Building Worker Power and Good Jobs in Your Community with Federal Clean Energy Refunds
Updated April 23, 2025
Author: Sara Steffens, Worker Power Director
Over the past several years, federal investments have driven historic opportunities to expand U.S. clean energy infrastructure by helping fund things like solar panels, wind turbines, electric vehicle (EV) charging stations, and electric fleet vehicles. Many of these projects include robust labor standards, and they offer broad opportunities for unions to shape clean energy investments and strengthen worker power.
Unions at the national level have worked hard to ensure these federal spending programs help build long-term union employment, bringing good jobs to communities throughout the nation. Now, union locals and worker advocates have a powerful tool to use in their communities: the IRA’s “Direct Pay” provisions.
What Is Direct Pay?
Direct Pay (sometimes called “elective pay”) allows tax-exempt organizations – including union locals – to receive direct federal payments for the costs of clean energy investments, reimbursing up to 70 percent of project costs. That means even though your union local or worker organization doesn’t pay taxes, you can still benefit from these federal clean energy tax credits.
This creates new opportunities to:
Improve your own union hall;
Negotiate with employers to improve workplaces for union members and the public;
Ensure more clean energy projects use union labor; and
Partner with public entities and local organizations to create opportunities for high-wage work.
Why Union Leaders Should Care About Direct Pay
Union leaders can help ensure that Direct Pay investments not only reduce emissions, but also grow union jobs, expand bargaining power, and strengthen ties with communities.
Here are five key ways to get involved:
Use Direct Pay to Upgrade Union Halls and Reinvest Savings. Because unions are tax exempt, union locals can directly access Direct Pay refunds to help fund clean energy improvements to their own union halls and use the resulting savings to better serve union members. For example, a union local could install solar panels that reduce their energy costs, and use the resulting savings to fund organizing programs or new member services.
Bring Direct Pay to the Bargaining Table. Union bargaining teams can negotiate with eligible public and nonprofit employers to implement Direct Pay projects that benefit workers in cities, states, schools, hospitals, public utilities, state agencies and other locations. Bargaining teams can fight for and win contract language requiring employers to file for Direct Pay funds to power workplaces with solar panels or wind turbines; install electric vehicle charging stations; or purchase union-made electric buses or fleet vehicles. These investments benefit both workers and the public – and union leaders can help ensure they’re built with union labor.
Bundle Smaller Clean Energy Projects for Impact. Unions can participate in regional efforts to bundle and fund multiple smaller Direct Pay projects through financing tools like bonds. This bundling* will create larger-scale projects that can deliver community-owned clean energy while triggering important labor standards such as prevailing wage and registered apprenticeships. Labor standards can be further strengthened through Community Workforce Agreements or Community Benefits Agreements.
Partner with Community-Based Organizations. Unions can partner with local groups planning to use Direct Pay to ensure that the resulting projects use union labor and incorporate high-road labor standards through mechanisms such as Community Benefits Agreements, vendor contracts, employer neutrality agreements, and coordination with union apprenticeship programs. These collaborations can also lay the groundwork for deeper union/community alliances across economic, climate, and social justice efforts.
Advocate for Union Labor in the Clean Energy Transition. Union activists can play a key role in encouraging public institutions like schools, healthcare centers, state and local governments, and houses of worship to seize the moment by pursuing Direct Pay projects that support high-wage union work while building America’s clean energy economy. The CPC Center offers guides and training to support union members and allies in making sure clean energy investments deliver for working people.
* Learn more about “bundling” on pgs 14-16 of our report “Building Equity with Direct Pay: Seizing the Moment for Racial Justice, Community Ownership, and Worker Power.”
Is Direct Pay Still Available?
Yes! Despite news about attacks on the Inflation Reduction Act (IRA) from the current administration, Direct Pay tax credits are still available, and the IRS continues to issue payments. Direct Pay has not been affected by any executive orders or funding freezes. These tax credits are written into law and are here unless Congress passes legislation to change them—and that hasn’t happened.
Getting funds distributed and projects out the door is more important than ever!
Interested in learning more?
The CPC Center offers:
Training for union leaders who want to learn more about the IRA and its Direct Pay provisions, including the strong worker protections required for larger projects.
One-on-one technical assistance for those ready to start creating and partnering on Direct Pay projects. We can help union leaders identify projects eligible for funding, walk you through the refund process, and help locals identify bridge funding.
Support for union negotiators interested in bringing Direct Pay to the bargaining table, including Direct Pay success stories and model contract language.
Find out more:
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