The Trump administration announced on Friday it was canceling 24 awards managed by the Office of Clean Energy Demonstrations, totaling $3.7 billion dollars.
OCED employees were notified of the cancelations on Friday, when the Department of Energy made the official announcement, a source told Latitude Media. Program staff and grant management staff at OCED weren’t included in the decision making, the source said. But according to announcements made to OCED staff Friday, these 24 awards are just the “first round” of cancelations.
Many of OCED’s largest projects, including multi-billion dollar hydrogen and direct air capture hubs, appeared on draft versions of the administration’s “project hit list” this spring. But this week’s cancelations largely consist of smaller awards, some as low as $4 million, designated for heavy industry.
“DOE found that these projects failed to advance the energy needs of the American people, were not economically viable, and would not generate a positive return on investment of taxpayer dollars,” the agency said in a statement. Seventy percent of the awards were finalized between Election Day and the inauguration in January, DOE added.
The reality, however, is that all 25 of the canceled awards received conditional commitments from DOE long before the election — in some cases more than a year prior. And, as is the case with every award given out by OCED, the deals contained strict cost-share requirements: for every dollar the government provides, corporate recipients are required to invest at least that amount, and often more, in the project too. In other words, Energy Secretary Chris Wright may be framing the cancelations as “generating an immediate $3.6 billion in savings for the American people,” but if projects fail without the federal funding, communities in at least 12 states stand to lose at least that amount in private sector investment.
First round cuts
Most of the first round of canceled projects received funding under the Industrial Demonstrations Program, a $6.3 billion initiative to deploy decarbonization solutions for heavy industry, including iron and steel, cement and concrete, chemicals and refining, and others. As part of that cost-sharing program, private industry committed around $14 billion, making the federal share around 30%.
The 17 canceled IDP awards span the country and the gamut of industrial sectors. Those projects began award negotiations with DOE in March 2024, eight months before the presidential election.
Tennessee-based Eastman Chemical, for example, won up to $375 million to build the company’s second chemical recycling facility in Texas. In the weeks after the election, Eastman executives said they were optimistic about the future of their agreement with DOE, which would have required the company to commit around $900 million to the project to qualify for the cost-share. “Eastman is already under award contract with the DOE for our project in Texas,” spokesperson Kristin Parker told reporters in November. “We are working together closely and don’t believe the change in White House leadership will impact our award.”
Other canceled projects received funding under DOE’s Carbon Capture Demonstration Projects Program, a multi-billion dollar initiative aimed at improving efficiency and cost of point-source carbon capture technologies for industrial facilities like power plants and steel mills.
As part of that program, ExxonMobil began award negotiations with DOE in May of 2023, for up to nearly $332 million in federal cost share for emissions capture at a Texas petrochemical facility. The oil giant finalized that deal in December 2024.
Natural gas giant Calpine expected to receive a federal cost share of up to $270 million to help build its own carbon capture and storage project in its home state of Texas. DOE selected Calpine for the award in December 2023, and the company finalized the cost share agreement for the first phase of the project in July 2024.
The project, if completed, will capture 2 million metric tons of carbon dioxide from Calpine’s own natural gas combined cycle power plant annually. That plant provides steam and power to a chemicals manufacturing facility, and to the Texas grid. The carbon capture and storage project, Calpine said, would create 250 full-time jobs.
Jessie Stolark, executive director of the Carbon Capture Coalition, said that the canceled carbon capture projects were expected to have a significant economic multiplier effect around the country.
“Every dollar invested by the American taxpayer, can lead to up to $4 in economic output though additional supply and material orders, job creation, and broader economic benefits to regional economies,” Stolark said in a statement. The nearly 300 publicly-announced CCUS projects around the country have already created more than $77 billion in private capital expenditures, he added.
“With DOE canceling these projects, we are instead faced with a worst-case scenario in which the American taxpayer and businesses have invested billions without any results.”
The OCED impact
The Office of Clean Energy Demonstrations, established in 2021, enjoyed several years of bipartisan support before finding itself in the Trump administration’s crosshairs.
OCED provides up to 50% of the funding for first-of-a-kind projects in sectors including steel, chemicals, and cement, with the goal of spurring private sector capital for critical technologies. Before the recent award cancellations, the office managed more than $20 billion in project investments. But while its creation actually dates back to the first Trump Administration and the Energy Act of 2020, OCED has been in the GOP crosshairs since before the election.
Project 2025, the conservative policy blueprint published by the Heritage Foundation, accuses OCED of “distorting energy markets” and forcing taxpayers to cover “the risk of new technology development. The document proposes shutting down OCED entirely — an effort that is already underway at DOE.
In a proposed internal plan for OCED viewed by Latitude in April, DOE indicated that the administration intended to “rescope or terminate” around $9 billion worth of OCED awards. As of the end of the administration’s 90-day review of projects and activities, OCED was managing around 100 awards totaling around $19 billion, the document said. Approximately $10 billion in funding will continue “as is,” while another $6 billion will be handed over to the Secretary of Energy and the Office of Management and Budget for future awards.
The ultimate goal, the proposal explained, is to “terminate as many awards as possible using [a] range of options consistent with legal authorities.” Canceled funds will be used for a variety of administration priorities including “deficit reduction.”
However, in the wake of the House reconciliation bill passed last week, even canceling all $15 billion in awards Secretary Wright said DOE is re-evaluating, is unlikely to make a dent in the federal deficit.
The proposal, which now heads to the Senate, slashed more IRA-funded efforts to incentivize domestic industrial decarbonization projects and investment, in the form of tax credits. In addition to the long-expected cuts to wind, solar, and electric vehicle tax credits, the House proposal seeks to remove incentives for advanced manufacturing, carbon capture, and clean hydrogen, among others. Despite those cuts, the bill would add an estimated $5 trillion to the federal deficit.
