Amid the general uncertainty as to what’s going to happen with the Department of Energy’s funding and staff, fears over the fate of one of the agency’s newest, yet most impactful offices are mounting.
Trump administration officials reportedly requested that DOE submit a list by the end of this week of projects funded by the Inflation Reduction Act, Bipartisan Infrastructure Law, and annual appropriations. Officials ordered the review of programs that have spent less than 45% of appropriated or awarded funding. The resulting “hit list” will help the administration determine which Biden-funded programs it will work to eliminate.
And, according to reporting from E&E News, it seems the Office of Clean Energy Demonstrations is particularly at risk.
OCED, officially established in late 2021 under the Bipartisan Infrastructure Law, manages over $20 billion in federal investments aimed at accelerating deployments for sectors like clean hydrogen, advanced nuclear, carbon capture, and energy storage. As former Energy Secretary Jennifer Granholm put it, OCED’s mission is to “move clean energy technologies out of the lab and into local and regional economies across the country.”
But the office’s many projects reportedly landed on an initial draft of the hit list. According to sources who spoke anonymously to E&E News, the offices $7 billion portfolio of carbon management projects (which includes the Direct Air Capture Hubs), its $8 billion Regional Clean Hydrogen Hubs, $6.3 billion industrial demonstrations program, and $500 million long duration energy storage demonstrations were on that draft list.
While that initial list wasn’t ultimately submitted to the administration because the cuts were considered too deep, a second draft is in the works. That list reportedly also recommended cutting most of OCED’s staff. The office’s advanced nuclear program however, doesn’t appear to have been targeted.
While legal experts told Latitude Media that it would be hard for individual recipients to sue over the initial 90-day pause on IRA and infrastructure law funding, these more pointed attempts to claw back promised funds are likely to prompt legal challenges.
According to White House data made public at the tail end of the Biden administration, 84% of grants created by the Inflation Reduction Act had been “obligated.”
“Those award agreements are legally binding contracts, and like all contracts they do include termination provisions,” Columbia Law professor Romany Webb told Latitude Media in January. That said, she added, those contracts typically outline a few circumstances in which an agency could legally terminate an agreement. “I would expect the Trump administration to be conducting a lot of audits, looking for things that might signal that the awardee is in breach, and therefore give them the ability to terminate.”
Two months later, the Trump administration’s order to review programs may be a sign of such an audit.
The OCED impact
The Office of Clean Energy Demonstrations is designed to address a critical gap — the infamous “valley of death” for tech companies — between research and development, and steel in the ground.
OCED provides up to 50% of the funding for first-of-a-kind projects, serving a key role in de-risking such projects for private investors. As Lara Burmeister, from Wollemi Capital, put it, without offices like OCED, investors will likely have a harder time getting comfortable with “emerging infrastructure” investments in the U.S.
While the office was officially funded under the Biden administration, the groundwork for OCED was actually laid by the first Trump administration. The Energy Act of 2020, which President Trump signed in December of that year, reauthorized programs like ARPA-E and the Fossil Energy Research and Development Programs. But it also authorized demonstration programs across a range of clean energy technologies.
The Biden administration then built on the Energy Act, and included OCED in its fiscal year 2022 budget request. The office was formally established in November 2021 via the Bipartisan Infrastructure Law, which provided $21 billion for large-scale energy demonstration projects.
