Can $500 Billion in Federal Clean and Green Tech Investments Close the Racial Wealth Gap?
There must be an all-out blitz focused on preparing Black and Brown businesses to enter and scale in renewable and clean energy sectors
Sarita Turner | a Prosperity Now feature
Investments to address climate change are at an all-time high, not just in the US, but also globally. In fact, there are actually three laws passed in the 2023 federal budget that contain a combined total of $500 billion (yes: half a trillion dollars) in spending over the next ten years: the Infrastructure Investments and Jobs Act (IIJA); the Inflation Reduction Act (IRA); and the CHIPS and Science Act (CSA).
When it’s specifically related to climate change, the CSA is designed to boost domestic research and manufacturing of semiconductors. The IRA will offer funding, programs and incentives designed to accelerate transition to a “clean energy economy” and drive the deployment of new clean energy resources - one key program in the IRA is the $27 billion Green House Gas Reduction Fund. The IIJA will expand access to clean water, make power grid improvements and reduce greenhouse gas emissions. Through these three funding initiatives, many business opportunities will be realized. Also, consistent with the Biden Administration’s environmental and climate justice focused “Justice 40” initiative, each of these funding bills state an intention to address economic inequities by creating opportunities for small, disadvantaged businesses, creating good paying jobs, and pushing other economic development strategies.
While these are all notable and noble goals, we should be clear: the real force behind these climate investments is global economic competition. That's not necessarily a bad thing. We just should be clear: these investments in research and development to increase U.S. capacity to produce clean and renewable energy and chip-making are the underlying driver of these significant investments. Renewable energy is increasing fast, and globally, in energy sector share.
According to the International Energy Agency, renewable energy will increase its share amongst all power sectors from 29 percent to 38 percent by 2025. China will account for about half of this growth and the European Union the next largest contributor at 15 percent.
Notice who’s behind?
Catching Up in the Climate Economy
Climate change has fostered a new global economy: the climate economy. The U.S. must catch up. Our ability to gain and maintain a competitive advantage in clean and green technologies is directly tied to our economy and the ability to maintain status as a world leader. So, while it is wonderful that these investments include intentions to address racial economic injustice, and make American communities better for all, it seems clear that the real agenda is about power and money.
That leads us back to the original question: What could this $500 billion investment in clean and green technology do to address racial wealth disparities? Since all three pieces of legislation governing the use of those resources purports to prioritize economic opportunities for disadvantaged businesses and underinvested communities, I would think that significant economic opportunities for Black and Brown communities will abound. That should prompt us to ask: Exactly how?
Can global economic power and competitiveness goals coexist with racial economic equity goals, or will one override the other?
Companies that perform research, engineering, manufacturing, supplying, installation and technology services, combined with the technical capacity to research and advance wind, solar, hydrogen and nuclear technology; and standup microchip manufacturing, are well positioned to reap tremendous economic benefits. However, Black and Brown ownership of companies operating in these technology sectors is sorely lacking. The most participation is in solar, and even that is dismal. The Solar Foundation and the Solar Energy Industries Association published a 2019 diversity report finding that executive leadership in solar companies is almost exclusively white men - only 22 percent of solar companies had a strategy to increase the numbers of people of color within their organizations.
Furthermore, data related to Black and Brown participation in wind, hydrogen, nuclear and microchip technologies are relatively non-existent. To make matters worse, Black and Brown led entrepreneur supporting organizations – those providing capital and those that do not -- have not had the exposures or capacity developed to provide business development and support services in these clean technology sectors.
So where do Black and Brown aspiring entrepreneurs go to access the technical assistance and support needed to enter these technology sectors?
The good news is, there are promising examples in action that must be rapidly mimicked and expanded in order to make a real difference …
Invictus Innovation EV Technology Corporation, a Black owned semiconductor chip manufacturer, is building a plant in Pontiac, Michigan. The owner, Danny Wilkerson, formed a partnership with the University of Michigan which has designed and implemented a comprehensive curriculum teaching students semiconductor technology. A future goal of Wilkerson’s is to provide educational platforms for the nation’s 107 Historical Black Colleges and Universities (HBCUs).
Los Alamos National Laboratory is engaging with eleven Historically Black Colleges and Universities (HBCU’s) to provide hydrogen and fuel cell research and learning opportunities.
Black Owners of Solar Services (B.O.S.S.) was awarded a $6.3 million grant from the U.S. Department of Energy’s (DOE) Office of Economic Impact and Diversity (ED) to implement the Equitable Clean Energy Advancement Initiative and Pilot Triad. B.O.S.S will lead a regional effort to coordinate and train Black and Brown businesses in applying for DOE funding and accessing DOE programs, benefits, and services.
Offshore wind companies that commit to working with Black and Brown and women-owned businesses are given preference New York’s procurement process. The state energy department is spending $120 million on workforce training for underserved communities including low-income households, people with disabilities and those who were previously incarcerated.
With white Americans holding 84 percent of total U.S. wealth and Black Americans holding only 4 percent of the wealth, if any real impact is made, there must be an all-out blitz focused on preparing Black and Brown businesses to enter and scale in these sectors. The administration must work quickly. Every effort must be made to advance robust support for approaches that will make the intention of advancing economic opportunities for those experiencing wealth disparities meaningful and lasting.