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Hey schools, go get your IRA tax credits!
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Hey schools, go get your IRA tax credits!

A conversation with Sara Ross & Jonathan Klein of Undaunted K12.
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US public education infrastructure faces significant challenges due to years of deferred maintenance and the growing impacts of climate change. Luckily, the Inflation Reduction Act offers substantial, easily accessible financial assistance to schools in the form of direct-pay tax credits for climate-friendly upgrades. Many schools don’t even know about them. In this episode, Sara Ross and Jonathan Klein of UndauntedK12 discuss their efforts to spread the word.

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Text transcript:

David Roberts

I don't talk about schools or public education much here on Volts, but it runs pretty deep in my family. My mom was an elementary school principal for 20 years, my father was a college professor at a state school for 30, and despite its flaws, I love the US public education system. But listeners: US public schools are not climate-ready. They already face billions of dollars in deferred maintenance, and the changing climate is putting them under all kinds of new stresses. (Just think about all the schools that need air conditioners for the first time.)

Luckily, the US passed a law a couple of years ago that contains within it uncapped, effectively unlimited financial assistance for schools that want to make climate-friendly infrastructure upgrades. The Inflation Reduction Act’s direct-pay tax credits for nonprofit entities like schools are easy to access, do not require any complicated tax filings or applications, and will pay 30, 40, even up to 50 percent of some projects like rooftop solar panels and geothermal heat pumps.

Sara Ross & Jonathan Klein
Sara Ross & Jonathan Klein

Unfortunately, many schools don't know about this! They are accustomed to grant money or other kinds of support coming with onerous competitive application processes and endless paperwork. They often do not know and are incredulous to discover that there's a big pot of money that they can access with comparatively little effort.

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Spreading the word — and the benefits of the IRA — to American schools is what inspired Sara Ross and Jonathan Klein to found UndauntedK12, a nonprofit that seeks to, among other things, educate schools about the opportunities in the IRA. I've invited them on today to discuss the infrastructure problems schools face, the special features of the IRA tax credits, and the kinds of things schools are doing with them.

Without any further ado, Sara Ross, Jonathan Klein, welcome to Volts. Thank you so much for coming.

Sara Ross

Thanks for having us.

Jonathan Klein

Thanks so much, David.

David Roberts

So, Jonathan, maybe let's just start with you. Maybe you can just say a few words about the situation schools face. Obviously, the condition of US schools varies widely across geographies and class barriers, since we have this ludicrous funding system that is dependent on local tax revenue. Obviously, some schools are doing quite well and some schools are struggling. But overall, say a few words about the sort of infrastructure condition of US schools. What's the status quo?

Jonathan Klein

Not ready. School campuses were built for a different era. Too many of them are not equipped to protect kids, keep them healthy, and learning given extreme weather, heat, and smoke. 40%, so that's two out of five of America's public schools, were built more than 50 years ago.

David Roberts

Really?

Jonathan Klein

There are almost 14,000 schools built in the 1970s that didn't need air conditioning then, but need it today. One out of three schools in Philadelphia still doesn't have air conditioning. So, school districts have had to close school early. School years have ended early in Cleveland, in Cincinnati, in Detroit, in Philadelphia.

And/or school districts are working on the schedule to start the school year at a different time because the classrooms aren't resilient. And this isn't just the buildings, it's playgrounds, too. You know, we can all kind of picture these blacktop playgrounds across the country. I'm out here in California, and I envision, like, in the Central Valley in California, there are 6 million kids in public schools in California. On any given fall or spring day, there might be, you know, one and a half million kids out at their afternoon recess looking for shade. So, climate change and extreme weather is already having a pretty significant impact on schools' core mission.

The other piece of this, and you mentioned this, is just the funding system has historically underfunded school infrastructure, and it's extraordinarily inequitable. So, our most historically marginalized young people are the most vulnerable to these climate impacts and extreme weather impacts. So, like, four million kids across the country have asthma. You know, black children have asthma at a ratio of two to one to their white counterparts. It impacts student learning, too. I mean, we see data that hot classrooms, uncomfortable hot classrooms, are responsible for as much as 5% of the gap in test scores between black students and their white counterparts.

So, this is like, climate change and extreme weather is a threat multiplier to our goals around educational equity.

David Roberts

And you say multiplier. I think that's an important term here that I kind of wanted to say something about early on, which is that, as you described, climate is putting additional stress on these things. But these are not by any means climate-created. Lots of these are pre-existing problems and pre-existing stressors, right? I mean, like, poor schools are underfunded, it's a longstanding thing, and they have bad ventilation and are uncomfortable, you know, etc. All that stuff has predated climate, let's just say.

Jonathan Klein

Absolutely. And the way that we fund schools, like the federal government, has historically not funded school infrastructure. Not even every state has a state funding program to fund school infrastructure. So it's mostly state and local dollars, which means, you know, lower wealth communities have less funding to maintain healthy, modern school facilities. And so, you know, those young people, they were already at risk, and now they are more at risk. And this is in 2024. I mean, part of how we got into this is just imagining how this could play out over the next five or ten years.

