With the government shutdown in the rearview, the Senate appropriations process is back on, and early last week the Senate Energy and Water released its proposal for funding the Department of Energy. The proposed budget landed days after DOE announced a significant internal restructuring, and is a clear endorsement of the Trump administration’s reprioritization and reorganization of DOE so far.
The Senate’s proposal for the department goes lighter than the hatchet job the House proposed back in September. This latest version declines to revoke unspent Infrastructure Investment and Jobs Act funds — as both the White House and House budgets proposed. Instead, the Senate outlined a plan to keep that funding within DOE, but funnel it away from Biden-era projects, and toward Trump priorities.
The Office of Nuclear Energy in particular will benefit from the rerouted infrastructure law dollars, receiving just under $1.6 billion of the funds previously designated for the Regional Clean Hydrogen Hubs and the Carbon Dioxide Transportation Finance and Innovation programs. The bill directs the vast majority of those funds to the Advanced Nuclear Reactor Demonstrations Program, which during the Biden era was managed by the now defunct Office of Clean Energy Demonstrations.
Elsewhere at DOE, the Office of Critical Minerals and Energy Innovation, which until late November was known as the Office of Energy Efficiency, will receive $1.059 billion that was previously set aside for the Regional Direct Air Capture Hubs.
The infrastructure law set aside up to $3.5 billion for those projects, and the Biden administration awarded funding to a total of 21 DAC projects at varying stages of development, including two large grants for the construction and operation of commercial-scale facilities. In the last year though, the vast majority of those projects — including the two largest, Project Cypress and the South Texas DAC Hub, selected for a combined total of up to $1.2 billion — have ended up on the agency’s cancellation list.
Hydrogen hubs funding meanwhile will be split in half, with the Office of Nuclear Energy and the Hydrocarbons and Geothermal Energy Office (formerly Fossil Energy), each receiving $92.35 million.
Most of the agency’s non-defense energy offices are seeing proposed cuts to their new annual appropriations, compared to the FY25 budget. The Nuclear Energy Office is the exception, with a slight lift over last year, even before the additional funding rerouted from the OCED projects.
The offices under fire
For the most part, the Senate’s proposal doesn’t reflect the recent organization changes at DOE, though it does zero out funding for the Office of Clean Energy Demonstrations, which was eliminated under the reorg, and had been in the administration’s crosshairs since early this year.
That office, officially established in late 2021, previously managed over $20 billion in federal investments designed to help tech companies cross the “Valley of Death” between research and development and steel in the ground. OCED provided up to 50% cost share grants for first-of-a-kind projects, including for the DAC hubs and the hydrogen hubs.
Another office that has come under fire from the Trump administration is the Loan Programs Office, which was once responsible for deploying $400 billion, but has been fighting for its future over the last 11 months. LPO was targeted by the Department of Government Efficiency’s personnel cuts, and had much of its credit subsidy removed with the passage of the GOP’s “One Big Beautiful Bill”in July. Last month, the office was renamed the Energy Dominance Financing Office.
But in the Senate appropriations bill, lawmakers largely rebuffed the White House’s proposals for the office, which included rescinding credit subsidy for the Advanced Technology Vehicles Program, and adding subsidy to the Title 17 financing program to support SMRs and advanced nuclear.
The Senate bill does neither, though it emphasizes Congress’ concern about “domestic capacity to develop and process critical minerals” and directs DOE to use the Title 17 loan guarantee program to support that supply chain using existing loan authority. The Senate also provides funding for the Tribal Energy Loan Guarantee Program, which the White House had proposed canceling in its budget request.
The Senate’s proposed bill also adds in some new guardrails around the administration’s efforts to cancel Biden-era awards. It would require DOE to notify the appropriate subcommittees in both chambers before terminating grants awarded under the IIJA, and to offer grant recipients at least 90 days to rework their projects to better align with administration priorities. That safety net, however, would not apply to Inflation Reduction Act funding, or awards announced after November 1, 2024.
