The News
The Biden administration is racing to disburse financing from the government’s biggest clean energy bank to get ahead of possible cuts once President-elect Donald Trump takes office.
On Monday the US Department Of Energy agreed to lend a project backed by automaker Stellantis up to $7.5 billion for two electric-vehicle battery factories in Indiana. The deal follows nearly $12 billion in other clean energy loans and guarantees announced in the last week, adding up to $41 billion in conditional commitments to about 20 projects the office is now racing to finalize before Trump’s inauguration on Jan. 20.
Realistically, most of those deals won’t close before Trump takes office, creating a risk that the new administration could pause or rescind them. Current and former DOE staff told Semafor they worry that the Loan Programs Office (LPO), a bastion of outgoing President Joe Biden’s climate agenda, could be drastically scaled back under Trump. They fear the incoming president may decide to leave roughly $340 billion in remaining loan authority either untouched or directed to projects favored by the fossil fuel industry.
“Any deal that remains conditional on January 20 is at real risk,” said John Miller, managing director for ESG policy at the investment bank TD Cowen. “Broadly speaking, we expect Trump’s DOE to mothball LPO for 2025.”
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Tim’s view
The LPO is a secret weapon in Biden’s climate portfolio, a relatively small and obscure agency that sits on a huge pile of cash with the aim of underwriting innovative clean energy projects that are considered too risky for private investors. But it moves slowly, in part to avoid being burned by bad deals like the politically disastrous collapse of LPO-backed solar manufacturer Solyndra during the Obama administration. Now, a “supernova” of deals will be forthcoming in Biden’s final weeks, Miller said.
The purpose of racing, at this point, isn’t just to get money out the door before Trump cuts it off. LPO’s best defense against being gutted is its project pipeline, which, like so much of the climate cash delivered by the Inflation Reduction Act, is being directed to big job-creating industrial projects in Republican-majority districts. LPO was largely shuttered during Trump’s first term. Then, it was working on about half a dozen proposals. Now there are more than 200. All of those companies, whether they’ve been approved for loans yet or not, have already invested months or years and tens or hundreds of thousands of dollars in the LPO due diligence process. Under Biden, LPO has also branched out from solar and EVs into a wider array of sectors — including biofuels, critical-minerals mining, and advanced nuclear power — that tend to draw bipartisan support.
“It will be very difficult for the Trump administration to undo those projects without extreme blowback from all over the country,” Dan Reicher, a former senior DOE official, said.
One such project is a sustainable aviation fuel factory under development by Gevo, Inc., which is working to finalize a $1.5 billion LPO loan guarantee announced in October. Patrick Gruber, the company’s CEO, said he’s not worried about closing the deal under Trump: “It fits the direction of job creation, rural economic development, addressing a market need economically, and creating additional infrastructure.”
There’s still “a lot of uncertainty hanging over” the future of the office, one former LPO staffer, who requested anonymity to speak candidly about the office culture, told Semafor. But, they added, Trump’s nominee to lead DOE, Chris Wright, has a track record of signing energy deals across clean and fossil technologies. LPO is basically free money for the administration, already approved by Congress, and therefore a ready source of relatively painless economic wins, they said: “Why wouldn’t they want to just make these Trump deals?”
Room for Disagreement
One area for concern, staffers said, is the LPO’s staff, which tends to include a high share of contractors who could become a target for Trump’s budget hawks and the proposed “Department of Government Efficiency” to be led by Elon Musk — even though Musk has profited personally from the LPO more than probably anyone else, given that the LPO was a critical early backer of Tesla.