Leveraging Renewable Energy Investments for Rural Development

The U.S. Department of Energy (DOE) is delivering hundreds of billions of dollars through grants and loans to advance every phase of the clean energy economy, including critical mineral extraction, electric vehicle (EV) battery manufacturing, and clean energy generation and storage. Many of these projects will be sited in rural communities. The DOE’s community benefits plan (CBP) requirement is designed to leverage multiple policy goals from public investments in clean energy, including reducing carbon emissions, creating good jobs, addressing historic environmental justice, and building more equitable economies as the new energy system is built out.

The Center for American Progress believes that tracking and evaluating CBPs will help identify what is working and where opportunities exist to improve guidance, engagement, and outcomes that can be incorporated into subsequent rounds of DOE funding opportunities. Interviews that the author conducted with companies, agency staff, and community development experts reveal early lessons and point to several areas for intentional policy development, including:¹

• Tight application timelines mean CBPs are submitted with little time for companies to build relationships and engage with communities. The CBP is not a completed agreement, but rather a framework for how community engagement will progress after the DOE grant or loan is awarded. Building capacity and expertise in DOE service centers and contracting officers will facilitate iterative and flexible partnerships between the DOE and companies as CBPs are implemented.
• Communities are the only partners not being paid to be part of the negotiations and often lack capacity in terms of staffing, expertise, and resources to articulate and advocate for local needs. DOE awards to companies should be aligned with federal investments in capacity, technical assistance, and training for host communities to enable meaningful engagement.
• Early CBP outcomes generally focus on workforce development via contributions to community and technical colleges. Developers will gravitate toward working with known and trusted partners and making investments that deliver mutual benefits. Meaningful community engagement after awards are granted may result in more direct and nuanced benefits in communities, but it is too early to see these kinds of outcomes.
• DOE grant awards that include an approved CBP should also trigger coordination among multiple federal agencies to make substantial and aligned investments in a place that leverages the goals of approved CBPs, such as investments in workforce housing, local water systems, public health services, or public parks and trails.
• Federal funding should be made available for robust third-party evaluation of CBPs and to facilitate peer networking among host communities to share examples and models. In addition to Infrastructure Investment and Jobs Act, also known as the bipartisan infrastructure law, and Inflation Reduction Act project trackers, the DOE could create a capacity and benefits tracker to highlight CBPs and aligned investments in communities that leverage project investments.

This report provides an overview and early assessment of CBPs required by the DOE grant and loan programs. It also details the requirements for CBPs across the agency’s programs and looks closely at the Battery Materials Processing Grants and the Battery Manufacturing Grants programs,² which stand out as the first DOE grant awards that required CPBs—called equity plans in this first funding round—as part of the application. The success of CBPs will help secure a social license for project developers to work with communities, heading off potential opposition, project delays, or cancellations.

The DOE requires companies applying to all the agency’s grant and loan programs to submit a CBP as part of their application.⁵ The purpose of the CPB is to advance an all-of-government approach that aligns energy investments with multiple policy priorities, including addressing the climate crisis, creating good jobs, and advancing environmental justice. A CBP helps ensure host communities share in the benefits when major public and private investments are made in a place. The DOE also requires a CBP because early and effective community engagement indicates a project is more likely to be successfully permitted and built in a timely manner.

The DOE requirement asks companies to detail a framework for how they will measurably address four policy priorities, including: investing in America’s workforce; engaging communities and labor; advancing diversity, equity, inclusion, and accessibility; and implementing the Justice40 Initiative—a federal goal that “40 percent of the overall benefits of certain Federal investments flow to disadvantaged communities that are marginalized, underserved, and overburdened by pollution.”⁶

The relatively short application periods for DOE grant and loan programs mean companies typically do not have time to negotiate a formalized agreement with communities. This is particularly true for new companies or established companies moving into a new host community where they do not have existing relationships. Companies and local organizations in host communities are also reluctant to engage in detailed discussions about formal agreements before they know if a grant or loan will be secured. The CBP is a framework that details how a company will engage with a host community after a grant is awarded. Once awarded, the grant agreement includes milestones that have to be met to unlock subsequent phases of funding.

