF and CCIA, offer loans rather than grants. While this capital is cost-effective, it requires repayment, a shift from the traditional grant funding many land conservation practitioners are accustomed to. Projects must, therefore, have mechanisms for repayment, whether through generating revenue directly from the project's outcomes or through financial structures where entities like municipalities manage repayments through their budgets, leveraging the lower costs upfront provided by GGRF and green bank financing. 

Moreover, there's a crucial need for accurate tracking and reporting of the outcomes of these projects. While metrics such as avoided greenhouse gas emissions are relatively straightforward to quantify and count for renewable energy projects, they are more complex for nature-based solutions. Awardees must meticulously document their impacts, which is essential not only for compliance but also for validating the effectiveness of these investments. The tools for such monitoring are robust and available, but it's imperative that all involved parties remain diligent in their use. This meticulous documentation is essential for proving the viability and success of these innovative environmental projects. 

What is Quantified Ventures doing to advance this work? What excites you about this work?  

Over the past year and a half, Quantified Ventures (QV) has been fervently promoting the importance of green banks actively investing in nature-based solutions (NBS) and environmental infrastructure. In a partnership with the Coalition for Green Capital , Pre-Collective, and the Robert Wood Johnson Foundation, Quantified Ventures has worked with a group of green banks to develop equitable clean water infrastructure programs. In April, we announced the six green banks selected for the cohort, a decision made difficult by the overwhelming response and the high quality of all submissions. As mentioned above, we also are supporting transaction development work in order to ensure a robust supply of project pipelines.  

The greatest reward has been witnessing the enthusiastic response and the genuine interest from the green bank community in embracing these projects. Seeing this level of engagement and dedication across the ecosystem has been immensely gratifying and confirms that we are indeed moving in the right direction. 


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