Issue Brief | States have flexibility to invest federal highway funds in climate-smart transportation
February 21, 2023
The U.S. has seen a historic influx of federal funding for improving America's transportation systems, especially through the $1.2 billion Bipartisan Infrastructure Law (BIL). In a new issue brief, “Flexible Federal Funding Opportunities for State and Local Clean Transportation Investments,” Georgetown Climate Center describes three ways states can leverage the flexibility built into federal law, including expanded flexibility in BIL, to use federal funding to support climate-smart infrastructure projects.
"Transportation agencies have a greater opportunity than ever to decide how much federal funding for transportation will be directed toward greenhouse gas emissions-reducing projects,” according to the issue brief released today. “By taking broad advantage of the flexibility of federal funding programs, states can accelerate progress toward their climate goals."
Many states have adopted, either by statute or executive action, ambitious targets for greenhouse gas emission reductions that will require significant cuts to carbon pollution across all sectors. State departments of transportation and legislatures can play leadership roles in helping to achieve these targets by investing in projects that reduce carbon emissions from transportation, the largest source of greenhouse gas pollution for most states. To help achieve these reductions, state decisionmakers can make use of three strategic opportunities as they determine how to invest their share of BIL funds:
- Take advantage of low-carbon project eligibility under Federal-Aid Highway programs;
- Use authority to transfer funding between Federal-Aid Highway programs; and
- “Flex” funding for transit projects from Federal-Aid Highway programs to Federal Transit Administration.
As prior GCC analysis shows, the Bipartisan Infrastructure Law has the potential to be an important part of the U.S. response to climate change. Alternatively, depending on the funding priorities at a national scale, it could instead lead to an increase in carbon pollution above the projected baseline. The key determinant will be the decisions made by federal, state, and local governments about how to exercise the flexibility available to them as they spend the money allocated to their states by the BIL. To some extent, all states already use flexibility provisions to invest federal transportation funding according to their own policy goals, while also achieving national priorities inherent to the federal programs. However, additional flexibility to use this authority is still available for states looking to expand the climate benefits of federal transportation dollars by increasing investments in transit, active transportation, vehicle electrification, and other low-carbon strategies.