Companies that are successful in receiving a DOE grant or loan are required to meet the elements set forth in their proposed CBP. While CBPs must be specific, actionable, and measurable, the requirement is intentionally flexible with regard to both the types of engagements and agreements as well as the specific local stakeholders with whom a company may engage. Flexibility is required to enable robust and authentic relationships that are led by each host community’s needs and goals.

This report looks closely at the DOE’s Battery Materials Processing Grants and Battery Manufacturing Grants programs, which stand out as the first awards that required CBPs—called equity plans in this first funding round—as part of the application. The DOE is requiring CBPs across the agency’s grant and loan programs, including in the Energy Improvements in Rural or Remote Areas program and in the Regional Clean Hydrogen Hubs funding opportunity.⁷

In addition to the DOE’s CBP requirement, the Bureau of Ocean Energy Management (BOEM) incentivizes community benefits agreements (CBA) by offering credits to developers bidding on offshore wind lease sales who have negotiated CBAs with communities affected by siting and development activities.⁸ The primary difference between the DOE and BOEM requirements is that the BOEM agreement has, at least in concept, a monetary value that bounds the scope of expected community benefits. The credit is calculated as a percentage of the bid price—the amount of money a company pays for an offshore lease at a competitive auction. The value of the credit is retained by the company, with the expectation that the credit is invested into a CBA. The DOE CBP requirement has no similar way to bound the expected value of benefits. So far, most offshore wind sales have not resulted in CBAs. For example, the recent California Offshore Wind Energy Auction brought in $757 million in winning bids, but none of the successful companies proposed a CBA as part of their bid.⁹

More recently, the U.S. Department of Interior released a set of recommendations to improve hard rock mining on federal public lands. The report, developed by an interagency working group over the past two years, includes a recommendation that “the BLM and USFS should provide incentives or require the development of a Stakeholder or Tribal Engagement Plan, a Social Impact Monitoring and Mitigation Plan, and a Community or Tribal Benefits Agreement.”¹⁰ The details of what a community or Tribal benefits agreement process should include are not defined, but it ought to learn from DOE and BOEM experience to date.

Internationally, CBAs are common in Canada and Australia in the mining and oil and gas sectors and more recently in renewable energy projects in Europe.¹¹ CBAs most commonly secure project labor and procurement agreements and share a portion of the project and/or profits with communities, particularly with Indigenous groups. Profit sharing can take several forms, including direct ownership in a project or payments by companies into community benefits funds.

In the United States, industrial siting and permitting laws at the state level generally make distinctions between project impacts and project benefits. For example, Montana’s Hard Rock Mining Impact Act requires mine developers to negotiate and fund an impact plan that ensures taxpayers do not pay for infrastructure and services needed for the mine’s construction and operation, including road construction and maintenance, increased school enrollment, workforce housing, and public safety. The DOE’s requirement does not distinguish between community impacts and community benefits, meaning some investments that might otherwise be required to protect taxpayers from financing project-related costs may be included in a CPB.

In October 2022, the DOE announced the awards in the first round of the Battery Materials Processing Grants and Battery Manufacturing Grants programs authorized by the Infrastructure Investment and Jobs Act. The battery grants will award $7 billion public investment over five years to companies contributing to building a secure domestic supply chain for batteries used in EVs and energy storage. The first round awarded nearly $3 billion to 21 companies in 12 states for projects that will source and process critical minerals; build and expand commercial-scale manufacturing facilities; and recycle battery components.¹² Each project awarded a grant contributes to domestic industrial supply chains that will accelerate the transition to EVs.¹³

The battery grants opportunity requires companies applying to the program to submit an equity plan as part of their application.¹⁴ The purpose of the equity plan is to ensure host communities share in the benefits when major public and private investments are made in a place. The DOE anticipates that a successful equity plan improves the chance that funded projects will be permitted and completed in a timely manner because of the social license secured by the plan. The funding opportunity announcement explains that the equity plan must detail a framework for how the company will measurably address policy priorities, including: community and worker engagement; job quality; diversity, equity, inclusion, and accessibility; and Justice40.

