Clean Energy Project Cuts: $3.7B in Grants Cancelled | Shale Magazine

clean energy project cuts

After months of threatening to decrease green energy and cleantech funding and reverse many of the efforts outlined in the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) from the Trump administration, the U.S. Department of Energy (DoE) announced in May that it would terminate 24 projects and cut billions of dollars. 

The Announcement

At the end of May, U.S. Secretary of Energy Chris Wright announced the termination of 24 awards issued by the Office of Clean Energy Demonstrations (OCED), which totaled more than $3.7 billion in funding. This decision followed a DoE review of each project, which suggested that the projects were not advancing U.S. energy needs successfully enough, were not economically viable, and were not expected to “generate a positive return on investment of taxpayer dollars.” 

Almost 70% of the projects that were cut had been signed between the day of the presidential election, on November 5, and January 20 when President Trump took office. The terminated projects were largely focused on carbon capture and sequestration (CCS) and decarbonization technologies. 

“While the previous administration failed to conduct a thorough financial review before signing away billions of taxpayer dollars, the Trump administration is doing our due diligence to ensure we are utilizing taxpayer dollars to strengthen our national security, bolster affordable, reliable energy sources and advance projects that generate the highest possible return on investment,” stated Wright. “Today, we are acting in the best interest of the American people by cancelling these 24 awards.”

Earlier in May, the DoE published a Secretarial Memorandum entitled, “Ensuring Responsibility for Financial Assistance,” outlining the agency’s policy for evaluating financial assistance on a case-by-case basis. This review process was used to assess the 24 projects in question. 

Congress under the Biden administration had approved tens of billions of dollars to trial novel technologies aimed at advancing the energy transition. The target was to explore carbon-cutting technologies to reduce emissions and encourage the private sector to invest in them. Most of the funds were awarded during Biden’s time in office, and the awards were legally binding but had various conditions attached to them. 

A further 179 awards with a combined value of $15 billion, which cover projects such as upgrading electric grids and domestic battery manufacturing, are expected to be assessed in the coming months. 

The Projects in Question

Two of the terminated awards, with a combined value of $540, were earmarked for Calpine, one of the largest U.S. electricity producers, which aimed to incorporate CCS technology into its natural gas power plants in Yuba City in California and Baytown in Texas.

Another company that lost its funding – $331 million in total – was ExxonMobil, which was planning to replace natural gas with lower-emissions hydrogen at its chemical facility in Baytown, Texas.

Other cancelled awards included: $500 million to the cement manufacturer Heidelberg Materials to use CCS tech in its Indiana plant, $189 million to Brimstone to reduce emissions in its cement operations, and $170.9 million to the food manufacturer Kraft Heinz to install electric boilers and heat pumps to help shift away from fossil fuels. 

Public Reception

While Wright insists that the termination of the awards is aimed at saving taxpayers’ money, many sectoral experts have criticized the move, suggesting that stopping exploration into novel technologies could lead the U.S. to fall behind its competitors. 

“Many of these projects involve new ways to make cement or chemicals, and they’re things that China and other countries are already investing in,” stated the senior director of policy at the nonprofit Clean Tomorrow Evan Chapman. “If we’re not making these investments, we’ll be losing the race to develop and demonstrate and deploy these advanced technologies.” Meanwhile, China has announced over 100 energy demonstration projects, Chapman stressed. 

Conrad Schneider, a senior director at the Clean Air Task Force, echoed Chapman’s sentiment. Schneider explained, “Today’s action is bad for U.S. competitiveness in the global market and also directly contradictory to the administration’s stated goals of supporting energy production and environmental innovation.” He added that it “undercuts U.S. competitiveness at a time when there is a growing global market for cleaner industrial products and technologies.”

Meanwhile, the executive director of the nonpartisan Carbon Capture Coalition Jessie Stolark said the news “is a major step backwards” for carbon management technologies, which are “crucial to meeting America’s growing demand for affordable, reliable, and sustainable energy.” 

Although the White House has pledged to undo many of Biden’s climate policies, several Republican lawmakers have shown support for investment in green energy and cleantech, particularly CCS technologies, which, if incorporated into oil and gas projects, could help garner support for fossil fuels. 

Further cuts are likely to follow under the new Ensuring Responsibility for Financial Assistance memorandum and following broader government efforts to cut climate funding. Earlier in the year, the Environmental Protection Agency was tasked with taking back $20 billion in climate funding, a move that has led several grantees to file lawsuits in an attempt to recoup the funds. It remains uncertain just how much climate funding will be cut under President Trump. 

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