The U.S. Department of Energy (DOE) recently announced the termination of several previously awarded funding projects nationwide. These projects aimed to create jobs and local economic value, enhance energy and national security, support burgeoning industries amid increasingly onshored manufacturing and the rapid growth of artificial intelligence, and reduce costs for households and businesses.
The Secretarial Memorandum
In May, in a Secretarial Memorandum called “Ensuring Responsibility for Financial Assistance,” U.S. Secretary of Energy Chris Wright laid out the department’s case-by-case process for evaluating awards and other forms of financial assistance to ensure they are “financially sound and economically viable, aligned with national and economic security interests, and consistent with Federal law and this Administration’s policies and priorities and program goals and priorities.” Following the memorandum, the DOE requested additional information to evaluate 179 awards totaling $15 billion.
May 30th Terminations
At the end of the month, Secretary Wright announced the termination of 24 awards issued by the Office of Clean Energy Demonstrations (OCED), equating to more than $3.7 billion. The department claimed that these projects, which were mainly focused on carbon capture and sequestration or decarbonization efforts, “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.” Affected projects were in industries that have often garnered conservative support, including oil, gas, and steel, with many cancellations concentrated in right-leaning states such as Alabama, Louisiana, Ohio, Texas, and Wyoming.
October 2nd Terminations
Unfortunately, May was not the end of the cancellations. At the beginning of October, on the first day of the federal government shutdown, Russell Vought, Director of the U.S. Office of Management and Budget, announced a new round of terminations. Afterwards, the DOE announced that it had terminated 321 awards spanning 223 projects, equating to $7.56 billion, some of which had already been included in the May announcement. The cancellations come on top of over $22 billion in clean energy projects cancelled and 16,000 jobs lost in the first half of this year alone, according to E2.
The awards were initially issued by a variety of offices and agencies, beyond more projects from the OCED, which included two of the Regional Clean Hydrogen Hubs. To name a few, as of October 2:
- 68 cancelled awards from the Office of Fossil Energy (FE), including regional direct air capture projects smaller than the OCED-awarded projects that were on the May list;
- 26 cancelled awards from the Grid Deployment Office (GDO);
- Six cancelled awards from the Office of Manufacturing and Energy Supply Chains (MESC);
- And one cancelled award from the Advanced Research Projects Agency-Energy (ARPA-E), which would have helped the University of Illinois to develop software for the design and optimization of floating offshore wind turbines.
However, the majority of cancellations had been awarded by the Office of Energy Efficiency and Renewable Energy (EERE).
Although many projects were located in 16 Democratic-led states, Republicans were not exempt: the cuts affected the districts of 108 Democratic members of Congress and 28 Republican members. For example, Rep. Dan Newhouse’s (R-WA-04) district lost $1 billion, while Rep. Jeff Hurd’s (R-CO-03) lost $120 million and Rep. Juan Ciscomani’s (R-AZ-06) lost over $2 million. Latitude Media notes that some of the projects would have promoted physical projects in red states. For example, the $464 million GDO award for the Minnesota Department of Commerce, the Midcontinent Independent System Operator (MISO), and the Southwest Power Pool (SPP) through the Grid Resilience and Innovation Partnerships (GRIP) Program would have contributed to transmission lines benefitting multiple states: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Meanwhile, a $90 million award to Swift Current Energy would support construction of the Mineral Basin Solar project in Clearfield County, Pennsylvania.
Photo Courtesy Swift Current Energy
October 7th Terminations
Within a week of the release of this list, however, another list began circulating, first reported by Semafor. It highlighted 647 grants totaling over $20 billion in awards by the same six offices, whose latest statuses were labeled as “terminate.” That amounts to almost $16 billion more for 351 additional projects. Latitude Media found that, among the newly announced projects, the EERE once again accounted for the most, with 158 alone. However, the OCED was targeted for the most additional funding cuts, totaling $9 billion. In total, as of October 7:
- The EERE accounted for $1.82 billion in cancelled awards spanning 340 projects.
- The FE accounted for $2.1 billion in cancelled awards spanning 151 projects.
- The OCED accounted for $12.36 billion in cancelled awards spanning 61 projects, including all of the Regional Direct Air Capture Hubs and Regional Clean Hydrogen Hubs.
