[Senate Hearing 118-310]
[From the U.S. Government Publishing Office]
S. Hrg. 118-310
THE DEPARTMENT OF ENERGY'S DUE DILIGENCE
PROCESS FOR AWARDING COMPETITIVE
GRANTS AND LOANS FUNDED THROUGH THE
INFLATION REDUCTION ACT AND THE BIPAR-
TISAN INFRASTRUCTURE LAW AND THE DE-
PARTMENT'S OVERALL INNOVATION INVEST-
MENT STRATEGY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 19, 2023
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-813 WASHINGTON : 2025
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
MARTIN HEINRICH, New Mexico STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ALEX PADILLA, California JOSH HAWLEY, Missouri
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
Zahava Urecki, Professional Staff Member
Richard M. Russell, Republican Staff Director
Justin J. Memmott, Republican Chief Counsel
Derek Fisher, Republican Professional Staff Member
Steve Eule, Republican Senior Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 7
WITNESSES
Crane, Hon. David W., Under Secretary for Infrastructure, U.S.
Department of Energy........................................... 9
Shah, Jigar H., Director, Loan Programs Office, U.S. Department
of Energy...................................................... 11
Donaldson, Hon. Teri L., Inspector General, U.S. Department of
Energy......................................................... 22
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Barrasso, Hon. John:
Opening Statement............................................ 7
Poster image of quote from Climatetech executive............. 42
Washington Free Beacon article entitled ``Biden's Energy Loan
Czar Founded a Trade Association. Now It's Selling Access
to Him'' by Alana Goodman, published October 6, 2023....... 54
Crane, Hon. David W.:
Opening Statement............................................ 9
Written Testimony............................................ 12
Responses to Questions for the Record........................ 69
Donaldson, Hon. Teri L.:
Opening Statement............................................ 22
Written Testimony............................................ 24
Responses to Questions for the Record........................ 114
Manchin III, Hon. Joe:
Opening Statement............................................ 1
Chart entitled ``Percentage of Awarded and Announced Loan/
Loan Guarantee Funding from LPO Since 2009''............... 5
National Mining Association:
Statement for the Record..................................... 117
Shah, Jigar H.:
Opening Statement............................................ 11
Written Testimony............................................ 12
Responses to Questions for the Record........................ 88
THE DEPARTMENT OF ENERGY'S DUE DILIGENCE PROCESS FOR AWARDING
COMPETITIVE GRANTS AND LOANS FUNDED THROUGH THE INFLATION REDUCTION ACT
AND THE BIPARTISAN INFRASTRUCTURE LAW AND THE DEPARTMENT'S OVERALL
INNOVATION INVESTMENT STRATEGY
----------
THURSDAY, OCTOBER 19, 2023
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. The Committee will come to order.
First, let me welcome our newest member, Senator Alex
Padilla from California. It's so good to have him, and so
everyone knows the changes that were made, Senator Kelly was a
tremendous asset for this Committee, but he had an opportunity,
and I think it was a wise move from his standpoint, to be able
to go on to Intel with his background, his training, and
everything of that sort. So we lost one and gained one. So I
think it's a pretty good swap. Anyway, Senator Padilla
represents the largest number of Americans, and the second
largest consumption of energy from his state. I know he will
dive right in on so many important issues, including hydrogen,
forestry, wilderness, western water, and other issues of
importance to California that our late, great Senator Feinstein
worked on diligently. We got an awful lot of input from her on
this Committee, but also from all of you and we appreciate that
so much.
So with that, we will get started.
I also want to briefly express, at the outset, my strong
concerns about the news last night that our Administration has
lifted most sanctions on Venezuelan oil for the next six
months. On the heels of announcing the smallest five-year
offshore oil and gas leasing plan in decades for the United
States, the Administration is turning to Venezuela to help make
up the production that they refuse to allow in America. And
they know I have a problem, I am sure maybe you all have all
different feelings on this. They are one of the world's
dirtiest energy producers and an oppressor of their own people.
I understand that the Administration believes that this will
encourage Venezuela to make democratic reforms, but that has
been tried, and we failed before. It makes no sense at all to
reward bad actors before they actually take the action you
want. We tried that with Iran and now here we are with
Venezuela.
Now, turning to today's topic--when I look back to when I
became Ranking Member of the Committee in 2019, we had not done
a comprehensive update to our nation's energy policy in over
ten years. Since then, we have worked hard to address that gap.
First, we set our energy policy goals in the bipartisan Energy
Act of 2020. Then, we provided the investment needed to make
those policies a reality in the Bipartisan Infrastructure Law
and the Inflation Reduction Act. These bills will transform our
nation's energy landscape for years to come. I am extremely
proud of these pieces of legislation and the opportunities
within them that will make us more energy secure while creating
good jobs across our nation.
