Just a week before November’s presidential election, Ken LaRoe, CEO and founder of the green bank Climate First Bank, said that “everybody is pretty confident that [the Greenhouse Gas Reduction Fund] will get compromised” in the event of a Trump win. The banks, nonprofits, and developers that had spent two years readying themselves for the IRA-powered influx were “scared to death,” he added.
This week, his words sound like a forewarning.
Denise Cheung, the veteran prosecutor who headed the Justice Department’s criminal division, resigned this week. You’d be forgiven for not keeping up in a week of major legal upheaval, but what sets her departure apart is that Cheung resigned over clean energy financing.
It’s a dramatic twist in the ongoing standoff over how appropriated climate funds will be managed under President Donald Trump. He is attempting to freeze Inflation Reduction Act disbursements, which include funds from the GGRF.
Here’s what happened: the Biden administration legally committed $20 billion from the Environmental Protection Agency’s GGRF. (The IRA had allotted $27 billion to the program.) Those funds are now at risk.
In a convoluted argument that involves “gold bars,” Trump’s EPA said it had found the money “parked” at a private institution, and called for its return. The funds were held in Citibank accounts under the names of nonprofit grantees, who ostensibly intended to loan the money to other green banks and clean energy projects. It has long been standard practice for the federal government to have private banks handle financial transactions.
Cheung’s resignation came after acting Deputy Attorney General Emil Bove demanded that she open a criminal investigation into an unnamed vendor (thought to be Citibank). Her doing so would have compelled the bank handling the disbursement to freeze the assets — a request that Cheung believed “unfounded” based on the evidence. She was willing to ask Citibank to freeze the assets, she wrote, but stopped short of compelling the bank to do so. It’s still unclear if Citibank will freeze the money, creating a ripple of uncertainty throughout the industry.
Hanging in the balance are more than 200 planned investments into clean energy projects. Legal challenges are inevitable; Cheung’s refusal to comply with the order alone is evidence that the Trump administration is asking career officials to prioritize something other than federal law.
Of course, the GGRF — including the $7 billion Solar For All funding that would be “transformational” for small solar companies — is just a tiny drop in the bucket compared to the $2 trillion that Trump ally Elon Musk’s Department of Government Efficiency aims to cut from the federal government. But according to an analysis from Stanford political science professor Adam Bonica, the goal of the cuts so far doesn’t seem to be “efficiency” or “cutting waste.” Rather, they’re targeting agencies perceived as liberal, including the EPA.
As former LPO director Jigar Shah said on last week’s episode of Open Circuit, the freezing of payments is likely to take a toll on the energy system, right when load growth demands more power on the grid. The administration’s actions, he said, “are going to lead to higher costs and a lot more uncertainty in the private sector.”
And it’s not just GGRF money that’s at risk — it’s more than $300 billion in infrastructure and climate projects that were committed during Biden’s tenure. (Grist this week launched a new tool that identifies what those projects are and where they are located.)
Ultimately, the factors that led Denise Cheung to depart seem to be more about Trump’s vindication than about any genuine desire to cut costs — much less investigate financial impropriety. It’s a striking example of a career official taking a stand against a request to act against the country’s interests. The question remains whether others will follow Cheung’s example.
