The high cost of retreat: Impacts of Department of Energy project cuts
America’s long-run economic prosperity depends on affordable, abundant energy. Durable, bipartisan congressional majorities have repeatedly endorsed a comprehensive energy strategy that delineates a clear role for the federal government, led by the Department of Energy (DOE), in the research, development, and deployment of innovative energy technologies. In just the last five years, Congress has come together across party lines on three separate occasions to pass landmark energy legislation under presidents of both parties: the Energy Policy Act of 2020, the CHIPS and Science Act, and the Bipartisan Infrastructure Law. Together, these laws formed the backbone of an economic strategy that met the moment to deliver affordable, clean, and abundant energy for American consumers and businesses; they also provided the private sector with the resources necessary to compete and win in the competitive international marketplace.
However, the Department of Energy has unilaterally reneged on congressionally mandated spending by cutting federal funds from hundreds of projects. In May, DOE announced the cancellation of 24 awards for clean energy demonstrations – including carbon capture and industrial demonstrations – totaling more than $3.7 billion in awards. Then, in early October, DOE announced the termination of 321 awards for energy projects worth approximately $7.56 billion in obligations, largely impacting states and congressional districts represented by Democrats. Subsequently, it was reported that an even larger DOE cut list – with about 300 additional projects, including many in states and districts represented by Republicans – was circulating on Capitol Hill and among advocates. Although this list was reportedly sent to the White House Office of Management and Budget, the administration has yet to say if it will be moving forward with the additional cancellations, as Republican lawmakers have pushed back.
These announced cuts and additional cuts being considered impact approximately 650 projects, encompassing $23 billion in federal funding, and span a wide array of energy projects that support Trump administration priorities such as reducing electricity costs, supporting cutting-edge technologies like carbon capture and storage, nuclear energy, and next generation geothermal, grid and transmission infrastructure, natural gas technologies, onshoring manufacturing, and industrial innovation. Locally, these cuts will have devastating impacts on communities and private sector businesses, eliminating jobs and economic opportunities.
They would also impact nearly every state across the U.S. Each project represents local jobs and economic development, partnerships, upstream and downstream supply chains with their own private investments, and up to 50% non-federal cost share from project partners. Altogether, the economic impact is far greater than the amount of stated federal investment to be canceled.
The most-impacted states1 by federal investments (combining announced cuts and additional cuts being considered) include:
- California — $3.6 billion
- Texas — $1.6 billion
- Illinois —$1.1 billion
- Indiana —$854 million
- Michigan — $846 million
- Louisiana —$705 million
- Colorado —$653 million
- Georgia —$624 million
- North Carolina —$591 million
- Minnesota —$555 million
Table 1. Total Estimated “Officially Terminated” and “Being Considered for Termination”* Project and Funding Cuts by District
| Total | Democratic District** | Republican District** | |
|---|---|---|---|
| # Grants Officially Terminated | 321 | 179 | 91 |
| # Grants Being Considered for Termination | 327 | 191 | 92 |
| Total # Grants Officially Terminated and Being Considered for Termination | 648 | 370 | 183 |
| $ Officially Terminated | $8 billion | $3 billion | $2 billion |
| $ Being Considered for Termination | $15 billion | $4 billion | $5 billion |
| Total $ Officially Terminated and Being Considered for Termination | $23 billion | $7 billion | $7 billion |
**Project and funding numbers are reflective of the project’s place of performance. Not all place of performance District data is available; therefore, numbers reflect a minimum. Multi-state projects are not reflected in district data.
Table 2. Total Estimated Announced and Being Considered for Termination Project and Funding Cuts by Key Sector
| Sector | Total Estimated Announced and Considered for Termination Project Cuts | Total Estimated Announced and Considered for Termination Funding Cuts |
|---|---|---|
| Industry and Manufacturing | 69 | $3.6 billion |
| Hydrogen | 76 | $821 million |
| Carbon Capture | 95 | $959 million |
| Methane Pollution Prevention | 21 | $686 million |
| Near-Term Infrastructure | 133 | $1.6 billion |
| Vehicles and Transportation | 90 | $2.1 billion |
In addition to negatively impacting state and local economies today, these cuts threaten energy deployment and long-term energy innovation in a way that hampers U.S. economic competitiveness. For instance, the U.S. government and private sector are squarely focused on the promise of artificial intelligence, a technology that requires significant electricity deployment to power data centers – cuts to solar and wind deployment, as well as grid resiliency, will harm that industry. Meanwhile, American manufacturing requires cheap energy and electricity to modernize and reduce input costs; announced cuts and additional cuts being considered threaten existing and future energy supplies for the sector, including low-cost electricity and hydrogen.
Lawmakers must use all available channels of influence to instruct the Department of Energy to reinstate or reissue project awards, and refrain from making future cuts.
1 This list excludes $7.1B in awards that are categorized as “multi-state” projects.