- The GDO accounted for $3.28 billion in cancelled awards spanning 45 projects.
- The MESC accounted for $4.26 billion in cancelled awards spanning 45 projects.
- ARPA-E accounted for $46.26 million in cancelled awards spanning five projects.
The new list includes 297 projects announced for cancellation on October 2, but is more expansive. An energy lobbyist told E&E News, “I understand this is the full list that was sent to Office Management and Budget a few weeks ago. Last week, they basically just pulled out most, if not all, the blue state projects, and that’s what they announced as cuts. It shows the much bigger list, which will definitely impact a lot more states, … a lot more red states and red districts.” This was not wholly unexpected, as Secretary Wright recently said on CNN, “As this fall goes on, you’ll see cancellations in red and blue states.” Latitude Media also pointed out that 24 awards listed on October 2nd did not appear in the October 7th version. While the DOE itself has not confirmed that the list is authentic, E&E News said that “seven people familiar with internal operations at DOE” have done so. Even without firm confirmation, its existence does not seem to bode well for these projects or their funding, further adding to the uncertainty.
Photo Courtesy Battelle
Workforce And Economic Impacts
All of these project losses are likely to hurt America’s overall workforce and economy. For example, according to TechCrunch, at least 10 direct air capture megaprojects, totaling $47.3 million, were listed for termination on October 2nd. Ben Rubin, executive director of the Carbon Business Council, wrote in an email to E&E News about the consequences of these cuts: “Pulling back promised funding jeopardizes jobs and local investment while weakening American competitiveness.” After the reveal that the October 7th list featured all Direct Air Capture Hubs, like Project Cypress by Batelle, Climeworks, and Heirloom Carbon in Louisiana and 1PointFive’s South Texas DAC Hub, Erin Burns, executive director of Carbon180, told Semafor, “These projects were never just about carbon — they were about jobs, investment, and the chance to lead in a global climate economy. Cutting them leaves communities in limbo and undermines years of progress.” Jessie Stolark, executive director of the Carbon Capture Coalition, zeroed in on the missed opportunity for local communities: “Every dollar invested by the American taxpayer can lead to up to $4 in economic output through additional supply and material orders, job creation, and broader economic benefits to regional economies.”
The electric vehicle industry was one of the most significantly affected by the October 7th list. All 13 awards through the Domestic Manufacturing Conversion Grants program were listed as terminated. Many of these would have invested in local jobs. For example, Mercedes-Benz was supposed to receive $285 million to retool its van assembly plant in Ladson, South Carolina, which currently supports 2,300 direct and indirect jobs and would create 800 more; Blue Bird Corporation was supposed to receive $80 million for an electric school bus facility in Fort Valley Georgia, which the company claimed would create 400 local manufacturing jobs; and, Cummins was supposed to receive $75 million to upgrade its facility in Columbus, Indiana to produce zero-emission components and electric powertrain systems, which would create 250 jobs. Separately, Ascend Elements was expecting to receive a $316 million grant to build a battery manufacturing plant in Hopkinsville, Kentucky. Happily, it still plans to move forward with the Apex 1 project, which it expects to employ up to 400 people and generate $4.4 billion in economic impact for the state over the next decade. However, not all companies are this fortunate.
Other awardees were relying on this funding to ensure the viability of their projects. According to Latitude Media’s analysis of the May cuts alone, “If projects fail without the federal funding, communities in at least 12 states stand to lose at least that amount in private sector investment.” In October, Chris Green, president of the Pacific Hydrogen Association, told CNBC that companies associated with the Pacific Northwest Hydrogen Hub (PNWH2), which saw $1.1 billion in funding cut, “were spending lots of their own money,” accounting for 80% of the funding. “Can we still do this project now that we’ve lost 20% of our planned revenue? It remains to be seen if some of these projects can persevere,” he reflected. Zealan Hoover, former senior advisor to the EPA administrator, explained, “Federal dollars are designed to solve investment gaps where private capital does not flow. So my expectation is that if these grants are terminated, then that work will either not progress, it will progress significantly slower or other sources of public investment at the state and local level or social investment will need to be redirected—but then that comes at the cost of investment that’s not happening elsewhere.”
