Energy Secretary Chris Wright said on Friday that his agency plans to cut billions in grant funds for Biden-era loans as the Trump administration conducts a review of the department’s $400 billion clean energy investments, a decision that energy policy experts who spoke with the Daily Caller News Foundation cheered on.
Before leaving office, former President Joe Biden squeezed $25 billion into the Department of Energy’s (DOE) Loan Programs Office (LPO) for various projects, with the bulk of the funds going toward renewable energy development. Wright’s newly announced plans to review and cancel a majority of the loans has the backing of several energy policy experts who told the DCNF that the LPO has stripped cash from taxpayers and contributed to U.S. grid instability.
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“We’ve got a lot of reasons to be worried and suspicious about that,” Wright told Bloomberg in response to a question about the LPO. “Some of these loans will go forward, some of it, it’s too late to change course. A lot of them won’t go forward, but that’s a very careful review process that we’ve just put in place and just got a team to execute on.”
The LPO has previously dished out loans for nuclear energy, an industry championed by the Trump administration. However, among the loans finalized after the election were $6.57 billion to an electric vehicle manufacturing facility in Georgia and $289.7 million to solar energy development and battery storage in Massachusetts.
“[The LPO] may have been well-intended, but it’s morphed into a clean energy slush fund that dooms energy projects by making them tied to federal funding,” Gabriella Hoffman, the director of the Center for Energy and Conservation at Independent Women’s Forum wrote to the DCNF. “LPO investing currently undermines competition and market innovation of energy technologies. In the event it stays, however, it must be radically reformed to not prop up reliable energy sources like solar and wind.”
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Notably, the rush to get these loans greenlit under Biden prompted a November inspector general report, which highlighted several potential risks to taxpayers related to the LPO, including concerns that the office may be moving too quickly to distribute funds, possibly at the expense of properly vetting loan applicants.
Other noteworthy projects approved under Biden’s watch included a $2.5 billion in loan for EV technology, 1.45 billion for a solar manufacturing facility in Georgia and $584.5 million for a solar photovoltaic (PV) system with an integrated battery energy storage system in Puerto Rico.
Founded in 2005, the loan office was created to help advance clean energy infrastructure, and it was increasingly active under the Obama administration, which approved a $535 million loan to Solyndra, a green energy company that collapsed just two years later. Activity slowed during President Donald Trump’s first administration, but under Biden, the office received a massive funding boost from Congress — totaling $400 billion — to support green tech firms.
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“These past four years have been the most productive in LPO’s history,” LPO wrote in a fact sheet three days before Trump returned to the White House. “Under the Biden-Harris Administration, the Office has announced 53 deals totaling approximately $107.57 billion in committed project investment – approximately $46.95 billion for 28 active conditional commitments and approximately $60.62 billion for 25 closed loans and loan guarantees.”
“If the government’s going to use my money as a taxpayer through LPO investments, that money should be going to investments that actually provide reliable power,” André Béliveau, senior manager of energy policy at the Commonwealth Foundation told the DCNF. “A lot of the push to keep these subsidies alive isn’t about good energy policy — it’s about keeping industries afloat that can’t meet reliability and affordability standards on their own.”
While the majority of the LPO’s support in Congress and the White House has come from the left, some right-of-center organizations recently urged Wright on April 14 to “preserve” the LPO for the sake of “American dominance.” The organizations argue that the LPO plays a “critical role” in enabling “new nuclear power development.”
“LPO continues to play a critical role in financing infrastructure that enables new nuclear power development, revitalizes domestic mineral production, and modernizes both grid and gas systems — all central to the administration’s goals of lowering energy costs, reshoring manufacturing, and achieving energy dominance,” the letter reads.
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Subsidizing energy projects that are not able to survive on their own in the free market is questionable, Amy Cooke, the co-founder and president of Always on Energy Research and the director of the Energy and Environmental Policy Center, told the DCNF. “The calls to eliminate it are well-founded, and at the very least, it should be dramatically reformed,” she said. “If the market isn’t interested in it, is it the responsibility of the Department of Energy to fund [these projects]?” she asked.
“We should be funding improvements for firming the grid and not arbitrarily add more intermittency,” Béliveau said in reference to wind and solar projects that provide less inertia — the grid’s ability to continue running smoothly after a disturbance occurs between energy supply and demand for the electrical grid.
“If it’s going to exist, then reforms need to make sure that we’re being good stewards of taxpayer dollars,” he added, pointing to natural gas and nuclear as options that could help “firm the grid.”
“The Trump administration’s version of energy dominance has created a source-neutral way of picking winners and losers,” he continued, noting that reliability, affordability and security are the priorities of the administration, as opposed to a climate-change centric approach to energy policy.
Trump declared a national energy emergency on his first day back in office and signed an executive order to boost domestic energy generation. He signed a series of other EOs within his first 100 days in office to speed up the permitting process and clear red tape for several industries including coal and critical mineral mining.
“The so-called Inflation Reduction Act (IRA) increased DOE’s loan authority by $290 billion,” Myron Ebell, former senior fellow and director for the Center for Energy and Environment at the Competitive Enterprise Institute told the DCNF. “This gives the federal government the ability to finance a large number of commercially unviable companies and prop up the entire renewable energy industry. The special interests that line up for these handouts spend more effort on lobbying in D.C. than they do on innovating and producing competitive products. DOE’s corporate welfare handouts need to be ended,” he said.
“First, the Trump administration should suspend any further loans, and second, Congress should end DOE’s loan authority in the reconciliation package,” Ebell continued. “The reconciliation package must also include repealing all the green energy tax subsidies in the so-called Inflation Reduction Act of 2022. Those two together will pay for hundreds of billions of dollars of tax cuts.”
The Biden administration encouraged the further development of renewables through billions of tax credits and subsidies under the IRA. In the case of the Goldman Sachs analysis, initially projected to contain nearly $400 billion worth of tax credits in 2022, later estimates revealed that the costs could skyrocket to $1 trillion over 10 years. The Cato Institute’s March report showed that IRA tax credits could get up to $4.7 trillion by 2050.
“The entire program has to be shut down,” author and Climate Depot executive editor Marc Morano told the DCNF. “You can’t have the energy department picking winners and losers in the energy sector.”
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First published by the Daily Caller News Foundation.
