With President-elect Donald Trump’s inauguration less than a month away, the Energy Department is getting clean tech loans finalized. Today’s newsletter looks at who’s getting loans — and how Trump can remake the office.
Dude where’s my loan?
By and
US President Joe Biden’s $400 billion green bank has just weeks to close billions of dollars in deals to finance green technology before handing the keys to the Trump administration.
The Energy Department’s Loan Programs Office (LPO) has provided crucial support for companies deploying first-of-its-kind technology and large projects that banks typically shy away from. Among other loans under Biden, LPO has made a record $9.2 billion offer to Ford Motor Co. to finance building three battery factories and provided $1.5 billion to Holtec International Corp. to restart a shuttered nuclear power plant.
Yet more than $40 billion in conditional commitments could be in jeopardy once President-elect Donald Trump takes office. Since the election, LPO has announced a $4.9 billion loan guarantee to renewables developer Invenergy LLC for a high-voltage transmission line project; a $6.6 billion conditional loan to Rivian Automotive Inc.; and a $7.5 billion loan for a joint venture between Samsung SDI Co. and Stellantis NV to create battery manufacturing plants in Indiana.
It’s still possible the Energy Department has time to close on those commitments, but it won’t be easy, said Kennedy Nickerson, who formerly worked as a policy adviser in the Loan Programs Office.
“It would be very quick and relies on a heavily bureaucratic process running perfectly, but it’s possible,” said Nickerson, who now serves as a vice president at Capstone, a Washington-based research group. “The Biden administration recognizes the risk, and they are working hard to make the loan guarantees and loan agreements as airtight as possible” before Trump takes over.
When asked if the Energy Department had enough time to close on pending loans, Jigar Shah, the office’s director, said it was up to borrowers to complete the Energy Department’s rigorous vetting process.
“Right now, borrowers are sufficiently motivated to move more quickly then they have, probably a year ago,” he said. “It’s up to the borrowers. Our process hasn’t changed.”
During his first administration, Trump attempted to kill the program. This time, some in his inner circle want to eliminate or retool LPO to finance fossil fuels and other energy sources favored by Republicans.
Already one of the two leaders tapped by Trump to lead the so-called Department of Government Efficiency, Vivek Ramaswamy, has vowed the incoming administration will scrutinize and rescind billions of dollars in “11th-hour” Energy Department loans. (The other is Elon Musk, whose company Tesla Inc. benefited from an LPO loan during the Obama administration.)
Chris Wright, Trump’s nominee for Energy Secretary, has slammed subsidies for wind and solar power and called greenhouse gas reduction targets “perverse.” He has, however, talked up the benefits of nuclear power.
LPO got an infusion of cash from Biden’s signature climate law. It has nearly $400 billion in remaining loan authority, the Energy Department said in November.
The administration has yet to close 18 loans, including a $2 billion commitment made in February 2023 to Redwood Materials Inc., a battery recycler led by a Tesla alum.
The time needed to finalize loans makes it unlikely they all will be done before Biden leaves office. The average LPO decision takes more than 200 days to wrap up, though the Biden administration closed its first deal — a roughly $500 million loan guarantee for a hydrogen project in Utah — in roughly 40 days.
Pat Gruber, the chief executive officer of biofuel maker GEVO Inc., said there is no chance the Biden administration will close on his company’s $1.46 billion loan. offered in October. The company still needs to raise equity and complete other details, though he was optimistic the new administration would see it across the finish line.
Clawing funding back wouldn’t be easy for the Trump administration, especially if the money has been sent, said Peter Davidson, the founder and chief executive officer of Aligned Climate Capital who served as the office’s executive director from 2013 to 2015.
“Once a loan has been obligated, it’s a binding contract with the government so it has to be paid,” Davidson said. “Once the money is obligated, if it isn’t sent to the borrower, you are in a legal dispute, and it has to be settled in the courts.”
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