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Twelve years ago, the Department of Energy was so central to the incoming Obama administration’s stimulus plans that DOE staffers were among the first through the doors at the transition headquarters, helping the Secret Service take the plastic wrap off tables and chairs so they could get to work.
Now, DOE is poised to again play an essential role as the Biden administration looks to leverage clean energy investments toward its twin goals of pulling the economy out of a deep slump and delivering on the president-elect’s ambitious climate pledges.
And Biden, who oversaw the Obama administration’s stimulus work as vice president, unknowingly left himself a down-payment for the work ahead: $40 billion in unused Energy Department loan authority awarded under the 2009 stimulus. That pot of money could offer a way to kick start his climate and infrastructure plan at a time when a narrowly divided Congress may balk at his call to spend $2 trillion over four years.
The Energy Department will play a key role in helping slash emissions from the transportation sector, the largest contributor to climate change. Electrifying the nation’s fleet of vehicles would represent one of the most seismic market and technological upheavals in recent history. And the department will also have a major role to play in stanching emissions from buildings, appliances and the electric power sector.
“This situation does feel eerily reminiscent of what it was like during the Obama administration,” said Sanjay Wagle, who served in Obama’s DOE and now is managing director of investment firm The Lightsmith Group.
DOE’s loan program helped a raft of clean energy companies deploy projects across the country during the early Obama years, when it provided financing that helped drive down the cost of solar and wind farms. But it became a political target after solar company Solyndra collapsed, defaulting on more than $500 million in federal loans — even though the overall program recorded an overall default rate of less than 3 percent, far lower than private lenders typically experience, according to a Bipartisan Policy Center analysis.
That loan capacity had been neglected by the Trump administration, which detractors contended was evidence of its resistance to aiding clean energy sources that would have competed against the coal, natural gas and oil industries.
Now, advocates say the incoming Biden administration could simply tweak the loan program’s language to make it the backbone of a government-wide clean lending bank that enables the rapid deployment of new innovations, like the installation of batteries and other energy storage technology to support the growth of renewable power.
“There’s a lot that you can do with the money that’s sitting at DOE,” said Dan Reicher, who ran DOE’s energy efficiency and renewable energy office under President Bill Clinton, and jokingly refers to the agency as “the Department of Everything.”
The $40 billion in DOE loan guarantee money is just a small fraction of the trillions of dollars needed to meet Biden’s goals of achieving net-zero emissions on the power grid by 2035 and economy-wide by 2050. And the omnibus spending package passed by Congress shifted some funding inside DOE, boosting money for clean energy research and a home weatherization program, while rescinding $1.9 billion under a loan program for the Advanced Technology Vehicles Manufacturing.
To run his Energy Department, Biden has tapped former Michigan Gov. Jennifer Granholm, a staunch clean energy advocate who worked closely with the Obama administration to bail out her state’s auto industry during the Great Recession — a program that also directed stimulus funds to build the LG Chem facility there that produces batteries for the Chevy Volt.
“Granholm was really good on this stuff when she was governor. She’s been even more engaged on the climate fights since she left,” said John Podesta, the former chief of staff to President Bill Clinton who later led Obama administration climate efforts. “She still has very strong connections to unions, to the auto companies.”
Granholm is already leaning into her argument that a clean energy transition can help the U.S. economy — and blue collar workers — weather the economic turmoil from the pandemic.
“We’re going to be working at the Department of Energy with the … states and the cities, to help give them incentives, little carrots, little sticks,” Granholm told ABC’s “This Week,” on Dec. 20, adding that “combating climate change is such an economic opportunity for this country.”
Clean energy experts and Obama administration veterans say DOE can play a crucial role in shaping the Biden climate plan through its research capacity, appliance standards setting, modeling capabilities and grants.
Clean energy investment has been a rare area of bipartisan agreement in recent years, and Congress’s omnibus package hiked funding for research into energy storage and to advance carbon capture, utilization and storage technology, as well as the work conducted by DOE’s Advanced Research Projects Agency-Energy.
While DOE research spending hit $9.5 billion in 2018, overall science spending across the federal government of 0.6 percent of GDP is well below the historical average of 1 percent, according to a September report from the research group Breakthrough Energy. That report also found that federal research spending offered significant benefits for employment, yielding 2.7 indirect jobs for every direct job it created.
Josh Freed, who leads the climate and energy at think tank Third Way, agreed with those jobs findings, and said increasing funding and focus on DOE’s network of 17 national labs could help create pockets of employment around the country that build buy-in for a clean energy transition.
But Danny Kennedy, the chief energy officer at incubator New Energy Nexus, said the federal government in general has failed to prioritize bringing new technology to market at scale. The Biden administration, he said. will need a coordinated strategy to deploy technologies like new batteries, which will be key for expanding the market for electric vehicles and renewable power.
“It’s chump change. This is sort of basic stuff,” he said, referring to current funding. “We’re spending diddly squat on commercializing it.”
