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At least one target of Chris Wright’s grant review may run into some sticky statutory issues.
The Department of Energy announced on Thursday that it’s reviewing some 179 awards made by the Biden administration worth $15 billion to ensure they were “consistent with Federal law and this Administration’s policies and priorities.”
But what happens when federal law and Trump’s priorities are at odds?
In the case of at least one awardee, the major U.S. steel producer Cleveland Cliffs, the DOE’s review process may become a mechanism to take funding that is statutorily designated for projects that reduce greenhouse gas emissions and channel it into long-lived fossil fuel assets.
Lourenco Goncalves, the CEO of Cleveland Cliffs, a major U.S. steel producer, said on an earnings call last week that the company was in the process of renegotiating its $500 million award under the Industrial Demonstrations Program. The DOE program funded 33 projects to decarbonize heavy industry, including cement, steel, aluminum, and glass production, with first-of-its-kind or early-scale commercial technologies.
Cleveland Cliffs was originally going to use the money to replace its coal-fired blast furnace at a steel plant in Middletown, Ohio, with a new unit that ran on a mix of hydrogen and natural gas as well as new electric furnaces. Now, the company is working with the Department of Energy to “explore changes in scope to better align with the administration’s energy priorities,” Goncalves told investors. The project would no longer assume the use of hydrogen and “would instead rely on readily available and more economical fossil fuels.”
The CEO later clarified that the company planned to “reline” its blast furnace at Middletown, extending its life, “now that the project is changing scope.”
But the Inflation Reduction Act, which created the Industrial Demonstrations Program, says the funds must be used for “the purchase and installation, or implementation, of advanced industrial technology,” which it defines as tech “designed to accelerate greenhouse gas emissions reduction progress to net-zero.”
“I don’t know at this point what Cleveland Cliffs can confidently say they’re going to do to substantially reduce greenhouse gasses and also deliver gains in public health and jobs to local communities, which is a prerequisite for IDP grant money,” Yong Kwon, a senior advisor for the Sierra Club’s Industrial Transformation Campaign, told me.
The memo announcing the Department of Energy’s review says that it has already reached some “concerning” findings, though it does not describe what was concerning or provide any further detail about the awards under review.
Compared to his peers at other agencies, Energy Secretary Chris Wright has been noticeably quiet about the Department of Government Efficiency’s efforts to slash funding across the Department of Energy. But in March, Axiosobtained documents that said more than 60% of grants awarded under the Industrial Demonstrations Program were being targeted. The following month, CNN reported that Cleveland Cliffs’ Middletown project was on the list slated for termination, noting that it would have secured 2,500 jobs and created more than 100 new, permanent jobs in JD Vance’s hometown.
At the time, Energy Department spokesperson Ben Dietderich told CNN that “no final decisions have been made” about the funding and that “multiple plans are still being considered.” Now it appears the Department may be negotiating with Cleveland Cliffs to develop a cheaper and more politically palatable project.
Meanwhile, House Republicans have also introduced a bill that would rescind any money from the Industrial Demonstrations Program that isn’t obligated, meaning that if the Department of Energy can find a way to legally terminate its contracts with companies, Congress may claw back the money.
The Industrial Demonstrations Program was the Biden administration’s “missing middle” grant program, designed to support projects that were past the early experimental stage, in which case they were no longer candidates for funding from the Advanced Research Projects Agency, but were also not ready for mass deployment, like those supported by the Loan Programs Office. In the case of Cleveland Cliffs, the funding was also aimed at making the U.S. a leader in the future of steelmaking, retaining thousands of jobs, saving the company money, and enabling it to command a higher price for its products.
“If you’re going to maintain blast furnaces, it means you have one foot in a technology that is now quickly becoming outdated that the rest of the global steel industry is transitioning away from,” Kwon told me.
David Super, an expert in administrative law at Georgetown University, told me in an email that if the Department of Energy provides and Cleveland Cliffs accepts funding that does not comply with statute, “the Department officials involved could be in violation of the Antideficiency Act and Cleveland Cliffs could be required to return the money, a modified contract notwithstanding.” The Antideficiency Act prohibits federal employees from obligating funds for projects that are not authorized by law.
Super added that the law also specifies that the money be awarded “on a competitive basis.” As Cleveland Cliffs won the competition with its hydrogen project, allowing it to use the money for a different project at the company’s plant “would thus violate the requirement of competitive awards and would allow the unsuccessful bidders to challenge this funding award.”
Neither Cleveland Cliffs nor the Department of Energy responded to a request for comment.
Leaks to the press have signaled that the Department of Energy may be taking a similar approach with the hydrogen hubs, potentially terminating contracts to develop renewable energy-based projects — all of which are in blue states — while allowing natural gas-based projects in red states to continue.