Like on our website, we are trying to run a map of all the, you know, episodes of schools closing because of extreme weather across the country. And it's got a lot; it's just a Google map, but it's got a lot of dots on it.

David Roberts

Yeah, so, Sara, let's talk a little bit about what schools need to do to be resilient in the face of this stuff. I think a lot of times when people talk about school upgrades, like putting on a solar panel or something like that, we sort of discuss it kind of narrowly in terms of either cost savings or energy savings. But I think when you all discuss climate resilience, you're discussing something a little broader and more holistic than that. So maybe talk a little bit about what is the basket of things that we are talking about when we're talking about a school being resilient in the face of climate change.

Sara Ross

Yeah, no, that's a great point, David, and maybe to start by painting the picture of just what this infrastructure is, because it's vast. Schools are a huge form of public infrastructure with something like 8-9 billion sq ft of buildings, 500,000 mostly diesel school buses, the 7 billion meals that we serve, all the land area that's associated with these schools. So this big public infrastructure and all those components can and need to be part of building resilience. Right now, the vast majority of those buildings burn fossil fuels to heat themselves. The vast majority don't have solar. And as Jonathan was talking about, they're ill-equipped to contend with things like extreme heat or wildfire smoke, flooding — another big issue that asphalt only makes worse.

So, we spend in this country about $110 billion every year on this very infrastructure. Part of the work here is how do we help leaders that are driving those dollars into various places make decisions that will align with more resilient school infrastructure that we need, decarbonized school infrastructure that we need? Because with all this massive infrastructure comes a big impact on climate. This is certainly things like transitioning from legacy fossil fuel burning heating systems to our modern heat pump equipment. And, you know, that solves so many problems.

It is going to help us address this cooling crisis in our classrooms that we've been talking about.

David Roberts

Right? You get cooling with the heating.

Sara Ross

Absolutely. Two for one. Upgrading to modern machines means we can incorporate the filters that we need to keep classrooms healthier from infectious disease, from wildfire smoke, from other particulate matter. It's going to reduce our electricity costs, our utility bills, so we can drive those savings back into the classroom. And, of course, it's going to reduce our covered emissions and improve local air quality because we're not combusting on site. So, that's kind of a core big idea. We want to run all of our electric machines, of course, with on-site solar where we can, and we want to back it up with energy storage.

Maybe those electric school buses can become part of that resilience plan. They can be kind of our batteries on wheels. We need green schoolyards with shade and the ability to manage stormwater so that when floods come, it doesn't just run across that asphalt and right into the building, really ruining our schools.

David Roberts

Yeah, can I ask, maybe, I don't know if either of you know the answer to this question, but who decided and why that all schools' outdoor areas should be dominated by impermeable heat absorbing material? It seems like a very — like maybe climate wasn't on the radar when these decisions were made, but it seems like the worst thing you could do in the face of climate change.

Sara Ross

I don't know the answer. I have some hypotheses around, you know, the people who need to have a big job maintaining, and are understaffed to maintain these facilities and what's easiest to clean, clean up and what's easiest to snowplow and shovel and, you know — showing my northeast stripes there. But, you know, I have a lot of grace for our facilities leader. They have a big job and too few hands and too few dollars to do it.

David Roberts

Yeah, can you say something in particular about indoor air quality? Because I feel like this is a, you know, this is something that matters, obviously, climate or no climate, but it is also something that wildfires in particular are making worse. And I don't feel like I have a great sense of, A) the sort of state of indoor air quality in schools, or B) like, what you would do? What is the machine that helps you with indoor air quality? Or what are the techniques? How do you think about that?

Sara Ross

Yeah. So, I would say the state of indoor air quality in schools is, by and large, really poor. Doctor Joseph Allen at Harvard and Doctor Erika Eitland have done amazing work on healthy buildings and, in particular, unhealthy schools. And, one of the big headlines is we under-ventilate these buildings. I would say that schools have been trying to save money on things like utility bills for a long time. And part of the way they did that decades past was to tighten up those buildings and really try and make them super energy efficient.

And some of what we got out of that was under-ventilated spaces, which we know is, again, not good for young lungs, young brains learning all of those things that we care a lot about. So, we cannot sacrifice indoor air quality on the altar of energy savings. And we need to ventilate and manage costs and energy usage while we can do that. And there are lots of things contributing to poor indoor air quality, like toxins and pests and roofs with leaks in them, right? A lot of this is the basic block and tackling of just having a good building, the building that we want to send our kids to every day.

And unfortunately, again, going back to the funding crisis for our schools, many communities, going into COVID, going into this worsening climate crisis, didn't have the building that we want our students and our young people spending most of their young lives in.

David Roberts

So, if you are talking to a school administrator and the school administrator sort of, I don't know, gets religion on this, decides, "Yes, this is something we need to do. We need to make our school climate resilient." Is there a step one, two, and three? Or is it the case that these sort of facilities are so heterogeneous that it's like a one by one thing, a bespoke thing? Or is there a blueprint here for people to follow?

