Federal review reshapes clean energy investment

In May 2025, Secretary of Energy Chris Wright announced a new policy to "increase accountability and prevent the wasteful spending of taxpayer dollars." The policy states that the DOE will review financial assistance awarded under the previous administration 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.” 

Recipients of DOE grants, loans, loan guarantees, and other financial assistance mechanisms have been scrambling to prove compliance with DOE standards. During this review process, DOE has terminated funding for a wide range of technology and project types, including transmission infrastructure, power and industrial decarbonization demonstrations, and hydrogen hubs. Now, hundreds of terminated projects are attempting to identify alternative funding sources or appeal their award terminations, while the private sector questions the integrity and reliability of DOE funding commitments. 

This cuts deep: Early terminations shake carbon management

On May 30, 2025, just two weeks after DOE released its new financial assistance policy, the agency terminated two dozen projects with a total estimated federal expenditure of $3.7 billion. Most projects involved carbon capture and storage (CCS) and industrial decarbonization, supported by the Industrial Demonstrations Program, the Carbon Capture Large Scale Pilots Program, and the Carbon Capture Demonstration Projects Program, all supported by the Bipartisan Infrastructure Law. 

The termination of multiple CCS investments comes as a particular surprise to many awardees. Just a month prior, the White House’s Earth Day press release stated that “by supporting cutting-edge technologies like carbon capture and storage… the Trump Administration is ensuring America leads in both energy production and environmental innovation — producing the cleanest energy in the world.” While DOE claims projects are being reviewed individually, initial terminations suggest certain programs, particularly awards made between the election and inauguration, may face additional scrutiny. 

These abrupt reversals undermine industry confidence and raise doubts about the government’s commitment to advancing carbon management technologies.

Loans (un)guaranteed: DOE withdraws support

In July 2025, the DOE Loan Programs Office (LPO) revoked its conditional commitment issued in November 2024 for the Grain Belt Express, a transmission project intended to connect renewable generation across Kansas and Missouri. If the project had reached final investment, LPO would have provided a $4.9 billion loan guarantee, one of DOE’s largest loan guarantees to date. 

The decision comes just eight months after the commitment, well before the typical two-year window to meet the terms and conditions under LPO’s Title 17 program. DOE states that the terms required to issue the guarantee were unlikely to be met, alongside its opinion that the federal government does not need to have a supporting role in the project.

Reports suggest additional cancellations of conditional commitments for loans and loan guarantees could follow, spanning technologies from batteries to low-carbon ammonia. 

A fiscally frightful fall: Mass terminations and backlash

On October 2, 2025, two days after the federal government shutdown began, DOE announced the termination of 321 financial awards supporting 223 projects with a collective value of $7.5 billion. Canceled projects span research and development to engineering studies to large commercial demonstrations. The organizations leading these projects include National Laboratories, major energy companies, startups, and universities. 

While DOE has not issued details on the terminated awards beyond aggregate figures, the House Appropriations Committee Democrats have published a comprehensive assessment of the terminated projects, including award amounts and the impacted congressional districts. 

According to DOE’s press release, terminated projects have 30 days to appeal the termination decision, even though federal regulations allow 90 days to appeal (2 CFR 910.128(d)).  Award applicants considering submitting appeals for terminated financial assistance will likely need to seek additional guidance from DOE on the details of the appeal process and coordinate with legal counsel to draft and submit appeal documents. 

However, these terminations have not come without significant resistance from Congress. On October 7, 2025, 163 Democratic members of Congress sent a letter to Secretary Wright, thoroughly criticizing the administration's process. It states these terminations would “harm American jobs, drive private capital out of our country, weaken our power grid, and give China a strategic edge.” The letter demands that DOE suspend all terminations and reinstate the projects, provide a complete list of affected projects and project-specific justifications for termination, and identify statutory authorities relied upon for post-award termination by October 14th, 2025. To date, DOE has not publicly acknowledged or responded to the demands outlined by the congressional signatories.

The same day, several outlets reported an unverified list of 351 additional projects slated for termination, representing an estimated $16 billion in federal funding. The list includes all 7 hydrogen hubs, both large-scale DAC hubs, and a substantial portion of the Office of Manufacturing and Energy Supply Chains portfolio. 

Moreover, these award terminations come at a time when DOE has seen the greatest year-on-year reduction in staffing for science and energy innovation offices (at least 39%), prompting the concern of whether DOE is adequately staffed to review appeals in a timely and rigorous manner.

Implications for the clean energy sector

If realized, these terminations would substantially slow decarbonization and hinder the deployment of new energy and transmission resources at a time of rapidly growing demand. While many of the affected projects were only recently awarded or funded, applicants typically spent several months developing rigorous proposals, organizing project teams, and securing non-federal matching funds. Canceling these awards both reduces the opportunity to develop and demonstrate energy technology and also stalls the investment of private capital into the sector. 

These widespread terminations risk delaying the innovation of clean energy technologies, reducing employment opportunities, and increasing energy prices. They may also undercut the credibility of the US government as a reliable capital provider and project partner. 

Finally, canceling commercial carbon capture and storage, industrial decarbonization, and hydrogen projects may erode American competitiveness, forfeiting early leadership in these critical technologies. The impact on private businesses and academia is also expected to be significant, as many recipients have already invested heavily in preparing applications, hiring subcontractors, and beginning site preparation. 

The path forward: Restoring stability and investor confidence

As the energy sector recalibrates, maintaining investor confidence and project continuity will be essential. 

Developers should:

• Track DOE announcements and appeal guidance.

• Consult legal counsel on compliance and appeal strategy.

• Explore state or private financing options to sustain progress.

Policymakers can help restore stability by clarifying DOE’s funding standards, ensuring transparency in termination criteria, and reaffirming bipartisan support for clean energy innovation and infrastructure investment.

At Carbon Direct, we help partners evaluate project viability, quantify emissions impacts, and identify durable funding strategies that advance decarbonization goals, even amid policy uncertainty.