The Biden administration is quickly moving to distribute billions in loans to clean technology companies, aiming to establish a green legacy before the upcoming inauguration of Donald Trump. Since the November 5 election, the Department of Energy’s Loan Programs Office has pledged over $38 billion in loans, which represents about half of the total issued during Biden’s time in office.
Among the recent commitments are five of the largest loans ever made by the program. Notably, a record-setting $15 billion loan has been granted to Pacific Gas & Electric for infrastructure improvements. Other significant loans include $7.54 billion for a joint battery plant by Samsung and Stellantis in Indiana, $6.57 billion for Rivian’s electric vehicle factory in Georgia, and $4.9 billion for a transmission line project by Invenergy.
This surge in loan awards comes amid worries in the clean energy sector that the incoming Republican administration may significantly cut back or eliminate this funding program. Approximately $43 billion in conditional loans could also be at risk, according to legal experts and energy analysts.
Vivek Ramaswamy, who co-chairs Trump’s so-called Department of Government Efficiency alongside Elon Musk, criticized the recent loan distributions on social media, labeling them a “midnight spending spree.” He emphasized that every last-minute transaction would be closely examined.
The loan program is a vital component of Biden’s industrial strategy and has faced ongoing criticism from Republicans. They argue it unfairly favors clean energy over fossil fuel projects and point out concerns over its financial scrutiny and management of taxpayer funds.
Kevin Book, a co-founder of ClearView Energy Partners, indicated that the Loan Programs Office is likely to be a target for the new administration, giving the current administration an incentive to finalize as many loan agreements as possible.
This uncertainty has prompted some companies to reevaluate their loan applications. For instance, Duke Energy recently announced it would pause its efforts to secure funding from the Loan Programs Office until after February, seeking clarity on how the program will be treated by the incoming administration.
Established in 2005, the Loan Programs Office provides affordable public financing for emerging energy technologies that typically find it difficult to attract investment from Wall Street. Despite enjoying notable successes, including supporting Tesla, the office was severely tested by the 2011 collapse of Solyndra, leading to a decade of scrutiny and criticism.
US Energy Secretary Jennifer Granholm responded to Ramaswamy’s criticisms, calling them regrettable. She asserted that the recent loans had undergone extensive vetting and emphasized that the program’s success rate has been robust, with $14.3 billion repaid and $4.9 billion in interest payments made.
Government representatives stated that the loan office’s activities are driven by borrower needs and reiterated that the processes remain unchanged. However, some legal analysts warn that the incoming administration might attempt to rescind conditional commitments made by the office as part of broader budgetary cutbacks, which could create additional financial pressure for companies in the clean energy sector already facing challenges like high interest rates and competition from China.
Mary Anne Sullivan, a former DOE attorney under President Bill Clinton, noted that if the new administration were opposed to particular projects, they might find legitimate reasons to cancel those commitments.
The Loan Programs Office currently oversees a portfolio worth $108 billion, with about $43 billion in conditional commitments. As of their latest update, the office received 212 active funding applications totaling $324.3 billion in requests.
Despite the political shifts, some companies remain optimistic about the future of clean energy investments, citing the significant funds flowing into Republican-led states and the escalating competition between the US and China in the clean technology sector. Moreover, under Trump’s first term, the Loan Programs Office successfully announced and completed only one loan— a $3.7 billion expansion at a nuclear plant in Georgia.
Patrick Gruber, CEO of Gevo, which recently received a $1.47 billion conditional loan, expressed hope that pragmatism would prevail in the new administration regarding clean energy financing.