Jonathan Klein

Yeah. Well, there are a handful of leading districts that we point district leaders to who have developed comprehensive sustainability and K-12 climate action plans, often at the behest of young people in their communities. Denver Public Schools is a great model for folks to look at. Their plan covers buildings, grounds, transportation, food, education, and right smack dab in the middle of —

David Roberts

I forgot about food.

Jonathan Klein

in the middle of the website, it shows how much the district saves every year because of their sustainability measures. Because one of the big drivers of moving these kinds of initiatives through the district is that they can be good for the bottom line.

David Roberts

Are those energy cost savings? Is it health savings? Where do those savings come from?

Jonathan Klein

I think most of them come from energy efficiency.

David Roberts

Let's talk about the tax credits. Then, when you think about the needs of a school to become climate resilient, and then you think about the tax credits available in IRA, I'm sort of curious how well those line up. I mean, before we discuss, like, what IRA does and what it can do, I'm sort of wondering if there are things schools need that IRA isn't offering them?

Sara Ross

For sure, yeah. I mean, going back to that leaky roof, right? We're not going to put solar panels on a roof that has a hole in it, right? We're not going to put — and there's no money in IRA for the roof! Right, we're not going to put heat pumps in a building that has a poor envelope, you know, single pane windows and is a sieve. Right, we've got work to do there. We need to make our buildings ADA compliant. And a lot of those things, you know, have not happened yet. We've been kind of kicking the can down the road there.

Fire codes. So, there's a lot of stuff that IRA does not help us with and is critically important to making these buildings work for all children and to address, you know, all the other things that aren't saving energy or clean energy. Right. We love these machines, and these machines are great, and they're not, they're not everything that we need to make healthy buildings.

David Roberts

Is there money for schools in any of the other, like, in the Bipartisan Infrastructure Act or anywhere else? Any of the other stuff Biden has done? Like, is there other, are there other pots of money to point to here?

Sara Ross

Yeah. So, BIL has the Renew America Schools program, which is a grant program to help schools advance, you know, a kind of broad array of energy efficiency and renewable energy. And, you know, there's a big menu to kind of choose from there in that program. It was heavily oversubscribed.

David Roberts

Shocker.

Sara Ross

Shocker.

David Roberts

Do you know how big, how big it was?

Jonathan Klein

It was a $500 million program that they expected to give out $100 million a year for, you know, for five years. In the first year, they got $5.5 billion worth of applications for what ultimately were the first $178 million in grants. Just to give you, like, a sense of, like, the scale of what we're talking about.

Sara Ross

Yeah.

David Roberts

I mean, honestly, even $500 million cumulatively sounds like —

Jonathan Klein

Right.

David Roberts

kind of peanuts.

Sara Ross

Yeah.

Jonathan Klein

Candidate Biden expressed support for a bill called the Rebuild America Schools Act. It was a $100 billion proposal, and that got folded into Build Back Better. Even that 100 billion, you know, say, $10 billion a year for ten years, is not enough to kind of get us to quality, safe, healthy school buildings and grounds across the country. But, it would be a significant kind of down payment on that. The law was, or the bill was, structured to incent more states to get in the game with state resources. So, what the IRA doesn't have is if there's a superintendent in a low wealth district that needs to kind of put cooling into her gym or one of her big high school buildings, even if the IRA can cover 50% of that new HVAC system, she needs the other 50% from someplace and may not have the tax base locally for those dollars.

David Roberts

Yeah, yeah. Also, before we get into the specifics of the IRA credit, one of the points you make on your website is that school administrators are accustomed to having to fight and scrap for grant money or assistance money and fill out a bunch of forms. So maybe it's just like, talk a little bit about, like, what a typical school administrator, how they get help traditionally, which might have sort of like, trained them to roll their eyes and be sick of the whole process. Let's talk about sort of like, how normal grants go out.

Jonathan Klein

Well, I think in most school districts, there is not a grant. You know, there are 14,000 school districts across the country, and many of them are small where, you know, the superintendent might be the bus driver and might also be the person looking at, you know, looking on a federal or state website, you know, when they have a problem, like, "Is there a grant available to apply for?" So there are groups that we collaborate with, you know, the Center for Green Schools, Generation 180, Green Schools National Network, New Buildings Institute that come alongside school districts and kind of can help them with climate action planning and their facilities master planning. But oftentimes they need both private sector support and or to kind of have some kind of public sector entity or state agency helping them navigate.

David Roberts

Well, yeah, and just administrative support to navigate all that stuff. You know, as you say, if you're a superintendent and bus driver, you probably do not have a great mastery of how to, you know, write a good competitive grant application. Sara, talk a little bit about the IRA tax credits then. Like, when you go and talk to schools about them, what are the sort of features of these tax credits that you highlight to sort of put an exclamation point on the opportunity here? What's your pitch for these things?