The required elements of the equity plan include:

1. The applicant’s plans and actions to engage with community stakeholders before project initiation, during the project, and after the project is complete. The applicant should also describe its plan to negotiate a CBA or similar agreement with community stakeholders;
2. A framework for the creation and retention of well-paying jobs.
3. A section describing how diversity, equity, inclusion, and accessibility objectives will be incorporated into the project.
4. A Justice40 Initiative plan, which should provide an overview of benefits that can be supported by measurable metrics and describe the benefits to disadvantaged communities.¹⁵

The equity plan accounts for 20 percent of the total score by which projects were evaluated. Each of the four policy priorities—engagement; jobs; diversity, equity, inclusion, and accessibility; and Justice40—are equally weighted in the score.¹⁶ While equity plans must be specific, actionable, and measurable, the requirement is intentionally flexible with regard to both the types of engagements and agreements as well as the specific local stakeholders which whom a company may engage. Flexibility is required to enable robust and authentic relationships that are led by each host community’s needs and goals.

To learn early lessons about the process and implementation of equity plans by companies who were awarded battery grants, the Center for American Progress reviewed the guidance in the DOE funding opportunity announcement and summaries of community benefits statements for all awarded grants, as well as interviewed representatives of five companies who received awards. CAP also surveyed available literature on CBAs and reviewed DOE guidance for subsequent funding announcements, including the Regional Clean Hydrogen Hubs and the Energy Improvements in Rural or Remote Areas program grants. These subsequent programs had not yet been awarded at the time this report was prepared, but the funding opportunity announcements and program guidance reveal additional detail about the DOE’s process and requirements for CBPs.

Developing a community benefits plan

Companies who were awarded battery grants generally welcomed the focus on equity plans and described how the requirement has been influential in helping formalize and clarify their commitment to working with host communities—something all the companies interviewed described as core to their operations and beliefs.¹⁷

The process for developing an equity plan is flexible by design and is pursued differently by companies based on their particular geography, prior relationships with communities, and the specific type of project they propose to build. A mine sourcing critical minerals, for example, has different environmental and community impacts, labor requirements, and project time horizon compared with a manufacturing plant producing components for EV batteries.

For relatively young startup companies moving into a new community, identifying who to talk to and how to understand a community’s needs can be overwhelming; one company described how it can feel “like peeling an onion.”¹⁸ By comparison, a company expanding operations in a community where it has been operating and based for years described the process of developing an equity plan as rewarding, noting it gave shape to the partnerships and relationships they already had in place.

The funding opportunity announcement does not provide a prescriptive process for developing an equity plan, but companies reported that the guidance was very helpful. However, companies who had managed DOE grants before had an easier time interpreting and navigating the DOE’s expectations and developing positive working relationships with the agency.¹⁹ The general approach below leans toward companies moving into a new community, which tends to be more challenging and potentially frustrating for companies.

The phasing of equity plan implementation and project funding is important because it allows developers time and flexibility to build trust with communities and stakeholders and to negotiate the details of agreements, partnerships, or investments outlined in the equity plan. For example, a workforce agreement cannot be finalized until after a grant is approved and the project’s labor needs and the capacity, skill set, and training needs in the local and regional workforce are more clearly defined.

In interviews, companies expressed a desire to be in the host community for decades. However, they noted that at the point an equity plan is submitted with a grant application, there has not been much time to engage with local stakeholders. For some companies, particularly those moving into a new host community and for those inexperienced with federal grants, the DOE’s guidance that the equity plan should include “at least one SMART (Specific, Measurable, Assignable, Realistic and Time-Related) milestone per budget period, supported by metrics, to measure the success of the proposed actions”²² felt too prescriptive. This was not a universal response from companies. However, several companies reported worrying that the process risks becoming overly rigid. “Once you draw a line in the sand, DOE holds you to it,” said one company. Another company asked the DOE to “lighten up.”²³

In a few cases, companies also described difficulty communicating with “siloed” teams within the DOE that did not appear to communicate with each other. This is a long-identified challenge of applying for and managing federal grants, which is more difficult for smaller companies that may struggle to navigate the process and are not familiar with federal government policy, language, and processes. Companies desire a partner in the DOE to help keep all the balls in the air and trust that the DOE “is not playing dodgeball.”²⁴ Again, these experiences were not universal. Companies with prior experience applying for and managing federal grants reported having excellent relationships with the DOE and that the process was flexible and clear.

