Trump Budget Would Eliminate Energy Infrastructure Program | Global Trade Magazine
International Trade
  July 17th, 2017 | Written by

Trump Budget Would Eliminate Energy Infrastructure Program

Loans Finance Clean Energy and Auto Manufacturing Technologies

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  • The administration's budget proposes to zero out an infrastructure loan program with $40 billion in the bank.
  • Loan Programs Office was created in 2005 to help finance innovative energy and auto technologies.
  • LPO issues loan guarantees for clean energy and loans for advanced technology vehicles manufacturing projects.

President Donald Trump has promoted a $1-trillion infrastructure program since he was on the campaign trail and has continued to do so since he took the oath of office.

Yet his administration’s budget proposes to zero out an energy infrastructure loan program with over $40 billion in the bank.

The Department of Energy’s Loan Programs Office (LPO) was created by Congress in 2005 to help finance innovative energy and auto technologies. LPO issues loan guarantees for clean energy projects and loans for advanced technology vehicles manufacturing projects.

Since its beginning, LPO has disbursed $50 billion in project investments and claims to have created or saved 56,000 US jobs, according to the Department of Energy. LPO’s current portfolio includes over 30 projects and over $30 billion of loans, loan guarantees, and conditional commitments.

The Loan Programs Office remaining authority of around $41 billion includes $8.5 for innovative advanced fossil energy projects; $12.5 billion in loan guarantees for advanced nuclear energy projects; $4.5 billion in loan guarantees for innovative renewable and efficient energy projects.

Trump and his budget director, Mick Mulvaney have called for the cancellation of the LPO in the president’s proposed budget.

“The relative inactivity of these programs indicates they are ineffective at attracting borrowers with viable projects who are unable to secure private sector financing and supports the position that financing innovative energy and advanced vehicle manufacturing projects is a more appropriate role for the private sector,” says the Trump budget document for fiscal year 2018.

The document goes on to claim, in seeming contradiction to Department of energy statements, that only three loan guarantees have been closed through the innovative technologies program since its

inception, and only five loans under the advance technology vehicles program.

The administration’s stance on LPO seems to be disconnected from the president’s rhetoric about rebuilding US infrastructure and creating jobs.

One explanation for the paradox could be that Trump’s budget director is a former tea-party congressman known to be an extreme budget hawk and likely to influenced by the budget ideas of the conservative Heritage Foundation.

Nicolas Loris, a Heritage fellow in energy and environmental policy argued against LPO before Congress in March, saying that “government interventions distort free enterprise, create government dependence, and allow Washington to direct the flow of private-sector investments. This is not a recipe for more innovation and economic growth.”


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