Sara Ross

Well, David, I will say I have the best job right now. Right, which is, I get to go around to these school leaders who are, again, used to competing for, you know, better than winning the lottery type grant dollars for these non-competitive, uncapped funds that they can go after to improve the health and resilience of their school buildings. And so, inevitably, when we're giving the pitch and we've got the slides up, the one that gets the most attention and gets the cameras out is the one that says non-competitive, uncapped.

And the fact that we have these for a decade, so nothing happens quickly in schools. School buildings do not get built within a year. These are five, six-year endeavors. And so, the fact that we have, you know, the ground source heat pump tax credit, we have until 2035 to do that. So, you know, we really have a time horizon over which these district leaders have some hope at getting a team together, getting folks organized, thinking about a plan, you know, not only for the next new construction project that they may or may not be able to do, but the renovation and the systems replacement.

And really, kind of step back and look at, no kidding, over the next decade, how can we get as many of these uncapped, non-competitive dollars in the door? Because, frankly, the grant monies, you can't build a strategy around that. Our pitch to school district leaders is, "No, you can build a strategy around this. This is here, this is now. And you can count on this." Which I'm not sure we're there yet. We're definitely going to need the first cohort of schools to take a big picture with a big check, like a big megabucks check when they get it from the IRS, we're waiting for those first moments to happen because seeing will be believing.

David Roberts

Why haven't they happened yet? Is it just they have gotten rolled out recently or specified recently? Where are they in the process?

Sara Ross

We're just waiting for this process to go through its natural kind of timeline here. So, for projects that were installed in 2023, folks have until November 15 of 2024 to get their filings in. And folks, we think, because they want the money sooner rather than later, because why wouldn't you, will get on it and start filing soon. And so, we're looking and have our eye on some of the first folks that we think will get money. Folks like Seattle Public Schools, who expects\ to get around $7.5 million back.

David Roberts

From doing what?

Sara Ross

From IRA tax credits, from doing three schools with ground source heat pumps.

David Roberts

Really?

Sara Ross

Yeah.

David Roberts

Those are my fave. Talk a little bit about the significance of the direct pay thing. I'm sure this is also happy news for schools.

Sara Ross

Yes. So, it's a very predictable kind of sequence where I say, "Yes, you know, clean energy tax credits, non-competitive, uncapped for your schools." And they go, "Oh, you know, but Sara, we don't pay taxes." And I say, "You don't say. Well, turns out we have this great new thing called direct pay or elective pay, same thing, and that magically turns this tax credit into a cash reimbursement for you." And they kind of cock their head to one side and then we keep going, you know, and helpfully now, these days, I point them to a fact sheet from the US Treasury Department.

I say, "Look, don't take it from me. Who am I? Look at the US Treasury's fact sheet, which talks about how schools can access these tax credits to improve energy efficiency, lower costs, and be healthier."

David Roberts

So, what do they have to do? Like, get a little tangible here. Like, they go buy a ground source heat pump and install it. And then what?

Sara Ross

Well, that's the gist of it. They have to install, you know, one of the eligible machines. And when I'm talking with schools, you know, there's a whole array of clean energy technologies out there that the IRA is trying to help bring into this world. But when I'm talking with schools, I'm talking about the big five, as I call them. So, solar and energy storage, ground source heat pumps, electric vehicles of many shapes and sizes.

David Roberts

Oh, yes.

Sara Ross

And EV charging equipment. So, they have to take one of these eligible clean energy machines. They have to do the work, right, to plan the project and get the project done and get it into a state of readiness, right. They've got to energize that solar energy system. They've got to commission that ground source heat pump system. That EV charging equipment has to be up and ready to go and then they can file for their tax credits from the IRS.

David Roberts

So, there is a little bit of trust involved then. Like, they spend the money up front and then get some back on the back end?

Sara Ross

For sure.

David Roberts

That's got to be a little nervous making, I would expect for some of them?

Sara Ross

For sure, and for good reasons, these folks are not incented to take risks. So, this is —

David Roberts

And obviously, if you're a poor school, like, you have lots of reasons to distrust, I would imagine, big government promises.

Sara Ross

Absolutely. And so, you know, one of the pieces of our work is talking with states about how they can help make sure that a wide array of schools, and the schools that need the most help, are not only aware of these opportunities and that they have the money to kind of fill up the rest of the bucket, as Jonathan was talking about, "Where's the other 50% coming from?" But that we think about the ways in which we might need to de-risk these tax credits for school districts so that they're not kind of left having to take this leap. I do think that once this first cohort gets their checks, it will certainly help folks.

And once the advisors and the bond council and everyone's kind of singing the same tune and have seen this work a few times, we will be in a better situation. But for sure, right now, trust is one of the barriers.

David Roberts

You know, you've talked to a lot of schools now. What do they tell you why they haven't tuned in on this? Like, what is it? Is it just ignorance of the existence of these things? Is it trust issues? Is it finding that other half of the money? Like, what is it? What are the big barriers?