All companies expressed understanding and sympathy for the DOE, which is being asked to manage multiple new billion-dollar grant programs funded by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. The agency has to interpret the bill text to design the grant programs, develop program guidance for applicants, and partner with companies to manage grants after they are awarded, all within short time frames and with limited staff. As noted earlier, companies find the guidance helpful and find the DOE to be a good partner, but partnerships would benefit from additional capacity at the agency to engage in robust partnerships that meet companies’ varying needs.

These company recommendations are well known to DOE leadership and staff. The DOE is actively adapting to provide for more capacity to work with applicants before a CBP is submitted, including to answer questions, provide additional guidance, and connect applicants to resources, case studies, and research that will be helpful in defining the scope and process for developing a CBP. The agency is also working to build capacity and expertise in service centers across the agency. For example, the DOE is working to hire contracting officers with experience in community economic development, labor, and environmental justice issues to facilitate more iterative and flexible implementation of CBPs after contracts are awarded while still holding companies accountable to milestones.

DOE leadership and staff also noted a need to invest in the capacity of communities and intermediaries who can negotiate a CBP.²⁵ Communities are the only partner not being paid to be at the table and often lack capacity, expertise, and standing to negotiate with project developers for local needs. A CBP, from a community standpoint, is a way to capture and retain more of the project’s benefits locally and ensure those investments are not geared toward supporting the specific project but help build a more diverse and resilient economy when public and private investments are made. The DOE does not have the authority, expertise, or resources to directly invest in community capacity.

Workforce training and hiring strategies predominate in approved equity plans

Successful equity plans deliver mutual benefits to companies and host communities. The company expects to secure a social license to operate in a particular place, to win an advantage in funding and permitting, and to build a skilled labor force. The host community expects to have a standing and voice in project design and operations, to win well-paying jobs for community members, and to share in the project returns that can be invested in local assets that build resilient and equitable economies. In extractive economies, such as mining, there is also an emphasis on permanent investments and economic diversification to mitigate against booms and busts.²⁶

The companies and projects funded in the first round of Battery Manufacturing Grants include mines and mineral processing facilities, manufacturing plants, and recycling facilities. By nature, the strategies, partnerships, and agreements included in equity plans varied. However, a common theme that jumps out is a focus on workforce training agreements with universities and community colleges. For example, Albemarle U.S. is funding a mineral processing operator training program at Cleveland Community College through a $5 million grant as well as a minerals pilot plant and engineering training program at North Carolina State University’s Asheville Minerals Research Laboratory through a $1.5 million grant.²⁷

In another case, Moses Lake, Washington, will host two of the Battery Manufacturing grant awardees, Group14 and Sila.²⁸ Moses Lake is becoming a hub for battery manufacturing because of an existing skilled workforce, proximity to transportation infrastructure, and access to clean, hydro energy. As manufacturing capacity expands, so too will the needs for skilled labor. Each company has engaged with Columbia Basin Technical Skills Center and Big Bend Community College to help train and support that workforce. Several companies also include engagement with unions and local hiring agreements in their equity plans. Talon Metals, for example, concluded a neutrality and workforce development agreement with the United Steelworkers union, covering the new jobs created at a new nickel processing facility in North Dakota. Talon is in the process of finalizing project labor agreements with the building trades unions in North Dakota.²⁹

A focus on workforce development via contributions to community and technical colleges can be an important piece of a community benefit strategy,³⁰ but it falls short of expectations around meaningful community engagement and benefits sharing. Companies feel comfortable working with a trusted and effective institution, such as a community college. But those partnerships and agreements should not come at the expense or exclusion of profit sharing, community ownership stakes, or deep engagement with disadvantaged populations and harder agreements around equity and inclusion.