It is still not clear how the agency will handle its $3.5 billion direct air capture hubs, which news outlets have reported may also be under threat. On Friday, however, the oil and gas company Occidental, which was awarded a contract to develop a DAC hub in Texas, announced that the Abu Dhabi National Oil Company is considering investing up to $500 million in the project as part of a new joint-venture agreement. The press release notes that the agreement was signed during President Trump’s visit to the United Arab Emirates.
Last week, Senator Lisa Murkowski of Alaska said during a confirmation hearing for Kyle Haustveit, the nominee to head the Office of Fossil Energy, that two carbon capture projects in her state were “in limbo” due to the agency’s spending review. The same day, in another hearing, Representative Debbie Wasserman Schultz of Florida accused Wright of having frozen $67 billion worth of funds and asked him to commit to releasing it.
Wright denied this. “We’re not withholding any funds and we’ve paid every invoice we’ve had for work done and funds that are due,” he replied. But he went on to clarify that the agency is “engaging with” recipients “to make sure American taxpayer monies are being spent in thoughtful, reasonable ways.”
According to efficiency department data, the DOE has “terminated” 39 contracts worth $60 million and five grants worth $3.4 million. The contracts include news subscriptions, various technical support services, and a $22 million contract with consulting firm McKinsey for “rapid response deliverables” for the Office of Clean Energy Demonstrations, the department that runs the Industrial Demonstrations Program. The grants include three Advanced Research Projects Agency awards to explore using geologic stores of hydrogen, and another to reduce methane emissions from natural gas flares.
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A little-noticed provision would make the payment option used by tax-exempt groups all but impossible to claim.
A little-noticed provision in the Senate tax bill will sabotage the efforts of tribes, rural electric cooperatives, and public power authorities to develop local affordable energy projects by striking a section of the Inflation Reduction Act that enabled tax-exempt groups to claim the clean energy tax credits as direct cash payments from the Treasury.
The IRA included strict domestic sourcing requirements beginning in 2026 for groups utilizing this “direct pay” option. But the law also created exceptions for cases where domestic components were not available in sufficient quantity or quality, or would increase costs by more than 25%. The Senate bill would get rid of these exceptions.
“It just makes it unlikely for those projects to go forward — or more likely for those projects to go forward with a private developer, instead of with a public utility or a tribe or a rural co-op,” Grace Henley, a tax attorney with the Natural Resources Defense Council, told me. “And so they don’t really do anything to increase the amount of domestic material that would be used, they just hurt the projects that are seeking to invest in clean energy infrastructure for these communities to lower costs.”
Public power and tribal energy advocates warn that without the exceptions, energy development will become impossible for their constituents.
Wind and solar projects being developed by these groups are already threatened by the bill’s rapid phase-out of wind and solar tax credits and its complex rules related to using materials from China. Chèri Smith, the executive director of the Alliance for Tribal Energy, told me that Tribes face longer development timelines than the average private developer. “We have multiple stages of approval that are unique to tribal energy development,” she told me, including lengthy internal consultation processes. The changes to direct pay will put these projects further out of reach, she said.
The Alliance provides free energy development consulting services to more than 100 Tribes. Smith sent me a list of projects in Alaska Native villages, Arizona, California, and Oregon that could be killed by the tax credit changes. “Alaska Native villages face some of the highest energy costs in the country,” she said, largely due to their reliance on diesel generators. Just over a third of the Hopi Tribe in Arizona lacks access to electricity, but now multiple microgrid projects meant to close the gap are at risk. Many of the projects on the list are also doubly threatened by grant cancellations and the repeal of the Tribal Energy Loan Guarantee Program.
“The bill is particularly harmful to Tribal Nations, pulling the rug out from under projects that would strengthen their energy sovereignty and power local communities,” Democratic Senators Martin Heinrich, Ron Wyden, and Brian Schatz wrote in a joint statement on Thursday. “Together, the Tribal Energy Loan Guarantee Program and our Inflation Reduction Act’s clean energy tax credits have cleared pathways and removed significant barriers for Tribes to finance and build their own resilient energy infrastructure.”
The American Public Power Association is also sounding the alarm. John Godfrey, the group’s senior government relations director, told me that in addition to wind and solar, municipal utilities and rural electric co-ops are also considering nuclear and hydropower projects. For example, Energy Northwest, a consortium of 29 public utilities in Washington State, has plans to retrofit the Columbia Generating Station nuclear plant to increase its power output. It’s also in early stages to deploy four small, modular nuclear reactors. As my colleague Matthew Zeitlin wrote a few days ago, the governor of New York has also tasked the New York Power Authority with developing a new nuclear plant in the state.
