US cleantech loan program accelerates amid clear path
TL/DR –
Since 2021, the US Department of Energy’s Loan Programs Office (LPO) has conditionally approved over $37 billion in loans for projects using new technologies to reduce greenhouse gas emissions. However, with the incoming Trump administration, there is uncertainty surrounding the future of the LPO as Trump has promised to rescind all unspent funds from the Inflation Reduction Act and has called clean technology policies a scam. Despite this, the LPO has seen an influx of applications due to increased funding and has issued 17 conditional commitments in 2024 alone, with companies racing to finalize their loan applications amidst the uncertainty.
Loan Approvals Skyrocket For Green Technology Projects Amid Uncertain Future
Credit: Redwood Materials
Since the beginning of 2021, the US Department of Energy’s Loan Programs Office (LPO) has greenlighted over $37 billion in loans for innovative projects set to curb greenhouse gas emissions, including Redwood Materials’ battery recycling plant in Nevada.
However, the future of LPO under President Donald J. Trump’s incoming administration remains uncertain. The office, launched during Barack Obama’s first term, supports large cleantech manufacturing projects, including battery materials and biobased chemicals plants.
The LPO has had a tumultuous past, including a slowdown in loan issuances following the Solyndra bankruptcy and a slump during Trump’s first term. But the office has revived under Joe Biden’s administration, with a cash injection through the 2022 Inflation Reduction Act. Despite this, the Trump administration may sideline the LPO, as the President-elect has called supporting clean technologies a scam.
Trump has recently nominated oil industry executive Chris Wright to lead the DOE. In a January 2024 letter, Wright dismissed the need for government support for renewable energy projects to combat climate change. The DOE head must approve new commitments for LPO loans.
Despite this, industry experts argue that the LPO may endure. Jeff Navin, cofounder of Boundary Stone Partners, said during a November webinar that the LPO now has a robust pipeline, making it harder to shut down.
The LPO has been processing loan applications at an impressive speed. The office issued 17 conditional commitments, including 4 in October 2024 alone, and the LPO recently reported that it has 210 active applications and is still receiving 1 new application per week.
The LPO also expanded its loan-making authority by changing its methodology to estimate risks, which allowed the office to quadruple the available funds for clean energy projects.
However, the Trump administration’s potential block of conditionally approved LPO loans presents a risk. Despite this, some firms, like Gevo and Eos, remain confident that they can finalize their loans this year.
The LPO must strike a balance between speed and rigor in processing applications, especially after the DOE’s Office of Inspector General recently hired a legal firm to review the LPO’s due diligence process and ensure compliance with its policies.
The LPO’s chief investment officer, Chris Creed, argued in June that despite high-profile failures like Solyndra, the program is financially successful with losses amounting to 3% of the money it has lent. However, some Republican lawmakers criticized the LPO for taking on too much risk, a claim disputed by Richard Wang, founder of Crevasse Consulting.
Despite the uncertain future, some LPO supporters hope that the program’s track record will convince the second Trump administration of its value. Sydney Bopp, a partner at Boundary Stone, believes that many projects align with the Trump campaign’s energy policy platform.
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