The U.S. House of Representatives passed its budget reconciliation bill that includes several provisions that would affect the U.S. Department of Energy's (DOE) Loan Programs Office (LPO), a key mechanism for advancing next-generation energy infrastructure. Most notably, the bill eliminates unused Inflation Reduction Act (IRA) credit subsidy funding while preserving existing loan authority – a combination that reflects an attempt to maintain the office's core lending capabilities.
However, this approach could unintentionally undermine efforts to accelerate technology deployment in the U.S. By rescinding the credit subsidy in its entirety, the bill could effectively shut down the entire program. That's because a portion of the credit subsidy is used to fund LPO's operating budget – meaning that even if the lending authority remains intact, DOE may be forced to rely on previously appropriated funds, which for some programs were already insufficient. This could cause DOE to lose the ability to administer the program altogether if administrative costs are not otherwise made available.
Beyond LPO, the reconciliation bill also includes provisions to repeal remaining unobligated amounts from certain IRA programs, as well as eliminate or significantly scale back several of the IRA's clean energy tax credits such as the Section 45V Production Tax Credit for hydrogen. These credits have played a major role in project economics – impacting everything from upfront financing to long-term revenue modeling. Their elimination could affect project viability and, by extension, loan repayment forecasts for LPO-financed projects.
During a recent U.S. Senate Committee on Appropriations Subcommittee on Energy and Water Development hearing regarding DOE's fiscal year (FY) 2026 budget, Secretary of Energy Chris Wright underscored the importance of LPO in catalyzing private investment. Describing the office as "the most efficient tool we have" to support early-stage energy technologies, Secretary Wright made a plea to lawmakers to ensure the program remains fully resourced as the budget process moves forward.
Secretary Wright's comments follow a period of growing interest in LPO-backed investments – from advanced nuclear to critical materials supply chains – that align with the Trump Administration's goals for energy dominance, supply chain security and grid resilience. As the Senate takes up its version of the reconciliation package, stakeholders across industry and government will be watching closely to see how these priorities are reflected in the final outcome.
Holland & Knight will continue to closely monitor developments that impact LPO. For additional information on how your project may be affected, please contact the authors.
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