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Other potential projects that could receive EIR funding may include converting old gas pipelines into ones fit to carry hydrogen, a potentially clean fuel whose main waste product is water. Or the funding might be used to retrofit pipelines to be able to transport carbon so it can be stored deep underground and not escape into the atmosphere. Carbon capture and storage received a major boost from the EPA in its draft power plant rules, as an option for gas plants to lower their emissions, but this technology is a nonstarter without the infrastructure.
There are still other, more creative approaches left on the table. RMI’s Varadarajan suggested that even abandoned gas stations could be put to new use through the EIR. Old gas stations are notoriously hard to reclaim and put to better use, but with more financing and an interested developer, they could be converted to EV charging stations and part of a distributed virtual power plant network.
Taite McDonald, a partner at the law firm Holland and Knight who helps clients navigate DOE loan program applications, said she sees the most potential for large industrial complexes, like hospitals and college campuses, that have already made public commitments to reaching net zero.
This list of potential projects shows quite a range in ambition and also raises some critical questions. Will the EIR loans mostly be put to financing large institutions on their journey to net zero or, more ambitiously, to creating an entirely new market for abandoned gas stations and coal mines? The answer will depend on the kinds of applications that start to come in.
“People are going to start to look at this when the other options start to be expended,” McDonald said. “And because it’s such a new program, we just haven’t really seen a lot of folks start to do that. What the program essentially becomes will remain to be seen.”
Jigar Shah explained his job involves a lot of “cajoling folks,” and explaining to industries how the DOE could help with low-cost financing for goals they have already committed to publicly.
“I see this as an economic development program,” Shah explained. “It’s our primary goal to help ensure that we can see investments and opportunity in the clean economy line up with communities that are currently producing energy. Whether that’s a coal plant that’s scheduled to retire but could become the site of an advanced nuclear power plant, or an interconnection point for a large battery and wind farm to access the grid, there’s a lot of useful infrastructure, local talent, and know-how in the workforce that could be put to good use.”
Balancing ambition, exhaustiveness, and speed will make all the difference
The Loan Programs Office can be truly transformative if the full $250 billion is loaned out for slashing carbon footprints. But the history of the office is also a reminder of all the potential pitfalls for this kind of government funding.
Solyndra was a solar panel manufacturer that received a loan under a different program to fund innovative technologies in 2009, but went bankrupt a few years later. It made for a field day for the Tea Party takeover of the House in 2010, which launched investigations calling the program an example of the government’s wasteful spending and its capacity to pick winners and losers. The House ultimately passed the “No More Solyndras Act” in 2012 to block any more loan approvals (the bill didn’t pass the Senate).
The Loan Programs Office itself has had some successes, however. The Obama administration approved 40 projects at a total of $36 billion that included companies such as Tesla and Nissan, which were looking to expand EV manufacturing, and Beacon Power, a company that would help store power to ensure grid reliability.
But the political fallout from the Solyndra bankruptcy did permanent damage. For about a decade, the Loan Programs Office went dormant until its first signs of life late in the Trump administration.
Both the Inflation Reduction Act and bipartisan infrastructure law have given the office its expanded mandate, and one of the most powerful positions in financing a clean energy revolution. Shah, a former clean energy entrepreneur, was tapped to lead the rapidly expanding team.
However, Shah and his office of 250 can’t afford more scandal — or being too timid, either. The clock is ticking down on the timeline Congress gave the EIR program, which has just until 2026 to approve up to $250 billion in loans, a deadline that will be tough to make.
Getting the word out and convincing applicants is another challenge. Shah acknowledged that DOE loans might not be “a natural thing for a lot of these applicants to use.”
While there isn’t a huge market today for retrofitting and repurposing existing fossil fuel sites, the hope is the EIR starts to make it much more commonsense. Shah argues that’s exactly the role the government should play, helping sectors make a leap to becoming no-brainer investments. “If we don’t start that process, there’s no one else,” he said.
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