After receiving both public praise and scrutiny for its grant giving, the Portland Clean Energy Fund (PCEF) presented its second, much larger round of proposed green energy grant projects to Portland City Council Wednesday. PCEF is asking the city to approve $107 million in green energy-related grants for historically underserved communities.

“We have a moment in Portland to activate our resources like the clean energy fund to show not just our region, not just our state, but frankly the nation what it looks like to center our communities as we not only mitigate the climate crisis in front of us, but also prepare to adapt,” said Donnie Oliveira, the director of the Bureau of Planning and Sustainability which oversees PCEF. “That’s what PCEF represents.”

The $107 million would fund 65 community-oriented projects that address energy efficiency, renewable energy, green energy workforce development, and renewable agriculture. The grant projects include major home upgrades, like $9.4 million to Hacienda Community Development Corporation to replace gas-powered heating in 243 apartments for low-income Portlanders, and equitable workforce development, like $7.2 million to the Constructing Hope Pre-Apprenticeship Program to train 595 low-income women and people of color in green energy construction trades over three years. 

Michael Edden David Hill, co-chair of the PCEF Grant Committee, told council that this round of grants hits PCEF’s “sweet spot” of reducing carbon emissions while also prioritizing communities most impacted by climate change. Overall, PCEF staff estimate that the projects will lead to a lifetime reduction of 300,000 metric tons of carbon dioxide, which is comparable to taking 64,641 gas-powered cars off the road for one year. 

This is the second round of proposed PCEF grants after the program was approved by voters in 2018. Funded through a surcharge on major Portland retailers, PCEF aims to redistribute money from corporations whose operations contribute to greenhouse gas emissions to Portlanders who are most vulnerable to climate change, like low-income people and communities of color. The program distributed $8.6 million to 45 projects during its first round of funding in 2021.

Then came a series of criticisms about the voter-approved program.

Changes in spending habits during the pandemic resulted in major profits for retailers, which in turn raised much more money for PCEF than originally projected. As PCEF’s revenue swelled from a projected $40 million per year to over $90 million per year, critics claimed that the program wasn’t getting the money out the door quickly enough. So, PCEF acted quickly after the deadly heatwave, awarding a $12 million grant to facilitate the distribution of air conditioning units to a company with a director whose experience could not be verified, prompting calls for more significant vetting practices. Then, an early city audit of the program this year pointed to a lack of specific benchmarks for how much carbon the program planned to divert through its programs and other oversight concerns. While the auditor’s office said the concerns and related recommended changes were typical for a young program like PCEF, the Portland Business Alliance—a lobbying group representing many of the businesses hit with the PCEF surcharge—called for PCEF to pause all grant giving and the Oregonian Editorial Board suggested the program should limit the scope of its grants until the audit recommendations could be addressed.

Instead, PCEF staff added additional review steps to its grant application process, ramped up its yearly grant giving to approximately $100 million, and devised a timeline to address the audit concerns by 2024. 

The additional review process flagged grant applicants requesting more than twice their annual budget, entering into a new area of work, or that have been operating for three years or less. If a grant application is flagged, PCEF staff request additional information about the structure of the organization, work history, or project partners to answer any concerns or determine if the proposal should be modified to be more realistic for the applicant and less risky for PCEF. According to PCEF manager Sam Baraso, the additional review criteria flagged 44 of the 144 eligible PCEF applicants, generated 300 emails between staff and applicants, and added about two months to the grant review process.

If an applicant was able to provide additional information that satisfied the program staff’s concerns—like adding additional work history that proved the organization’s capacity or answering budget questions—then the grant application moved forward to the scoring process. If staff believed a grant proposal was too ambitious for a new organization, the applicants were asked to modify the proposal by downsizing the scale, developing project stages that hinge on the completion of certain project elements, and other risk mitigation measures. 

Of the 65 grants PCEF is asking city council to approve, 30 went through the additional review process to either gather more information to answer additional questions or modify the original grant proposal.

City council members were receptive to the steps PCEF staff had taken to improve the program’s review process following the public scrutiny, but also pressed the program for more details. Mayor Ted Wheeler noted that because city council makes the final approval for the PCEF grants, city council is held accountable by the media for any real or perceived missteps of the program. Wheeler indicated that, because of the media scrutiny, he felt pressure to make sure the PCEF grant vetting process was as rigorous as possible. 

“My enthusiasm for the [PCEF] mission has been somewhat tempered by the reality that there is risk associated with the way this is done,” Wheeler said.

Wheeler pressed PCEF staff on how the program is avoiding conflicts of interest, whether the grant vetting process can be further improved, and questioned whether PCEF has enough staff to reasonably manage the number of grants it is expecting to give out. Due to the language of the voter-approved ballot measure that created PCEF, the program can only use 5 percent of its annual revenue for administration costs. However, as annual revenue fluctuates and PCEF has increased the staff oversight of grants as part of its risk mitigation efforts, the 5 percent cap has been identified as a possible burden. A change to the administrative cap can only be approved by city council.

While PCEF staff’s methods were interrogated, city council members also indicated their support and hope for the program. Commissioner Dan Ryan characterized himself as a “critical friend” of PCEF—someone who is asking critical questions of the program because he wants it to succeed. While Wheeler is discouraged by the potential risks of PCEF, Ryan sees the innovation and related risks of the program as a positive sign for the city.

“Portland needs to be known once again for actually taking some risk,” Ryan said. “We’ve been resting on our laurels too long, so I’m sitting here getting excited about where this can go.”

City council will vote whether or not to approve the PCEF grants on July 20.

Correction: An earlier version of this story mischaracterized the Oregonian Editorial Board's position on PCEF. The story has been corrected.