Late last week (May 28, 20250), the U.S. Department of Energy ("DOE") announced that it had terminated $3.7 Billion in grants awarded to clean energy projects under the Biden administration through the Office of Clean Energy Demonstrations (OCED). In the DOE's press release, the Administrator claiming that the prior administration "failed to conduct a thorough financial review," and that the projects were not economically viable.
In total, 24 grants were terminated. Of those grants that were terminated, the DOE stated that 2/3rd of these grants were awarded between the November 2024 election and the January 2025 Presidential inauguration.
Most of the cancelled projects focused on carbon capture and sequestration (CCS) and various decarbonization initiatives.
In a statement announcing the grant terminations, U.S. Secretary of Energy Chris Wright said that the "DOE found that these projects failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return on investment of taxpayer dollars."
The cancelled awards included $500 million for a carbon capture project at a Heidelberg Materials cement production plant, $330 million for a clean hydrogen project by Exxon Mobil, a $540 million grant for Calpine and $375 million for a plastic recycling project by Eastman Chemical. Other negatively affected companies include PPL Corp., Orsted, Exxon Mobile, Calpine, Brimstone Energy, US Pipe and Foundry Co., Libby Glass LLC, Owens Brockway Glass Container, Sublime Systems, Nevada Gold Mines, Kohler, Nippon Dynaware Packaging, and National Cement Company of California.
In addition to carbon capture, projects that were canceled include efforts to advance climate-friendly cement production, more eco-friendly furnaces at glass and pipe companies and a $170M effort to cut emissions at various plants used by food company Kraft Heinz.
Interestingly, these cancellations impact both blue and red states and communities around the United States, including Yuba City, CA ($270M), Baytown, TX ($270M), Vicksburg, MI ($4.3M), Louisville, KY ($72M), Gillette, WY ($49M), the Gulf Coast ($200M), Chambers County, TX ($99M), Gallo Modesto, CA ($75M), Birmingham, AL ($75M), Bessmer, AL ($75.5M), Louisiana ($500M), Toledo, OH ($45.1M), Zanesville, OH ($57.3M), Medina, NY ($15.3M), Longview, TX ($375M), Shelbyville, KY ($75M), Holyoke, MA ($86.9M), Lebee, CA ($500M), Baytown, TX ($331M), Longview, WA ($46.6M), Casa Grande, AZ ($51.2M) and Eureka County, NV ($95M). As one can see, over $1 Billion Dollars that would have been spent on projects in Texas alone were terminated.
Green Spouts – The DOE has not yet indicated that it will reimburse any grantees' costs incurred prior to formal notice of the termination. As such, it remains to be seen how many, if any, of the grant recipients will respond to the cancellation of previously approved grants and, if and/or how many lawsuits are filed claiming damages or detrimental reliance on funds invested in projects already based on receipt of a grant award.
Moreover, potential plaintiffs are likely to argue that terminating active grant contracts goes well beyond the court's order regarding "freezing, halting, or pausing" funds.
Grant recipients of other types of frozen or terminated grants have attested to widespread financial harms, including having to lay off staff, being unable to pay subcontractors and being unable to move forward with their projects due to uncertainty.
Given the above, my view is that termination of these grants will likely lead to a host of lawsuits challenging the DOE's authority to remove funding once said funding has already been granted. The Administration may be hopeful that delay and the length of these potential court cases that challenge the DOE will lead to a lack of desire on the part of the companies to pursue such projects. Time will tell how many, if any, will be willing to challenge the Administration directly.
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