A decision to shut down the Office of Clean Energy Demonstrations could be coming as early as next week, sources familiar with the matter have told Latitude Media.
According to reporting by Axios, those plans may also include terminating half of the office’s awarded funding, and using the President’s budget request to ask Congress to shut down the office and realign appropriations.
OCED, established in 2021, provides up to 50% of the funding for first-of-a-kind projects, and is focused on helping critical technologies get steel in the ground. It has also played a key role in de-risking such projects for private investors. Some of the office’s most notable projects include the Direct Air Capture Hubs, the Clean Hydrogen Hubs, and the Advanced Reactor Demonstration Program.
Reports that the Trump administration was seeking extensive cuts to the office emerged several weeks ago, when a draft list of DOE-funded projects to cut was circulated. That list reportedly included OCED’s carbon management and clean hydrogen hubs, as well as its industrial demonstrations program, and long duration energy storage projects. Sources within DOE now report that most if not all of OCED’s staff is expected to be cut.
The creation of OCED dates back to the first Trump Administration, and the Energy Act of 2020, which authorized demonstration programs across a range of clean energy tech. The office wasn’t officially funded until 2021 as part of the Bipartisan Infrastructure Law, which provided $21 billion for large-scale demonstration projects.
That makes OCED somewhat unique from other offices at DOE, explained Jigar Shah, who led the Loan Programs Office under the Biden administration. On top of its statutorial creation, OCED also has bipartisan support, he added. “This is something that [Joe] Manchin and [Lisa] Murkowski and all those folks worked on for years to put in place,” Shah said on an episode of Open Circuit.
OCED is essential to helping American companies “finally start winning” in tough to crack sectors like steel, chemicals, and cement, Shah added. “If you destroy that office, then you destroy the capacity of the Department of Energy to run those [programs,]” he said.
Many of those programs are years in the making. “A hydrogen hub doesn’t get built in one week,” Shah said. That means it’s particularly risky and tricky to simply move certain projects to the purview of another office, which is reportedly being considered, according to sources who spoke with Latitude Media.
The office also fills a unique role in the American business ecosystem, Shah said. Public-private partnerships, like those OCED engages in, are common practice in other parts of the world, but not in the U.S., he explained.
For an enormous project like a hydrogen hub, plans are inevitably going to change over the many years it takes to get the project up and running. In a public-private partnership model, “the government is flexible, the private sector is flexible,” Shah added.
In the United States, making changes to projects in that way tends to be extremely challenging and time consuming, and can ultimately sink projects. OCED was therefore building “a new muscle” for U.S. project development, Shah said. “And now they’re destroying the muscle.”
Andrew Beebe, managing director at Obvious Ventures, said that while other mechanisms might eventually step up to fill the gap left by OCED, having the government involved in getting technologies into their respective markets is an “easy win.”
“This is a time when America should be putting its best foot forward to be competitive, and instead we’re shooting ourself in the foot,” he told Latitude Media. And it’s counterintuitive to the administration’s stated goals.
“I thought we all wanted the same thing, which was to make sure America both remains competitive and could be more competitive in massive new industries like climate tech,” he said. “Supposed actions like this make me think… that not everybody is as committed to competitiveness as the people who put these [programs] in place.”