Jonathan Klein

Well, we're coming up on the two-year anniversary of the Inflation Reduction Act, and I am, for certain, going to have conversations next week where I will be the first person to share with an education leader at a district or a state level about what could be the largest federal investment ever in school infrastructure.

David Roberts

It's just maddening. I don't even know whose job that was, you know, but, like, it's just wild.

Jonathan Klein

And a lot of that is because of the nature of the American public education system. We have made it, you know, generally a local endeavor.

David Roberts

Right.

Jonathan Klein

So, a lot of our work is, how do we get states, you know, the apparatus of state government, and or state associations of superintendents or teachers unions or, you know, school business officers, facilities directors, to come alongside us and help get the word out? But it's very retail.

David Roberts

Yeah, yeah. Are you talking with teachers' unions? Because they seem like kind of the big 800-pound gorilla in this area. Like one of the few sort of groups with some real power and reach. Have you tried to join forces with them?

Jonathan Klein

Very much so. Both the AFT and the NEA, the two major national teachers unions, are partners. And here in California, we're working with the California Federation of Teachers on a bill that would make California the first state in the country to have a state plan for climate resilient school infrastructure, including a strategy to make the most of the IRA over the next eight or ten years.

David Roberts

God, why doesn't every state have that? It just seems so —

Jonathan Klein

We're going to get there.

David Roberts

It's crazy that schools are just, I mean, when you think about it, are just kind of stranded out there. They're just kind of stranded out there in their local area, on little islands, you know, so little help and so little even communication with them. They just have to do everything on their own. It's a crazy way to run a railroad. I promised myself I would not spend this episode ranting about the absurd way we fund US schools. It's truly, it's truly insane. Are there schools? Are there success stories now that you have in your back pocket that you can break out and talk to schools?

Or, is it just too early for these things to have filtered down? Like, do you have, like, "X school did this, got the money back. Look, here's the thing." Like, what do you tell people in terms of examples?

Sara Ross

We have some great examples. We talked about Seattle public schools. I would say we had a great leader, Clark Seipt from Loudoun Public Schools, on a webinar the other day with the Department of Energy. She has the full menu of eligible machines, you know, in the mix in Loudoun. So, she's going to be filing for this first round of tax credits for some solar, some electric school buses, some white fleet that they made EV, some charging infrastructure. And that's going to net her about $2 million in tax credits, she estimates. And then, they are working on two school projects that are going to install ground source heat pumps.

She thinks that'll net them another $7 to $8 million over the next few years. So, you know, she's got almost double-digit million tax credits coming back into her budget, which is great. We've got a really exciting project in Manchester, Connecticut, that's actually a retrofit, a net-zero retrofit. They use geothermal. This is in Manchester, Connecticut, Bowers Elementary. They expect $2.5 million back. We have a wonderful project in Wisconsin, Menasha, Wisconsin, where they're working with labor unions, because one of the cross-cutting provisions of the IRA is we want to build good jobs, right? And we want to create the workforce of the future to, you know, get us to our clean energy goals.

And so, that project is wonderful. It was, you know, always going to be a ground source heat pump project, and it was going to be kind of a "solar, when we can afford it" project. And then the IRA came along and it became a geo plus solar plus storage project today because the IRA money was so enticing. And they're doing that work with labor unions up in Wisconsin. So that's just an awesome project. We have a physics teacher in Kansas who got his school to install solar a few years ago. They were so tickled by the whole thing.

We said, they said, "Oh, you know, we did a power purchase agreement for that last one. But we want to own it the second time." And so, they're going to get a tax credit.

David Roberts

To be clear, you can only get tax credits for things you buy in this year, right? Like, you can't. They couldn't go back and get a tax credit for something they bought in previous years, right?

Sara Ross

It's for any of these eligible machines that were put into service after January 1, 2023. The wrinkle that often comes up when we're talking about schools and solar is that the schools need to own it. It's the owner of this equipment that gets to file for the taxes. And so, as you may know, the vast majority of schools that have gone solar to date have used the power purchase agreement for all the reasons that we know about that tax credits weren't eligible to them. So this is a new world with direct pay. So those are some of the great, great examples we have that we're excited to see get their big checks.

Jonathan Klein

And it seems like we have schools in two different places. One is like every school district that did a solar project or bought an electric school bus after January 1, 2023, is eligible to go back and apply for these tax credits. So in some cases, we are — this is like found money. It didn't impact, you know, it didn't impact the decision making.

David Roberts

That's when you really have good news for a school: Guess what? Here's some free money sitting in front of you.

Jonathan Klein

Yeah, there's just money out there, and it's kind of a race to get the word out about it. And then this year, we also have districts that are looking at like a bid for an HVAC system where they have a choice, you know, first cost an $8 million HVAC system that burns fossil fuels, like a gas boiler system, or an $11 million ground source heat pump system that, with the tax credit from the IRA, then becomes the lower first cost technology. So it is starting to impact decision making going forward. But it's a mix.

