Op-Ed Submission: Inflation Reduction Act is Unique Opportunity to Combat Climate Change & Racial Wealth Gap

Joint Letter to the Editor from Guadalupe Credit Union and the Credit Union Association of NM

The Inflation Reduction Act (IRA) presents an important opportunity to address both climate change and the racial wealth gap, which disproportionately harms Latino and Native communities in New Mexico. We applaud the Biden Administration and Congress for moving this critical legislation forward and see the IRA’s $27 billion investment in green lending through the Greenhouse Gas Reduction Fund (GHGRF) as a key tool to address the climate crisis and improve our community’s financial well-being. To ensure this historic legislation lives up to its promise, the Biden Administration should leverage its Justice40 Initiative to plan the GHGRF implementation with careful consideration of how funding will reach and meet the needs of communities of color, reservation-based communities, immigrant communities, and low-income urban and rural communities.

New Mexico has the highest level of income inequality in the country and deep disparities in poverty rates between white and Latino residents. This translates into considerable disparities in energy cost burden: households in New Mexico living below the poverty line dedicate 16% of their income to energy-related costs, compared to 3% for the average household. This intersection of financial and energy inequity is exacerbated by the fact that communities of color do not have equal access to affordable green lending programs that would reduce energy cost burdens and increase climate resiliency by expanding energy efficiency and renewable energy installations in their communities.

Our institutions are committed to addressing the disproportionately high energy burden felt by our communities. Guadalupe Credit Union is 100% dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and other underserved communities join the economic mainstream. In addition, we specifically tailor our financial products and services to serve Hispanic communities, as well as immigrant communities. Since 1948, Guadalupe has helped to build greater financial resiliency in households and communities in New Mexico. We will leverage additional capital provided by the GHGRF to further this work by developing new, affordable loan products for home improvements that reduce monthly household bills, such as home solar panels, electric vehicles, efficient heating and cooling systems, and efficient appliances.

Accessing the capital offered by the GHGRF will also provide CUANM’s member credit unions opportunities to partner with national organizations, like Inclusiv, the national network of community development credit unions, and a CDFI Intermediary and Inclusive Prosperity Capital (IPC), a not-for-profit clean energy investment fund. IPC and Inclusiv are helping credit unions to offer green loans at a lower cost via IPC’s Smart-E Loan platform, which connects homeowners to local lenders and vetted residential clean energy, water, and energy efficiency contractors across New Mexico. The GHGRF would mean that more credit unions could leverage the Smart-E Loan to scale low-cost clean energy in underinvested neighborhoods and underserved markets throughout New Mexico. These credit unions will ensure that black, Indigenous, Latino, and other disinvested and underserved communities can access the energy cost savings that well-off, predominantly white communities already enjoy. The Biden Administration and the Environmental Protection Agency should partner with lenders like New Mexico’s credit unions as it implements the Fund. Together, we can scale equitable lending programs and support local green job creation that will help all communities thrive.

***The authors of this op-ed piece represent Guadalupe Credit Union, a minority depository institution and Community Development Financial Institution (CDFI) based in Santa Fe, and the Credit Union Association of New Mexico (CUANM), NM’s trade association for credit unions.

Click here for a downloadable version of this op-ed submission.