For instance, I was pleased to join a bipartisan group of
federal and state lawmakers and business and community leaders
to welcome Secretary Granholm and Under Secretary Crane to West
Virginia this week, on Monday, to announce that the Appalachian
Regional Clean Hydrogen Hub won a $925 million award to bring a
hydrogen hub to West Virginia and parts of Ohio and
Pennsylvania, which is the three-state region. This funding,
which came from the Bipartisan Infrastructure Law, will ensure
West Virginia will be able to be a new epicenter of hydrogen in
the United States of America. It's just one example. In the
past two years, our state has celebrated announcements for
battery manufacturing plants, carbon capture projects,
microgrid-powered industrial sites, with many more projects on
the way that stand to benefit from the DOE support. I will
mention that tomorrow, when I go for a groundbreaking for Nucor
Steel. Nucor Steel has just signed a contract with Helion,
which is a fusion manufacturer, and they are intending, by
2028, to have a Helion fusion manufacturing plant for clean
hydrogen to make clean steel. It will be the cleanest in the
world, being made in West Virginia, and we are extremely proud
of that. That opportunity is unbelievable.
In the case of the hydrogen hub, the private sector is
proposing to invest up to $6 billion on top of the nearly $1
billion from the DOE. So if you look at the $1 billion we have,
that is a 13 percent investment the United States is making for
an 87 percent return. That is a tremendous thing for us to
incentivize that, and be willing to share some of that risk
that makes these projects possible. The story is also similar
across our country--the private sector announcements pouring in
as a result of opportunities created by our laws, and all of us
should be proud of that.
And while I am thrilled to see all these impactful
investments being made, it is also disheartening to witness
this Administration distort the intended purpose of the laws to
fulfill their agenda. And they know, I think we have had these
conversations, and sometimes we are ahead of our skis and we
just want to keep them in check. The laws were deliberately
crafted to secure energy supply chains, but so far, we have
seen too many indications that this Administration is willing
to sacrifice security to pursue their unrealistic anti-fossil
goals. The most apparent example of this is through the
implementation of the IRA's EV tax credit. That credit was
designed to encourage automakers to onshore their supply chains
in order to break our reliance on China, who has dominated the
EV supply chain. Unfortunately, actions by this Administration
to cut the sourcing requirements in half and water them down in
other ways just to get more EVs on the roads, Chinese or
otherwise, clearly are not a reflection of the text or the
intent of the IRA and Infrastructure Law. Not only is the
Administration violating and manipulating the law to implement
the legislation they wanted rather than the bills that we
passed, but the decisions they are making will have detrimental
impacts on American workers and embolden our adversaries.
There is a bipartisan agreement that these laws must be
implemented as written, as Congress intended, to secure our own
country's energy supply. This is why our Committee expressed
bipartisan concern at a hearing earlier this year when DOE was
considering providing a grant to Microvast, a battery company
with alleged links to the Chinese government. While DOE
ultimately made the correct decision not to award this grant,
and I thank you for that, this Administration's actions as a
whole have made me question what aspects of the laws are at
risk of being manipulated. So I felt it was important to invite
the Department of Energy here today, and Mr. Crane, we are so
glad to have you, and thank you for coming to discuss your
approach, and Mr. Shah, you also, we are anxious to hear from
you of these new important laws, and especially the review of
the Department's due diligence and process for companies and
technologies pursuing grant funding or loan guarantees.
I have two primary questions for our witnesses. First, how
are we ensuring that U.S. taxpayer dollars are absolutely not
benefiting any of our adversaries? And I think we even have
named our adversaries that we are very much concerned about,
whether it be China, Russia, North Korea, or Iran. And second,
how is the Department ensuring that companies receiving awards
have proven technologies worthy of government support to
commercialize them? The IRA and the Bipartisan Infrastructure
Law are an investment in American energy security to protect
ourselves and our allies while breaking our reliance on
countries like China, Russia, Iran, North Korea, and other
nations who do not share our values and should not be relied
upon to provide critical elements of our supply chains. While I
was pleased to see that DOE rescinded the Microvast award, I am
alarmed that the company was able to get through even the first
round of vetting. We continue to hear about our companies
seeking to use taxpayer dollars to make a devil's bargain with
Chinese technology providers, like Ford's potential licensing
deal with CATL seeking to qualify for IRA credits, or the
conditional loan approved by DOE for Kore Power that involves
purchasing technology from a Chinese firm. Let me be clear: I
do not want--and I don't believe any of our Committee members
wants--a cent of the funding benefiting China in any way and
being held hostage. So I hope today's witnesses will shed some
light on the vetting process to make sure China and Chinese
companies are not turning taxpayer-funded American innovation
into a windfall for our geopolitical adversaries.