You have districts just claiming found money, which then they are recycling. In Modesto, out here in California, they put in four solar carports, and they're going to take the credits they get back and do two more. So they say, "We bought four, we're getting two free."

David Roberts

Nice. The way the tax credits are structured — we went, I went through this on my IRA episode way back when — but there's sort of a base rate and then there are adders. Can we talk a little bit about how some schools can get even extra money, extra tax credit? It's like 30%, 40%, and 50%, I think, if my memory serves correctly? Help me out.

Sara Ross

Your memory serves you welll. We should say, y ou know, some people talk about a base rate of 6%, because if you're over 1 MW in size, you do need to meet labor standards relating to prevailing wage and apprenticeship.

David Roberts

But, you know, to get to 30%, labor is the thing, right?

Sara Ross

Yeah. Yeah. Or you're under 1 MW, you get the exception. Right. So, let's just say. Let's just make sure we are tracking that piece. But, yeah, 30% is kind of a good starting point. And then you can get an extra 10% if you are located in an "energy community." So, this is a term of art from the IRA, right? These are places like brownfields. These are places like communities that have historically relied a lot on a fossil fuel kind of economy. Coal communities.

David Roberts

And didn't they just release an official map of those communities? Like it's official now what is and isn't one of those?

Sara Ross

So, we have had an energy communities map from the Department of Energy for some time now. But what we have, as of the beginning of June, is an enhanced map with two sets of layers. One set of layers shows the areas that qualify for 2023, and a new set of layers show the areas that qualify as of June 7, 2024. So, to get into a little bit of energy community weeds, one of the pathways to gaining this energy community designation is to have a certain level of fossil fuel employment and above the national average levels of unemployment.

This means that areas of the country may gain and lose energy community designation every year. The way school projects, and projects in general, in fact, will lock in their ability to qualify for this bonus credit is to meet the commence construction test before the new unemployment data gets released and the DOE updates their maps, which we expect to happen in May of every year.

David Roberts

So, obviously, one thing schools need to do is look at that map.

Sara Ross

It's definitely part of the pitch, "Here are the maps, go plug in the address." And it's really the address of any particular school site that you're working on, because it is that fine-grained. So, yeah, so that's another 10% bonus for being in an energy community. And then there's an additional 10% for one of these other cross-cutting policy goals of the IRA, which is, we want to build the clean energy machines in America, right? So we want to stimulate domestic manufacturing. And so we're going to give you an extra 10% if you use domestically made clean energy machines.

And help us put America to work building this future.

David Roberts

Is that — again, we're so early in the process, it might be too early to draw sweeping conclusions — but is the domestic content requirement a meaningful restriction or restraint here on school districts? Like, is it difficult to find domestic equipment, or is that just a matter of choosing one vendor over another usually?

Sara Ross

So, I rely on talking with folks that are actually implementing these projects, and so I don't have firsthand experience of this, but what I hear on the street, and this will not surprise you, is that our domestic supply chains do not yet support solar projects or energy storage projects to meet domestic content. The IRA did release new guidance recently, a safe harbor, which outlines the kind of different bits and bobs that you would have to source domestically, for example, to meet domestic content for solar and energy storage projects. Conversely, I have heard that we do have a good number of manufacturers of your favorite ground source heat pump machines. And so, for example, that Bowers Elementary School project in Manchester, Connecticut, is actively, right now, trying to put all the paperwork together to substantiate their ability to get that extra 10% domestic content piece for the ground source heat pumps.

David Roberts

We have some domestic electric school bus manufacturers, don't we? Or didn't — one of them went out of business?

Sara Ross

So, there's a few different tax credits at work here. The ones we've been talking about, the solar, the energy storage, and the ground source heat pumps, are all under the investment tax credit where these adders exist. There is not a similar adder for the electric school buses. Rather, there's a list of acceptable manufacturers. So, it's a little bit of a different formulation there on the electric school bus side.

David Roberts

On the electric school bus side, to me, this is one of the most vexing sort of areas here. Because on the one hand, it seems like just the most obvious thing in the world, like trapping dozens of children in a small box and putting a diesel jet engine next to them just seems quite viscerally terrible. You know, they're trapped in there with those emissions and that noise. It's just awful. So, like, this just seems like absolutely a thing that anybody should want to do. It's like, it's inhumane that we have normal school buses still when we have electric alternatives.

On the other hand, electric school buses are very expensive. And I'm sort of wondering, from your experience talking to schools, whether the tax credit for electric school buses is substantial enough to bring them within the reach of most school districts.

Jonathan Klein

Oh, I think that a lot of the — I mean, Sara, you should build on this — but I think a lot of the electric school bus deployment to date has been a result of, you know, the federal grants, like in the Bipartisan Infrastructure Law, which supercharged all of this. And you can stack the IRA tax credit with those grants. And so I think what we will see over time, I mean, some of it is just districts getting their first couple and building the charging infrastructure and getting comfortable with the technology and the modeling around how they can — the payback on that investment of the bus.