Nuclear and hydropower “are technologies where often there is not a U.S. source, but there is a good trading partner source — Canada, Germany, Japan,” Godfrey said. By tightening the domestic sourcing requirements for direct pay, the bill would “hinder the very technologies that there’s generally a bipartisan consensus we need to be developing.”
Public utilities and electric co-ops, which serve close to 30% of electric customers in the U.S., are also unfairly singled out by the provision, he said. “If my public power utility wants to develop a project and they need a Canadian turbine, they can’t get any credit. But if a taxable corporation down the street develops exactly the same project, they can.”
“If the purpose is to encourage hydropower, that’s not a good use of resources,” he said.
Senate Republicans tucked a carveout into their reconciliation bill that would allow at least one lucky renewable energy project to qualify for a major Inflation Reduction Act tax credit even after the law is all but repealed.
The only problem is, it’s near impossible to be sure right now who may actually benefit from this giveaway — and the mystery is driving me up the wall. I feel like Charlie Day in that episode of It’s Always Sunny in Philadelphia, stringing documents together and ranting like a lunatic.
The Senate bill would phase out the tech-neutral production tax credit starting next year and completely eliminate it by the start of 2028. For the past week and a half, I have been trying to solve the riddle of an exemption tucked into the language that would allow a wind or solar facility that is “part of a single project” to continue to take advantage of the tech-neutral production tax credit as it exists today, which means it would not begin to phase out until 2034.
To qualify for the exemption a project must, according to the Senate text, meet two conditions: It must produce more than 1 gigawatt of electricity, and be sited on federal lands where a “right-of-way grant or lease” had been given by the Bureau of Land Managementbefore June 16, which is the date the text was released.
Only a handful of projects in the U.S. could possibly fit that criteria. But every time I think I’ve identified one that will actually qualify, I learn a new fact that, to me, takes it out of the running.
Here’s why my head hurts so much: A renewables facility that would benefit from this language needs to be sited at least partially on federal lands. But because Trump isn’t issuing new right-of-way approvals or leases to most renewables projects right now, it likely had to get its right-of-way or its lease before he entered office. (The June 16 language feels like a bit of a red herring. Nothing that fits the other definitions has received these documents since the start of Trump 2.0.)
Then there’s another factor: The only projects that would benefit from this language are ones that haven't started construction yet. Even if a project doesn’t have all of its permits for federal land use, its developer can build stuff like roads on any connected private lands and technically meet the deadline to start construction laid out in the new legislation. The construction start date is what counts — it doesn’t matter whether a project is placed in service and provides power to the grid years later, as long as it began construction before that deadline.
Taken together, all this means that a project that would benefit from this language probably has to be sited on federal lands and hold permits already … but for some reason can’t start construction to qualify for the program.
When I first started hunting for an answer, many people — including renewables advocates, anti-wind activists, and even some Senate staff in conversations with me — speculated that the language was a giveaway to two wind projects under construction in Wyoming, Chokecherry and Sierra Madre, which together make up what would likely be the largest wind farm in the U.S. if completed. These two projects are largely sited on federal lands and received all their approvals before Trump entered office.
I understand why people are pointing at Chokecherry and Sierra Madre. They are not expected to be online before 2029, and the House version of the bill would have locked them out of the production tax credit because it added a requirement that projects be “placed in service” — i.e. actively providing power to the grid — by around that same period. Any slippage in construction might have really hurt their finances. They’re also backed by a powerful billionaire, GOP donor and live entertainment power-broker Phil Anschutz, a man who made his initial fortune partially from fossil fuels.
Except … my colleagues and I are still not convinced. That’s because it is not clear that these two projects are at any actual risk of losing the production tax credit. They have been actively under construction for a long time, and the Senate bill killed the House’s “placed in service” requirement.
Another project floated is the Lava Ridge wind farm in Idaho, which was fully permitted under Biden, is largely sited on federal lands, and would produce more power than necessary to qualify for the exception. Hypothetically, this project would be a great candidate for being a beneficiary of the bill because Trump banned work on the project via executive order amid opposition from Idaho politicians, making a carveout to get more time a worthwhile endeavor.
Except … Senate Finance Chair Mike Crapo, the lead author of the pertinent section of the Senate reconciliation bill, was one of those Idaho politicians who pushed Trump to kill Lava Ridge. Why would he give a tax break to a project he wanted dead?
Then there was my personal best guess for the beneficiary: Esmeralda 7, an expansive set of proposed solar farms in the Nevada desert that, as proposed, would produce more than 5 gigawatts of power and is largely sited on federal land. Construction can’t begin until Esmeralda 7 gets its federal approvals, and the Trump administration was expected to complete that work by mid-summer.
