The Energy Department announced Wednesday evening that it would rescind more than $7.5 billion in funding for hundreds of energy projects, largely those initiated during the Biden administration and predominantly situated in states governed by Democrats.
This action starkly illustrates how the Trump administration seems to be leveraging the government shutdown as a pretext to penalize its political adversaries. Earlier this week, President Trump explicitly warned that if congressional Democrats failed to approve a funding bill, he would enact “irreversible” measures that would be detrimental to them during the shutdown.
While the Energy Department’s Wednesday announcement didn’t detail which specific projects would lose funding, an internal agency document reviewed by The New York Times reveals a broad impact. The affected initiatives include significant upgrades to electrical grids in California, Minnesota, and Oregon; efforts aimed at reducing methane leaks from oil and gas operations in Colorado; and major developments for producing clean-burning hydrogen fuels in both California and the Pacific Northwest.
The document further indicated that the overwhelming majority of the 321 canceled awards were earmarked for projects in these states, alongside Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Maryland, New Mexico, New York, and Washington. All of these states currently have Democratic governors and senators.
In an official news release, the Energy Department justified its decision by stating that the 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.”
The agency has granted recipients a 30-day window to appeal these terminations. Should these appeals fail, affected parties could potentially pursue legal action against the Energy Department, echoing past legal challenges faced by the Environmental Protection Agency over similar award cancellations.
Crucially, no existing law permits a federal agency to unilaterally cancel previously awarded grants during a government shutdown. Typically, companies and universities receiving federal funds enter into legally binding agreements and often invest their own capital upfront, with the understanding of future reimbursement.
These cancellations, however, appear to be the culmination of several months of preparation. Political appointees within the Energy Department have been scrutinizing billions of dollars in climate and infrastructure spending allocated by the Biden administration. They have claimed that these funds were hastily disbursed but have offered limited specifics regarding any alleged problems.
California Governor Gavin Newsom swiftly condemned the agency’s announcement. One of the affected projects in California alone was projected to create over 220,000 jobs. Governor Newsom’s statement read, “In Trump’s America, energy policy is dictated by the highest bidder, with economics and common sense utterly disregarded. We will persist in our comprehensive clean-energy strategy that powers our future and purifies our air, regardless of Washington D.C.’s attempts to interfere.”
Prior to the Energy Department’s official announcement, Russell T. Vought, the White House budget director, indicated the impending cancellations through social media posts. He wrote on X, “Nearly $8 billion in Green New Scam funding to fuel the Left’s climate agenda is being cancelled.”
Mr. Vought did not elaborate on the details, and the Energy Department’s news release followed several hours later. In the interim, numerous state officials, members of Congress, and energy executives were left scrambling to identify which projects would be impacted.
Among the most significant revoked awards were $1.2 billion for California projects and $1 billion for Pacific Northwest initiatives. Both focused on the critical areas of producing, transporting, and storing clean hydrogen. Hydrogen fuels hold immense promise for decarbonizing industries like steel and fertilizer production, and for powering heavy-duty trucks, all without emitting planet-warming greenhouse gases.
The bipartisan infrastructure law of 2021 had authorized approximately $8 billion for these “hydrogen hubs.” The Biden administration had subsequently awarded this money to seven hubs spanning across 16 states, though most of these funds had yet to be fully utilized.
Notably, none of the hydrogen hubs located in Republican-controlled states, including West Virginia, Texas, and Louisiana, were affected by this latest round of cancellations.
Greg Keoleian, a University of Michigan professor specializing in hydrogen research, stated that these canceled funds were vital for the United States to maintain its competitive edge against countries like China and Europe, which boast more advanced hydrogen industries. Dr. Keoleian emphasized, “We must invest in clean energy technologies such as hydrogen to ensure global competitiveness.”
Chris Green, president of the Pacific Northwest hydrogen hub, expressed his disappointment but affirmed, “our commitment to advancing hydrogen in the Pacific Northwest is unwavering.”
The agency’s list also included the termination of financial awards for two dozen projects aimed at modernizing the national electrical grids. This includes $630 million allocated to California for upgrading 100 miles of transmission lines with advanced conductors capable of carrying greater electrical current, and a $250 million grant designated for strengthening power lines on the Warm Springs Reservation in central Oregon.
Also slated for cancellation was a $464 million grant awarded to Minnesota, intended to enhance interconnections between two major regional electrical grids in the Midwest and Great Plains. This project was designed to facilitate the integration of more renewable energy into the grid and mitigate the risk of blackouts. Supporters argued it would have reduced electricity costs across a broad area, including in Republican-led states.
The list of defunded initiatives also featured $326 million previously granted to Colorado State University for projects aimed at reducing methane leaks from oil and gas wells, a potent planet-warming gas. Furthermore, over $350 million in awards to the Gas Technology Institute in Illinois, which focuses on methane and hydrogen emission reduction technologies, would also be impacted by these cancellations.
Additional funding cuts by the Energy Department included projects focused on reducing emissions from cement production and developing carbon capture technology to prevent industrial carbon dioxide from entering the atmosphere. Some of these particular terminations had already been announced in May.