In rural areas, they're solving for range and the long distance and charging. So, I think we're still pretty early on in the deployment, and it's challenging.

Sara Ross

I would agree with what Jonathan shared there. And the other piece certainly is just the gnarliness around where are we charging these buses and do we have the infrastructure? And, "Oh, there are extra costs there," and, "Oh, the driver used to drive that bus home to her home, and, you know, that doesn't work anymore." So in rural areas, so there's some additional complications there, for sure. You've had before on the show, Duncan McIntyre from Highland.

David Roberts

Yeah, yeah.

Sara Ross

Fun fact, you know, that podcast came out and I happened to be sitting on my town's capital planning meeting, and they were talking about, you know, in the budget was the next diesel school bus. And so, I sent the pod over to some folks, and lo and behold, we have three buses coming with Highland to Amherst, Massachusetts.

David Roberts

Love it. Volts makes a difference, people, sign up as a paid subscriber! Well, that's awesome. That makes me happy because, as you can tell, slightly obsessed with school buses, electric school buses. And that raises an issue, which is like, if I'm a philanthropy or even just a rich person, but if I'm a philanthropy and I want to help schools, the tax credits sort of are like a boost for me. Like, I only have to spend, you know, two thirds as much as I would have to help schools. So are there private — you know, because as we discussed, like, the superintendent in the poor school district, even if she can get tax credits for half a ground source heat pump, you know, she still needs the other half, and there's not enough tax base.

Are there private sources of money stepping forward to sort of match these tax credits and help schools? Like, this seems like such an obvious target for philanthropy for well-meaning rich people. Are people stepping up to do that, to your knowledge?

Jonathan Klein

You know, we're having a conversation with a community foundation who is interested in this question of, like, you know, how do they help the school districts in their community and other public sector entities make the most of direct pay and the IRA? And number two, how can they use their philanthropic resources to help accelerate that? And so, I think community foundations across the country should and could be thinking about that. It's also about just recognizing where we are in the phase of implementation. Right now, what is needed is philanthropy can just help get the word out.

To school districts, to state leaders, and then, yes, help provide some of that match that's needed. But ultimately, I think the scale of the problem is so big that the philanthropic dollars just funding basic stuff, literally, we have touched something like 32 states in our campaign. There are another 18 states that may or may not know about direct pay for schools.

David Roberts

Just some money getting the word out would be helpful. Yeah, but, you know, I like to yell at funders periodically here on Volts. So this is my, this is my yelling at funders chapter of this episode. This is such a, like, do something here. Like, your funds are going to get matched. You know, this is a great way to remedy some of this horrible inequity that's all around us. Nearing the end here, I'm wondering if I'm just a parent, you know, as I am, if I'm a parent in a school district, and I, you know, heard an episode of Volts and realized that there are these pots of money available.

What can parents do here? If you're not part of a school district, you're not a school administrator. What can, you know, just normies do?

Jonathan Klein

We've got a one-pager on the front page of our "Schools and the IRA" website. Make sure people in your community know about the IRA. Do you have a school building project? Is your school district replacing an HVAC system? Likely, yes, this year or soon. This is very retail work. Take the one-pager, send the link to one of the webinars that we've done with the Department of Energy. It's right there. But most of the time, increasingly a year into this, when school district folks see the one-pager, they see the fact sheet from the treasury or from the White House, they see a few of these early examples, like, "Hey, this is real."

People are interested in the conversation, but there's a lot of school districts that don't know yet.

David Roberts

Yeah, just peer-to-peer, knowledge sharing, basic stuff. All right, finally, beyond IRA, like, IRA is extremely helpful for these set number of categories. But as we've discussed, the needs for schools in terms of climate resilience go well beyond these basic five categories. You need to do something about impermeable surfaces. You need shade outside. You need, as we mentioned, indoor air quality is a huge thing. That doesn't sound like it's directly covered under IRA. There's just lots of needs. So in terms of policy, I'm curious what else you two would — I mean, absent fundamental overhaul of the ludicrous way we fund our public schools in general, which would obviously be the best thing — I'm curious what other sorts of near-term or tangible or possible policies you would like to see?

And is it mostly stuff at the state level that you think would help, or is there something else the federal government could do in this respect?

Sara Ross

Yes, and yes is the answer. Yeah. So, there's a lot of work that states can do. And later on this year, we'll be coming out with a state playbook, which basically answers a question, "Hey, state leader, so you want to drive as many IRA dollars into your schools as possible. Here are the 26 things you can be doing." And certainly, it's the awareness building that we've been talking about. There's a ton of planning work that needs to happen. And so, supporting planning, decarb planning is a particular flavor of planning that we're a big fan of, right.

We need these states — you were talking about rich folks getting leverage. States have leverage here, too, right? This is a moment for states to lean in, right? Establish a role in financing school infrastructure if they don't have one, increase the dollars if they do have an existing role, and make sure, again, those dollars are going to the communities that need it most. There's a lens that we can take to this work. Where do we most need cooling in our schools? Where are the schools on heat islands? Those are the type of ways in which we can think about driving our dollars to the places that need them most.