As noted earlier, several companies proposed to use Phase 1 resources from their DOE award to hire community organizers and do more engagement after the grant award. A smaller number of agreements include local hiring and purchasing agreements and support for local service providers. For example, 6K Inc. committed to hiring a minimum of 40 percent of new employees from disadvantaged communities and to paying wages higher than the prevailing rate.³¹

It is too early to judge the ultimate outcomes of CBPs, but carefully tracking outcomes for the most vulnerable and disadvantaged communities will be important to assessing the usefulness of CBPs in broadly sharing the benefits of public and private investments in the energy transition.

Uncoordinated federal capacity and economic development policy limit the potential of equity plans

Growing workforce and training needs described above point to a gap—and an opportunity—for deeper federal coordination to support equity plans. The DOE is making billions of dollars of investments in supply chain capacity, including several individual investments that add up to hundreds of millions of dollars in Moses Lake alone. It makes sense to coordinate federal investments in workforce development by making aligned grants to universities, technical schools, and community colleges. Host communities may also lack housing, child care, and other essential services. Additional opportunities to coordinate federal assistance from workforce, housing, and economic development programs would leverage the DOE’s investments in supply chains and in equity plans. For example, ENTEK described a robust partnership with the Indiana Economic Development Corp.,³² a public-private partnership capable of bringing additional incentives and resources into a community to leverage the benefits of public and private investments. The corporation can provide technical assistance, serves an important networking role, and brings new resources to the table to leverage project and community goals.

Experience with CBAs in the mining sector also reveals that host communities often lack capacity—in terms of staff, expertise, funding, and support services—to allow citizens and stakeholders to identify and articulate local needs and meaningfully engage with companies and agencies. The battery grants allow companies to use awards to fund engagement and agreements, but no funding is directly available to host communities. A variety of federal resources exist, such as technical assistance and capacity delivered by agencies through the Federal Interagency Thriving Communities Network,³³ but they are not coordinated with the DOE grant or loan programs.

Another gap is that equity plans often count jobs created through project investments as community benefits. Community development experts are clear, however, that CBAs must offer additional benefits to host communities.³⁴ Jobs created through investments are not additional benefits typically negotiated in CBAs, nor should expected secondary economic benefits, compliance with required environmental review, or required consultation with Indigenous governments be considered additional community benefits. Equity plans do not replace expected regulatory compliance and should not be used to address project impacts. Additional benefits are investments in workforce training; hiring agreements that ensure jobs pay good wages and are accessible to locals; investments in community assets and amenities that help diversify the local economy; and direct benefits sharing through granting of ownership stakes in the project and/or direct profit sharing via community funds.

The Appendix includes a list of community benefits statements for each project.

An early review of equity plans in awarded battery grants reveals several opportunities to improve the DOE’s CBP process and implementation. Identified gaps include a need to: bolster staff capacity and training within the DOE to support companies with varying levels of capacity and existing relationships in host communities as they implement equity plans after awards are granted; address a lack of coordination among federal agencies that could bolster company investments detailed in equity plans; and identify and align resources directed to host communities to enable meaningful engagement. The DOE, Congress, and the White House should coordinate to fill these gaps in the following ways.

Bolster DOE capacity to manage iterative and adaptive contracts

Particularly for young startup companies entering a new host community, there has not been much time to engage with and build trust in the host community when milestones are set in equity plans. Equity plans are intentionally flexible, and the DOE expects milestones to move and change. However, some companies expressed uncertainty and worry that the DOE would be too rigid in enforcing them and that they would have difficulty communicating with the agency. Improved coordination and additional capacity within the DOE to manage partnerships with companies could address the challenges some of them face in pursuing interactive and flexible engagements with host communities. This goal can be accomplished by hiring and training contract officers across the DOE’s project centers in community economic development, public engagement, and CBAs.