Additionally, many of these companies had already received some of the funding that the DOE now wants to recoup. According to Resources, $171.9 million had already been funneled to businesses before they were notified of the May cancellations. FuelCell Energy, whose $3 million award was terminated on October 2, has already received $2 million of that funding to produce reversible solid-oxide fuel cell technologies. The Woods Hole Oceanographic Institute, which saw its $8 million award terminated for a project to assess wind power potential off the coast of New England, “is currently in its fifth and final year, and the majority of the funds have been already spent,” according to an email to Chemical & Engineering News from the organization.
Photo Courtesy Ascend Elements
Innovation and Competition Impacts
Many of the cancelled projects were essential to advancing American innovation and industry leadership. Conrad Schneider, U.S. senior director for the Clean Air Task Force, added, “With respect to some of these emerging technologies that require the demonstrations, that’s what we would say would be the hammer blow.” For example, the $45.13 million award to Libbey to test hybrid electric furnaces in Toledo, Ohio, which was cancelled in May, could have generated benefits for the domestic glass industry as a whole. MTR Industrial Separations was awaiting a $62 million award, cancelled in October, to help it advance and commercialize a new membrane-based process for capturing carbon from a $140 million Wyoming pilot plant that is already operational.
Many of the May cancellations had been test cases on the path to commercialization for energy-intensive sectors, as part of the Industrial Demonstration Program. Several had been for the cement industry, including a $500 million award to Heidelberg Materials to implement carbon capture and storage technologies at its facility in Indiana, a $189 million award to Brimstone Energy to cut emissions in its production of low-carbon cement and alumina, and a $87.91 award to cement company Sublime Systems to build its first commercial-scale factory in Holyoke, Massachusetts. A spokesperson for Brimstone told Heatmap News, “Given our project’s strong alignment with President Trump’s priority to increase U.S. production of critical minerals, we believe this was a misunderstanding… As the first U.S.-based alumina plant in a generation, our project — which would also make Portland cement — would clear a ‘mine-to-metal’ path for U.S. aluminum production, fortifying the U.S. critical mineral supply chain and creating thousands of jobs.” Plus, these projects’ selection for participation in the Industrial Demonstrations Program indicated that they presented a significant opportunity to “provide American manufacturers a competitive advantage in the race to lead the world in low- and net-zero carbon manufacturing.”
Photo Courtesy Sublime Systems
National Security Impacts
The rollback of this funding will also compromise America’s national security interests. For example, with the October 7th update, all the awards for the Regional Clean Hydrogen Hubs program have been targeted for termination, in addition to the previously cancelled PNWH2 in the districts of the likes of Rep. Dan Newhouse (R-WA-04), Rep. Cliff Bentz (R-OR-02), and Rep. Ryan Zinke (R-MT-01) and ARCHES H2 in the districts of the likes of Rep. Vince Fong (R-CA-20), Rep. Young Kim (R-CA-40), and Rep. Ken Calvert (R-CA-41). The Mid-Atlantic Clean Hydrogen Hub (MACH2) and the Appalachian Regional Clean Hydrogen Hub (ARCH2) would have benefited red states, where they received bipartisan support. Pennsylvania Gov. Josh Shapiro (D) labelled them a “win for our Commonwealth,” and Pennsylvania Sen. Gene Yaw (R-23) said he was “delighted to see the federal government’s recognition of our vast natural resources.” Sen. Shelley Moore Capito (R-WV) recently spoke out in defense of ARCH2, expressing, “Yeah, I’m worried — it’s a big deal for us.” Rachel Starr, senior U.S. policy manager for hydrogen and transportation at Clean Air Task Force, described the national security implications of these losses to Heatmap News: “The U.S. will risk its leadership position on the global stage, both in terms of exporting a variety of transportation fuels that rely on hydrogen as a feedstock and in terms of technological development as other countries continue to fund and make progress on a variety of hydrogen production pathways and end uses.”