We also need to kind of foster the conditions in states that are going to allow schools to take down these dollars because, as listeners of this pod well know, there are a whole host of challenges having to do with solar deployment and batteries that are not school specific but are just some of the utility stickiness that folks run into. We need to really set the table for schools and make sure that they can install these clean energy machines. And we need to build a ton of capacity. We need sustainability leaders like the enormously competent and enthusiastic sustainability leader, LeeAnn Kittle, that they have in Denver.

We need a LeeAnn Kittle in every school district, or at least in every cluster of rural school districts. We need that capacity in school districts across the country. So there's a lot of work for states to do. And then on the federal government side, we certainly need them to keep talking about the IRA. It is super helpful when those federal leaders reinforce that schools and IRA tax credits live on the same planet. That's really, really useful. We would love to see the Department of Education in a next term, really lean in here and talk about this funding, which we would really welcome their voice in this.

David Roberts

Yeah, and I know that you two would never be so crass as to drag electoral politics into this, but I'll just say, because I don't mind being crass, that maybe if you're, like, a Democrat and you're running and there's a bunch of important races in 2024, especially a presidential race, that maybe like getting out and telling local schools, "Hey, look at this big thing that Biden and the Democrats did for you. They're giving you free money." Might also serve an electoral function. Might also serve to drum up some support for you. All right, crass interlude over.

Sara Ross

You know, David, we are a team of four, soon to be five, hopefully, and we have to make choices about where we do work. And so, it's not for nothing that I mentioned a school in Wisconsin and the fact that we've done lots of work in the lovely state of Wisconsin, telling the story of how tax credits are flowing in to make those school buildings healthier and more resilient. So, for sure.

Jonathan Klein

100%.

David Roberts

Presumably, the other thing the feds could do is just more money. Is there any momentum behind that at all? Is anybody even really talking about it? Is there any prospect of substantial federal action on this?

Sara Ross

Well, I am on the board of the BASIC Coalition, whose sole mission is really to drive and ensure we have a reliable and substantial federal contribution to our school infrastructure. They were the kind of leading force behind that Rebuild America Schools Act that Jonathan was speaking about earlier. We continue to advocate for that federal and to help educate members of Congress about the ramifications of not playing the federal government's role in funding those school buildings. So we'll continue to advocate for that. And then in the meantime, we'd love to see a program like the Renew America Schools program have, be able to serve more of that $5.5 billion worth of applications that they got.

We'd love to see the EPA have more money to expand the work it's doing to address air pollution in schools. We'd love to have the Department of Education be able to establish their own competency around infrastructure and buildings, which they don't have a team looking at that right now. So in COVID, they were flat-footed. We'd love to have them be able to give more grants to build up capacity within states, for example, to again be able to help guide schools in so many things, IRA included in the list that could help them improve buildings.

David Roberts

Jonathan, any last words?

Jonathan Klein

Only to say, like, and I wonder what you would think about this, David. We are operating from this assumption that the world becomes what we teach. We've been talking about schools and climate and the IRA. One in six Americans visits a school campus every day. Children spend more waking hours at school than any other place. We actually know that when a school installs solar, residential adoption rates increase in surrounding neighborhoods.

David Roberts

Yes, it's contagious. This has been studied many times.

Jonathan Klein

We know that young people, particularly daughters, are great influencers of their parents and their dads around car choices, food, and clean energy, residential clean energy. Any national climate strategy for decarb demands people who want to do the work and are prepared to do the work. We need a million more electricians. Just gratitude to you for lifting up the role of schools and the opportunity for schools in the IRA. Are we crazy to think that we must, that schools are actually essential in the national climate strategy?

David Roberts

So much more than just buildings and infrastructure? These are young eyes seeing this stuff.

Jonathan Klein

Yeah. So, just no school construction project, new or modernization, should be undertaken over the next eight to ten years without some awareness of these tax credits and how they can support communities to provide healthy, resilient places for children to learn and play.

David Roberts

Awesome. Well said. All right, well, thanks, you two, for coming on and thanks for doing this work. Like I said, this is God's work, and it's sadly neglected in this country in many ways. So I appreciate what you're doing and thanks for coming on and talking us through it.

Sara Ross

Our immense pleasure.

Jonathan Klein

Yeah, right on, David. You know, I'm a climate pivoter. You know, I've worked in schools for 25 or 30 years. And so, your voice has been with me the last three or four years as I've been pivoting, trying to understand this whole clean energy climate policy. Like, I'm a radicalized dad who's chaperoning kids at a climate strike. And now, I'm like swimming in these waters. So, it's really a thrill to be on the pod and grateful for your work.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time.

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Volts is a podcast about leaving fossil fuels behind. I've been reporting on and explaining clean-energy topics for almost 20 years, and I love talking to politicians, analysts, innovators, and activists about the latest progress in the world's most important fight. (Volts is entirely subscriber-supported. Sign up!)