Coordinate and deliver capacity and technical assistance for host communities

Many host communities have small populations and limited staff and expertise and lack resources vital to a community’s ability to engage with companies, express their values and needs, and ask for what they want in negotiation with companies. Federal agencies, including the DOE, should have authority to provide direct resources to host communities and to coordinate existing capacity and technical assistance programs across federal agencies. For example, the agency could leverage federal programs that place staff in host communities, such as the U.S. Department of Agriculture Rural Development’s Rural Partners Network, the Economic Development Administration’s Economic Recovery Fellows, focused assistance from the new Environmental Protection Agency’s Environmental Justice Thriving Communities Technical Assistance Centers, and drawing on other resources that are part of the Federal Interagency Thriving Communities Network to host communities where major DOE investments are being made.³⁵

Make aligned federal investments in host communities to leverage CBP outcomes

A core principle of place-based economic development is to make substantial and aligned investments in a place. Project-related investments alone do not guarantee benefits will be captured in host communities or that projects will result in more resilient and diverse economies. CBPs offer a framework to identify community needs, such as workforce training, housing, public infrastructure, and community assets that can leverage projects into more broadly shared economic benefits. Currently, the DOE does not have the authority or capacity to make investments in communities that are aligned with CBPs. In general, there is a need for improved collaboration and coordination between implementing agencies—in this case, the DOE and federal and state partners with economic development and workforce training expertise and resources. For example, a DOE investment in a major manufacturing facility in a rural community ought to trigger additional federal grants for economic development, infrastructure, and community assets. Companies and communities deserve a federal partner that can coordinate and deliver on partnerships that draw in additional resources that leverage project benefits and implement equity plans.

Conduct assessment, tracking, and policy learning

Long-term measurement and evaluation of CBPs should be included in any DOE program that requires or incentivizes CBPs as part of a funding opportunity. Evaluation can determine if promised outcomes are being realized, if agencies and stakeholders are accountable for actions and to each other, and if transparency was present at all levels. Evaluation is best conducted by nongovernmental and academic organizations that are resourced and empowered to participate in programs, integrate evaluation into policy design, and share lessons transparently with agencies, communities, companies, and the public.

CBPs are relatively new in the United States, and the DOE has relatively few effective agreements to point to as examples for applicants and communities to learn from. DOE staff expressed a desire to have a deep bench of examples and partnerships to learn from and share with company and community partners.³⁶ Companies also shared that they want to know more about the expected scope of CBPs—about how many engagements, what kinds of agreements, and the scale of resources that should be committed to CBPs.³⁷ The White House and nongovernmental organizations have developed project trackers to demonstrate how bipartisan infrastructure law and Inflation Reduction Act funds are being deployed and what kinds of projects are being built. The DOE could develop a capacity and benefits tracker to begin describing the kinds of investments public and private entities are making in communities where projects are located. This kind of tracker would be helpful in communicating the capacity limits some communities face and the ways that limits are being addressed. And a deeper bench of examples would allow the DOE to point to good case studies without being overly prescriptive about what companies have to do.

The bipartisan infrastructure law and the Inflation Reduction Act aim to integrate major public investments in renewable energy infrastructure with economic development and environmental justice policy to address the climate crisis and build a more equitable and just economy in communities simultaneously. CBPs can be an essential tool in this endeavor. A CBP can facilitate community engagement, make mutually beneficial investments in host communities, and coordinate policy and investments in capacity around large industrial projects. CBPs have become an integral part of all the DOE’s grant and loan programs and will likely be adopted by other federal agencies.

Early assessment of the Battery Materials Processing Grants and Battery Manufacturing Grants awards details how CBPs are already guiding more robust engagement between companies and host communities, including engagement with labor unions, colleges and universities, and community organizations to establish local hiring and purchasing agreements, workforce training programs, and funding for other local services and programs that help communities leverage the investment in projects into local benefits. These engagements are more seamless for companies already located in the host community with established relationships and partnerships. The process with the DOE is also made easier for companies with prior experience with federal grants.

Improving coordination at the federal level, leveraging private investments in CBPs, building capacity in communities to facilitate more meaningful engagement, and funding evaluation and case studies would make the process more transparent, more impactful, and easier to navigate for all parties.

CBPs also demonstrate how new industrial development may be different from old industrial development: Modern mining and manufacturing processes can have fewer impacts in host communities. And a new focus on community benefits that leverage public investments promises communities a greater say in how things are done in their communities.