A contributing factor to weakened security has been the uncertainty that many of these companies have faced throughout the year. Frank Wolak, head of the Fuel Cell and Hydrogen Energy Association, stated that the hydrogen hubs were “fundamental to building long-term hydrogen investments in the U.S.” This lack of certainty has been a common theme across the energy landscape. The DOE never actually informed some companies of the cancellation of their projects. Plug Power CEO Andy Marsh said that as of October 10, “We’re aware of the reports regarding Department of Energy program funding and, at this time, have not heard directly from DOE.” However, the company lost seven awards, according to the October 2nd list. News of the cancellations almost came as a relief to others, including Zora Chung, cofounder of ReJoule, which saw its $10 million award for the reuse of electric vehicle batteries for commercial building energy storage capabilities across states, including Minnesota in Rep. Pete Stauber’s (R-MN-08) district, cut on October 2. She described, “[For] a lot of members of our team, there was a certain amount of relief when this finally happened, because the fact that this has been going on since January has been a challenge.” However, the company believes “that the project is aligned with the DOE goals of energy independence and resilience, as well as competing directly with China on battery technology.”
Hilary Lewis, steel director at Industrious Labs, summarized, “When the government backtracks on its promises and cancels this type of funding, it puts American competitiveness at risk. We are ceding leadership to other countries that are going to make these investments.”
Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, elaborated that the loss of these projects in totality will also impact the country’s ability to compete on the global stage: “Locking domestic plants into outdated technology is not a recipe for future competitiveness or bringing manufacturing jobs back to American communities.” The Clean Air Task Force’s Schneider summarized that the move “undercuts U.S. competitiveness at a time when there is a growing global market for cleaner industrial products and technologies.” He concluded, “Demand for a range of innovative energy technologies is booming, and the US just made itself less competitive.”
Evan Chapman, senior director of policy at Clean Tomorrow, further emphasized the importance of competition with China: “Many of these projects involve new ways to make cement or chemicals, and they’re things that China and other countries are already investing in. If we’re not making these investments, we’ll be losing the race to develop and demonstrate and deploy these advanced technologies.” Evan Gillespie, a partner at Industrious Labs, explained that the move equates to “handing the competitive advantage to Europe, China, Canada, and other nations that are making significant investments in clean manufacturing while leaving the U.S behind.”
Photo Courtesy Arches H2
Energy Impacts
These projects would have promoted American energy independence and lowered costs. Stolark called the May cancellations a “major step backward in the nationwide deployment of carbon management technologies,” whose commercialization is “necessary to demonstrate the technology across fossil fuel power generation and key industrial sectors, including natural gas-fired power generation, cement, and basic chemicals.” For example, among the cancellations were $540 million in awards to Calpine to add carbon capture technology to its natural gas facilities in California and Texas, a $331.88 million award to ExxonMobil Corporation to replace natural gas with lower-cost hydrogen at its facility in Baytown, Texas, and a $72 million award to PPL Corporation to install carbon capture and storage technologies at its Cane Run Generating Station in Louisville, Kentucky. At the end of the day, Stolark explained, these technologies are “crucial to meeting America’s growing demand for affordable, reliable, and sustainable energy.”
Some of the clean energy cancellations will be particularly damaging to customers’ energy bills. Utilities, including Baltimore Gas & Electric in Maryland, Commonwealth Edison in Illinois, Sacramento Municipal Utility District in California, and National Grid in New York and Massachusetts, will no longer receive the $50 million each that they had been awarded to add technologies like backup batteries and rooftop solar to their grids. Sandra Purohit, federal advocacy director for E2, explained, “Dismantling clean energy projects across the country at a time when some Americans are seeing their electricity bills skyrocket, at twice the rate of inflation since 2020, simply makes no sense… Adding obstacles to building the cheapest, fastest sources of energy, and stalling energy innovation is a confounding choice that’s antithetical to a free and open market.” Joanna Slaney, vice president for political and government affairs at the Environmental Defense Fund, added, “Canceling projects that would lower electric bills and make the grid more reliable is not about achieving ‘energy dominance.’”
