When Darren Walker, president of the Ford Foundation, a $13 billion foundation guided by a vision for social justice, and Steve Mnuchin, President Donald Trump’s treasury secretary, agree that the Opportunity Zones program is the biggest economic development opportunity in 50 years, it’s worth taking a closer look.

A provision of the Tax Cuts and Jobs Act of 2017, the Opportunity Zones (OZone) program seeks to spur investment of patient capital in low- and moderate-income communities across the United States. The program allows investors to delay or avoid paying capital gains taxes if they invest in Qualified Opportunity Funds that then invest within Census tracts designated as Opportunity Zones.

Market watchers are predicting $200 to $300 billion in investment in the nation’s 8,700-plus OZones. And federal rules have made it clear that green economy projects — such as local power generation, microgrids, EV charging stations and energy storage — are eligible for OZone investment.

The OZone program is a good fit for clean energy and sustainable development. First, the tax benefits — capital gain tax deferral, partial forgiveness of tax on capital gains and forgiveness of additional gains on investments in OZones — make it easier to include sustainability features because the projects can deliver higher returns and be structured with simpler capital stacks. The higher return on Opportunity Fund investments, for example, could allow sponsors of clean energy projects to add features to projects or partner with energy customers that are considered more risky, as proposed by Jon Bonanno, CXO of New Energy Nexus. New Energy Nexus provides assistance to global energy entrepreneurs.

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