Office Of Clean Energy Demonstration (oced)

Mission/Overview

The OCED was established in December 2021 to implement the IIJA. Its mis- sion is “[to] deliver clean energy demonstration projects at scale in partnership with the private sector to accelerate deployment, market adoption, and the equi- table transition to a decarbonized energy system.”51

Needed Reforms

End market distortions and stop shifting technology and development risks to taxpayers. The OCED is distorting energy markets and shifting the risk of new technology deployment from the private sector to taxpayers. The IIJA provided more than $20 billion in government subsidies to help the private sector deploy and market clean energy and decarbonizing resources. Government should not be picking winners and losers and should not be subsidizing the private sector to bring resources to market.

New Policies

Eliminate OCED. The next Administration should work with Congress to eliminate all DOE energy demonstration programs, including those in OCED. Taxpayer dollars should not be used to subsidize preferred businesses and energy resources, thereby distorting the market and undermining energy reliability.

Refocus on resources that will support reliability. To the extent that the various energy research and development funding authorities cannot be repealed, funded projects should be consistent with the programmatic goals of the next Administration. For example, the already awarded Advanced Reactor Demonstration Program should help to move SMRs from pilot scale to commercialization and in the process address material, fuel, and regulatory issues that would pose deployment risk to utilities and Wall Street.

Budget

DOE’s FY 2023 budget request includes $214 million “to initiate a new $150 million competition to support demonstrations that address integration issues of renewable energy into the U.S. transmission and distribution grids.”52 Overall, the “$21.5 billion provided by the Bipartisan Infrastructure Law”53 supports several OCED programs:

lAdvanced Reactor Demonstration Projects ($2.5 billion). lCarbon Capture Large-Scale Pilot Projects ($937 million). lCarbon Capture Demonstration Projects Program ($2.5 billion). l Clean Energy Demonstration Program on Current and Former Mine Land ($500 million).

lEnergy Improvements in Rural or Remote Areas ($1 billion). lIndustrial Demonstrations Program ($6.3 billion). lLong Duration Energy Storage Demonstrations ($505 million). lRegional Clean Energy Hubs ($8 billion). lRegional Direct Air Capture Hubs ($3.5 billion).54

Personnel

By drawing resources from across the DOE, the OCED has already grown to 70 personnel in six months. If OCED is eliminated, those positions can be eliminated. If OCED is reduced, its personnel can be reduced to fit its scope.

LOAN PROGRAM OFFICE (LPO)

Mission/Overview

“LPO’s mission is to finance next-generation U.S. energy infrastructure,” serve “as a bridge to bankability for breakthrough projects and technologies,” and “de-risk[] them at early stages of investment so they can be developed at commercial scale and achieve market acceptance.”55 The Biden Administration directed the program to subsidize the Administration’s “net zero” energy tran- sition away from conventional fuels by 2050 and to promote union jobs and domestic supply chains.56

The LPO coordinates with the U.S. Treasury Federal Financing Bank and is organized into seven divisions: Outreach and Business Development, Origination, Portfolio Management, Risk Management, Technical and Project Management, Legal, and Management and Operation. Its loan programs were originally designed as temporary programs but have since been amended and expanded. Specifically:

The IRA expanded the authority in [LPO’s] existing programs, 1703, ATVM, and Tribal Energy Finance, by $100B. IRA also created the Energy Infrastructure Reinvestment (EIR) Financing Program (1706) which can support up to $250B in loan authority. The CO2 Infrastructure Finance and Innovation Act (CIFIA)—authorized by the [bipartisan infrastructure law], appropriates $2.1B to support approximately $25B in flexible, low-interest loans. This new legislation will create jobs and wealth, address environmental justice and equity priorities and strengthen our energy security and supply chains.57

Needed Reforms

Taxpayers should not be backing risky business ventures or politically pre- ferred commercial enterprises. To save tax dollars and reduce current risk, the new Administration:

Should not back any new loans or loan guarantees. Should seek to sunset DOE’s loan authority through Congress and eventually eliminate the Loan Program Office.

DOE-backed loans and loan guarantees put taxpayers at undue risk, distort private-sector investment decisions, shift private money toward projects with political support, and create additional barriers to entry for companies that are outside of the government’s definition of “innovative” or for companies that choose not to participate.

New Policies

To the extent that DOE loan programs cannot be repealed, the new Administration should:

Strengthen due diligence and increase transparency in DOE loan programs. Limit the use of new loan or loan guarantee authority to projects that will promote the reliability and resilience of the electric grid and other energy infrastructure and support national security objectives. Establish clear mandatory qualifications requiring applicants to comply with the Uyghur Forced Labor Prevention Act58 and to certify that they are not financed with any other local, state, or federal taxpayer-backed loan, loan guarantee, or bond (such as a state “green bank”).

ADVANCED RESEARCH PROJECTS AGENCY–ENERGY (ARPA–E)

Mission/Overview

ARPA–E was created in 2007 as part of the America Competes (Creating Oppor- tunities to Meaningfully Promote Excellence in Technology Education) Act.59 Its statutory goals are “to enhance the economic and energy security of the United States through the development of energy technologies” that reduce “imports of energy from foreign sources;” reduce “energy-related emissions, including green- house gases;” improve “the energy efficiency of all economic sectors;” and “ensure that the United States maintains a technological lead in developing and deploying advanced energy technologies.”60

Some in Congress see ARPA–E as beneficial because the COMPETES Act pro- vides it with more bureaucratic flexibility than other federal programs are allowed. Its goals are essentially the same as those of DOE’s applied energy offices, but its structure is different, and it is focused around individual programs instead of around offices with longer-term agendas.

Needed Reforms

Stop risking taxpayer dollars as venture capital for the private sector. ARPA–E tends to see its mission as bringing technology from idea to commercialization. Often called the investment trough, ARPA–E is effectively funding projects that the private sector is unwilling to fund. Taxpayers should not in effect be picking winners and losers—and having their dollars at risk but not gaining the economic rewards of success. End duplicative efforts. Another problem is that ARPA–E’s mission is similar to the missions of DOE’s applied energy offices. If DOE’s applied energy offices are doing their jobs correctly, they will use Funding Opportunities Announcements, prizes, lab calls, and other funding mechanisms that are needed to accomplish a specific goal. In other words, ARPA–E is at best duplicating the work done by other DOE offices.

New Policies

Eliminate ARPA-E. The next Administration should work with Congress to eliminate ARPA–E. The agency is unnecessary, risks taxpayer dollars, and interferes with risk-benefit decisions that should be made by the private sector.

Budget

Congress appropriated $427 million for ARPA–E in FY 2021, and slightly more than $700 million has been requested for FY 2023.61