The cancellation of transmission projects will also have detrimental consequences. The GDO’s award of $464 million for the Joint Targeted Interconnection Queue partnership between MISO and SPP would have benefitted local households, according to the Minnesota Department of Commerce: “Without these investments, Minnesota could face higher energy prices, slower infrastructure development, and increased burdens on low- and middle-income households — all while demand for clean, affordable energy continues to grow.” Grid Strategies affirmed that every dollar invested in stronger ties between MISO and SPP would yield $7 to $10 in benefits in the case of emergencies. Overall, “consumers in the Great Plains [in SPP], and those in the Gulf Coast states [in MISO], each could have saved in excess of $100 million with an additional 1 GW of transmission ties.”
Jason Walsh, executive director of the BlueGreen Alliance, described to Canary Media that these effects will be felt all over the country: “Energy does not abide by state boundaries. Electrons flow, supply chains flow, and markets are often regional or national in nature. Anytime you destroy a project in one part of the country, it’s going to affect another part of the country.”
Moreover, the cancellations will hurt the wallets of companies that planned to implement them to save on costs. For example, a $178.88 million award to food conglomerate Kraft Heinz Food Company to install electric boilers and heat pumps across 10 locations was among the cancellations in May. As the DOE explained in its original award, the project “seeks to help a major American brand achieve deep decarbonization and serve as an example for other U.S. food and beverage companies to reduce emissions from process heat while reducing energy costs.”
Human Impacts
These funding cuts will harm constituents who were relying on local organizations and departments to deploy these resources. Some provide essential services. For example, a cancelled award of nearly $30 million to Charge Bliss, now known as Faraday Microgrids, would have enabled Valley Children’s Hospital in California to continue operating for days, even in the face of blackouts or climate events like wildfires, through a new solar microgrid and backup battery project. Due to the importance of the project, Valley Children’s Healthcare President and CEO Todd Suntrapak emphasized, “This project is about protecting the health and safety of children, no matter what challenges come our way. While we’re disappointed by the loss of federal support for Phase 2, our timeline hasn’t changed, and our commitment hasn’t wavered.”
Other institutions are vital for resilience in the face of climate events. A $26.8 million award to Tri-State Generation and Transmission Association in the district of Rep. Gabe Evans (R-CO-08), cancelled on October 2nd, would not only have helped improve grid resilience and reliability in rural areas of Colorado, Nebraska, New Mexico and Wyoming, but would also have been matched by Tri-State with additional funding for the likes of home weatherization and energy efficiency rebates. A $30 million award to West Biofuels would have provided reliable energy for communities in or near the districts of Rep. Doug LaMalfa (R-CA-01), Rep. Kevin Kiley (R-CA-03), and Rep. Tom McClintock (R-CA-05), which face wildfire risk, while creating a market for local biomass that contributes to forest thinning tactics and prevents those fires in the first place. A $249 million award to the Louisiana Department of Energy and Natural Resources (DENR), slated for cancellation on October 7th, would have helped pilot projects get off the ground in areas with the most energy burden and storm risk. This Louisiana Hubs for Energy Resilient Energy Operation (HERO) program was particularly important “in the face of the kind of extreme weather we are particularly vulnerable to, living and working at the intersection of flood-prone rivers and hurricanes from the Gulf of Mexico,” according to DENR Secretary Tyler Gray.
Cancellations will also impact customers’ ability to deploy energy-saving technologies in their own homes, particularly in rural and low-income areas. A $10 million award to Efficiency Maine, slated for termination as of October 7th, would have contributed to the installation of high-efficiency heat pump systems in 675 rural homes across the state. The award followed a pilot program that successfully “helped homeowners lower their energy expenses, increase the comfort of their homes throughout the year, and curb greenhouse gas emissions.” As Sen. Susan Collins previously described the importance of the technology, “Due to our state’s long, cold winters, many Mainers face significant costs to heat their homes. Electric heat pumps offer an affordable, energy-efficient alternative.”
Photo Courtesy Efficiency Maine
Many legislators are already standing up to defend their constituents. Upon news of the termination of a more than $3 million award to Caterpillar in his district, Rep. Darin LaHood (R-IL-16) stated, “I am reviewing the details of the recent DOE announcement and have been in communication with companies in and near my District on this issue. As more information becomes available, I will continue to remain a strong advocate for all employers and workers in my district and will continue to engage with the Administration to advance opportunities that support businesses and communities across Illinois.”