Except … I reported last week that the permitting process for Esmeralda 7 is now indefinitely stalled. The project is at best still months away from getting its right-of-way approvals from the Trump administration, which recently pushed back timelines for finishing reviews of other large Nevada solar projects, too.
Ultimately, it will be difficult to glean who the lobbyist giveaway here is for unless the legislators who wrote it disclose their intentions. I reached out to the communications director for Republicans on the Senate Finance Committee to try and find out, but so far I’ve gotten crickets.
It may be that this language is revised and that future changes lay out the true beneficiary. Sometimes lawmakers will put the wrong date or word into a bill and they’ll edit it on the floor before a vote, chalking it up to a drafting error.
If senators decide to add back the “placed in service” requirement to capitulate to the House, this would easily be the Chokecherry-Sierra Madre giveaway. If Republicans were to shift forward the deadline for getting a right-of-way, Esmeralda 7 would qualify. Or maybe they could change some secret third thing and a different project I hadn’t considered will be revealed as the mastermind in the shadows.
Until then, I’ll be in my basement poring over more maps and going slowly insane.
Additional reporting was provided by Emily Pontecorvo.
On resuming rare earth shipments, hurricane tracking, and EV tax credits
Current conditions: The Ohio Valley is still sweltering through the last remnants of this week’s brutal heat wave • The death toll from recent floods in South Africa has risen to 101 • It’s 90 degrees in Venice, Italy, where the world’s rich and famous are gathering for the wedding of Jeff Bezos and Lauren Sanchez.
The U.S. and China have hammered out the details of a trade deal, including an agreement that China will resume rare earth shipments to the U.S. Rare earth materials are essential for everything from planes to EVs to wind turbines. China controls most of the world’s rare earth production and halted exports in April in response to President Trump’s tariff hike, and China’s chokehold on rare earths threatened to derail trade talks between the two countries altogether. Commerce Secretary Howard Lutnick said a deal has now been “signed and sealed.” “They’re going to deliver rare earths to us,” Lutnick said, adding that the U.S. will then “take down our countermeasures.” Lutnick also indicated that Trump plans to announce further trade deals with other nations in the coming two weeks.
As climate talks in Bonn, Germany, wind down, negotiators there have agreed to increase the budget for the United Nations Framework Convention on Climate Change by 10% over the next two years to 81.5 million euros ($95.4 million). The UNFCCC runs some of the world’s largest climate negotiations and tries to ensure countries follow through on their climate commitments. Its budget is funded by government contributions. China will account for 20% of the new budget, Reuters reported. The U.S. is supposed to cover 22%, but President Trump has pulled international climate funding. Former New York Mayor Michael Bloomberg’s philanthropic arm has stepped in to cover the missing U.S. contributions. UN climate chief Simon Stiell said the budget increase was “a clear signal that governments continue to see UN-convened climate cooperation as essential, even in difficult times.”
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Hurricane forecasting is about to get a little bit more difficult. At the end of June, the federal government is going to stop distributing readings from the Defense Meteorological Satellite Program, a tool forecasters all over the world have been using to track and predict hurricane development. As retired federal meteorologist Alan Gerard told Bloomberg, this particular satellite program is unique because it lets forecasters peer inside storms and monitor for rapid intensification. As the planet warms, hurricanes are strengthening much faster than they did in recent decades. Hurricane expert Michael Lowry says the Department of Defense seems to be concerned that the satellite data poses a security concern. Its termination “will severely impede and degrade hurricane forecasts for this season and beyond, affecting tens of millions of Americans who live along its hurricane-prone shorelines,” Lowry wrote.
A group of U.S. car dealers penned a letter urging senators to “reject provisions in the budget reconciliation process that would abruptly eliminate EV-related tax credits from the Inflation Reduction Act,” warning that sudden changes would bring about market uncertainty, damage businesses, and hurt Americans. The signatories – including EV Auto, Carmax, and Caravan – instead call for a “gradual sunset” of the EV tax credits to avoid disruption to the used car market. “A multi-year transitional period would also provide the opportunity for Americans to continue adopting cleaner vehicles more affordably,” they add. The tax and budget bill put forward by Senate Republicans would end the $7,500 EV tax credit within 180 days after the law’s passage.
A report out today from the International Council on Clean Transportation estimates that the world’s private jets produced more greenhouse gas emissions in 2023 than all the flights that took off from Heathrow Airport — the world’s fourth busiest airport — that same year. Emissions from private jets increased 25% over the past decade. A few more interesting (though perhaps not surprising) tidbits from the report:
International Council on Clean Transportation
Solar power accounted for more than 10% of U.S. electrical output in April, while wind provided about 14%. As Michelle Lewis at Electreknotes, “solar is now producing more electricity than hydropower, biomass, and geothermal combined.”