(Oil Price) – Following the recent election of Donald Trump as the next president of the U.S., the Biden administration is racing to approve huge quantities of green funding to ensure the U.S. gets the best chance possible at a green transition.
The Biden government’s far-reaching climate policy, the Inflation Reduction Act (IRA), is under threat as President-elect Trump has repeatedly threatened to cut spending on renewable energy and clean tech in favour of greater fossil fuel production. The government is, therefore, racing to advance clean energy before Trump’s inauguration in January.
The Loan Programs Office at the Department of Energy (DoE) is working to finalise as many loans as possible before the change of government in January, as its future looks uncertain. During Biden’s leadership, the office announced around $54 billion in loans or loan guarantees, which is just a small portion of its total lending power, for projects such as the Rivian electric car factory in Georgia and a massive power line in the Midwest. However, the office has closed just $13.5 billion of the deals to date.
Kennedy Nickerson, a former policy adviser to the loan programs office, stated, “They see the writing on the wall… They want to get out as much money as possible just to safeguard as much progress as they can.”
Companies expecting a payout from the Loan Office are now worried that loans could be delayed or stopped under the new Trump administration. In addition to losing out on critical funds and threats to the advancement of the U.S. green transition, some company leaders believe that if their projects are delayed it leaves space for China to move ahead, which could be detrimental to U.S. geopolitical aims.
Following the passing of the IRA in 2022, the Loan Programs Office was made responsible for the distribution of up to $400 million in funding. The office, which was established in 2009, has input from thousands of experts at the DoE, making it better prepared to assess green energy and clean tech projects than most commercial banks.
Since Biden’s inauguration in January 2021, the office has approved $34 billion in loans for the electric vehicle (EV) and battery industries, aiming to counter China’s dominance in the global market. Funds have been awarded to battery manufacturers and automakers, to strengthen domestic EV and battery supply chains. It has also provided financing for several novel technologies to drive innovation that could help advance the U.S. green transition.
The office is now racing to finalise various funding decisions for fear that Trump may attempt to halt green spending once in office. In his July Party Platform, Trump stated his intention to DRILL, BABY, DRILL.” He said, “We will become Energy Independent, and even Dominant again. The United States has more liquid gold under our feet than any other Nation, and it’s not even close. The Republican Party will harness that potential to power our future.”
During his first term in office, Trump rolled back over 100 environmental rules and withdrew the U.S. from the Paris climate agreement, which it had joined in 2015. He also sought to establish more opportunities for new drilling on federal land and offshore drilling.
Trump has been adamant about his intention to halt programmes and funding from the IRA. “My plan will terminate the Green New Deal, which I call the Green New Scam. Greatest scam in history, probably,” Trump said in a September speech. He also stated plans to overturn Biden administration regulations on vehicles, power plants, and household appliances.
The rush to approve funds has been criticised by the opposition in recent weeks. A letter from three House Republicans addressed to the head of the Loan Programs Office, Jigar Shah, stated, “The last-minute drive to expedite loans exposes the federal government — and American taxpayers — to tremendous risk.”
Shah responded by saying, “Our process remains the same… We continue to do everything with a fine-toothed comb. But right now, borrowers are sufficiently motivated to move more quickly.”
The rush to finalise funding decisions started even before the November presidential election when the office recognised the potential shift in policy approach. In October, Katie Harris with BlueGreen Alliance, a coalition of union and environmental groups, stated, “The Biden-Harris administration is trying to get this money out the door and get it fully obligated.” Harris added, “It’s quite the undertaking.”
By early September, $61 billion in climate funding had been awarded across several government departments, such as the Environmental Protection Agency, with much of it allocated this year. This figure does not include the significant tax credits that have been awarded.
While it will be impossible to complete all the pending loans under the Loan Programs Office and other government agencies, the Biden administration is making a clear effort to distribute the funding as quickly as the bureaucratic process will allow to ensure that the U.S. is given the best possible chance at a green transition.
By Felicity Bradstock for Oilprice.com
