Energy Dept. cancels projects amid government shutdown

The Energy Department’s cancellation of more than 300 funding awards to projects in 16 states won by Democratic nominee Kamala Harris in the 2024 presidential election slammed the brakes on efforts to reduce carbon emissions, air and water pollution, and strengthen electrical grids.

The rescissions of nearly $8 billion in funding were announced on Wednesday, the first day of the federal government shutdown, and on the same day that the Trump administration froze a whopping $18 billion in funding for two massive infrastructure projects in New York City — the home of Congress’s two top Democrats.

While some of the cancellations first announced by Office of Management and Budget Director Russell Vought were new, others had been previously announced in May by the Energy Department.

The rescinded awards had been issued by the Energy Department’s Offices of Clean Energy Demonstrations,Energy Efficiency and Renewable Energy, Grid Deployment, Manufacturing and Energy Supply Chains, Advanced Research Projects Agency-Energy, and Fossil Energy.

 “There would have been significant emissions reductions from these projected,” said Ian Wells, a senior advocate at the National Resources Defense Council, an advocacy group. “Not only greenhouse emissions, but things that would lead to green air and water,” Wells said.

Wells noted one cancelled $87 million grant issued to Sublime Systems, which was to build low-carbon cement manufacturing in Holyoke, Massachusetts, involving between 70 and 90 jobs.

“It was about restoring American manufacturing competitiveness, and growing jobs,” as well as protecting the environment, Wells said.

“It’s potentially a win-win-win, and that is potentially now being thrown out.”

The Energy Department did not release the details of the 223 projects affected by the funding termination.

But Democrats on the House Appropriations Committee compiled a list of affected projects and released it on Thursday afternoon.

“The termination of these critical energy projects will increase energy prices, eliminate jobs, and make the energy grid less reliable,” the group said.

The terminated funding included $1.12 billion for a hydrogen hub in California under the so-called ARCHES program — The Alliance for Renewable Clean Hydrogen Energy Systems.

“Today’s decision to withdraw federal funding for ARCHES ignores the critical benefits our projects will deliver – including 220,000 American jobs and stronger national energy security and resilience,” said ARCHES CEO Angelina Galiteva in a statement.

“The ARCHES Ecosystem and Marketplace will continue to advance in collaboration with state leaders and private sector innovators – building on our strong foundation to create a reliable, future-focused domestic hydrogen network for California and beyond.”  

Another $1.1 billion in grants for energy projects across Washington state, including the Pacific Northwest Hydrogen Hub, were cancelled by the Energy Department, according to Washington state officials.

“That hub will create a clean hydrogen economy across our region,” Washington Gov. Bob Ferguson said in a statement to CNBC.

“It is outrageous that this administration is using a government shutdown to punish blue states like Washington,” Ferguson said. “We’re working with the Attorney General’s Office to fight this illegal action.”

Chris Green, president of the Pacific Hydrogen Association, called the cancellation of federal funds for the hub “a gut punch.”

“We are, of course, very disappointed in that,” Green told CNBC, noting that the project could have led to tens of thousands or even hundreds of thousands of jobs.

He said that companies involved in the hub “were spending lots of their own money,” with about 80% of the committed funds being provided by private companies, with federal funds providing the remaining 20% or so of the costs.

“Can we still do this project now that we’ve lost 20% of our planned revenue?” Green asked. “It remains to be seen if some of these projects can persevere.”

The Colorado Energy Office said that more than 30 grants totalling more than $500 million “are being illegally terminated in Colorado alone.

Two of those grants each provide $2.5 million to support reduced energy use and create cost savings through building energy codes and building performance standards through decarbonization, the office said.

“Other terminated grants in Colorado range from oil and gas methane reduction projects and investments in grid resilience to support for utility programs in low-income communities,” the office said.

“This clearly politically motivated targeting of grants by the Administration will balloon energy costs, threaten grid reliability, increase pollution, and create instability in our business community,” the office said.

Senate Minority Leader Chuck Schumer, a New York Democrat, in a statement about the funding cuts said, “This goes beyond targeting blue states. It’s taking a wrecking ball to working families’ lives: putting construction workers out of a job and raising families’ electric bills for political gain.”

“Donald Trump is threatening to hike energy costs and waste billions, wiping out projects already underway in his endless campaign for chaos & revenge and in the process axing thousands of American jobs,” Schumer said.

“It is outrageous and counterproductive to pull the rug out from local projects, workers, & businesses that grow our local economies, spearhead American innovation, and lower costs.”

The Energy Department said the cancellations followed ” a thorough, individualized financial review” which “determined that these projects did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars.”

Energy Secretary Chris Wright said that many of the awards were “rushed through in the final months of the Biden administration with inadequate documentation by any reasonable business standard.”

“President Trump promised to protect taxpayer dollars and expand America’s supply of affordable, reliable, and secure energy,” Write said, adding that the cancellations “deliver on that commitment.”

The department said that of the 321 financial awards terminated, “26% were awarded between Election Day and Inauguration Day,” with those awards alone valued at more than $3.1 billion.

Ken Lovett, the senior communications advisor on energy and environment for New York Gov. Kathy Hochul, said that the funding cuts “come as no surprise given the Trump administration’s full-on assault on clean energy.”

“Whether it’s blocking offshore wind, cutting federal incentives for electric vehicles and solar energy, or rolling back clean air and clean water standards, the Trump administration’s attempt to rollback the progress we have made puts New Yorkers’ well-being and safety at risk,” Lovett said in a statement. “We will not go back.”

— CNBC’s Emily Wilkins, Ashlee Trujillo and MC Wellons contributed to this story.

This is developing news. Check back for updates.