Between the IRA and the Bipartisan Infrastructure Law, the
Department of Energy received nearly $100 billion to support
new or existing energy, advanced technologies, grid
modernization, and clean manufacturing programs. Both bills
emphasized an all-of-the-above approach so that we could
innovate--not eliminate--our way toward a cleaner environment,
while at the same time, increasing our energy security and
creating new economic opportunities here in the U.S. These
bills were designed to be balanced and ensure that the best
technologies of all types win, not just those favored by any
given administration. Historically, DOE's Loan Programs Office
has fallen short of a balanced approach. If you look at the
chart here, it shows you basically where we are investing our
dollars.
[The chart referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Forty-one percent went to electric vehicles
and clean transportation. Solar was 22 percent. Nuclear was 22
percent. Distributed energy, storage, transmission was only
seven percent. Wind was only three percent. Fossil, hydrogen,
geothermal is four percent. Now, if you look at where our
energy comes from today, 81 percent comes from energy
production in fossil fuels and cleaner innovation--81 percent--
with a four-percent investment. Eight percent is nuclear power.
Nuclear, 22 percent investment, eight percent right now. And
renewables, you can look at all the renewables, 13 percent is
where we get our energy from. So we have a long way to go, but
we have to be realistic enough to know where our power is
coming from today so we don't short-sight it and get the cart
in front of the horse and say go ahead and start pushing. It
does not work that way.
To correct this, the IRA created the new 1706 loan
guarantee program specifically to support investments in our
dispatchable fossil fuel plants, such as adding CCUS or other
environmental controls. I am also pleased to see that the LPO
is supporting a number of hydrogen projects, a proven
technology that we just have not focused on commercializing
until the past few years. It is my hope that the Department
will adhere to a balanced approach moving forward. I look
forward to hearing how DOE is taking that balance into
consideration as they work through the decision-making process
for these important funding opportunities. I would also like to
hear the Department's plans to ensure that taxpayer dollars are
being spent efficiently, effectively, and responsibly.
Without a doubt, the Department of Energy's loan programs
have had successes over the years. And it is notable that the
interest on loans returned to taxpayers has exceeded losses in
investments by roughly four times over. That is excellent. That
being said, it's no secret that problematic projects from
previous years are still very much on our minds. Mr. Shah, I
hope you are able to assuage any concerns this morning about
the efficacies of the loan programs and demonstrate how the
Department is working to prevent the next Solyndra. Being
responsible with all this funding also means DOE's offices
should not be working in a vacuum. There needs to be a cohesive
strategy to ensure that we are not duplicating efforts and
missing key gaps. So I hope that we can hear from Mr. Crane
this morning about how he works with Mr. Shah and other offices
within the DOE and across the agencies to make sure that
funding is being used in the most effective and efficient ways
possible. If implemented effectively, the Bipartisan
Infrastructure Law and the Inflation Reduction Act have the
power to truly transform our country for the better. And that
is why it is so important that we get this right. I will
provide all the support I possibly can to DOE to help the
agency get it right and achieve Congress's intent. At the same
time, it will be of no surprise to hear that I fully intend to
continue our Committee's robust oversight of the Department,
which is our jurisdiction and responsibility.
And with that, I am going to turn to my Ranking Member,
Senator Barrasso, for his opening remarks.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thanks so much, Mr. Chairman.
I want to join you in welcoming Senator Padilla to the
Committee. Given his degree in engineering from the
Massachusetts Institute of Technology, we welcome both your
participation and your expertise. So welcome to the Committee.
I look forward to working with you.
Mr. Chairman, thank you for holding this hearing today.
Recent horrifying events provide a disturbing backdrop for
today's hearing. Hamas terrorists have viciously attacked
Israel. Hamas committed atrocities against innocent civilians,
including infants and children. People are sickened by what has
occurred. And there is a reason to believe that Iran helped
plan and finance this evil attack on our ally. The risk of a
wider, regional war in the Middle East continues to grow.
Meanwhile, Russia continues to wage its unprovoked war against
Ukraine, and as you might have seen, Putin and Xi are together
today. And China is, at the same time, growing more aggressive
by the day as it pursues global domination.
These are consequences of weakness by our nation. They
demonstrate that our energy policy needs to be about more than
a blind allegiance to tackling climate change. That is what
makes the laughably named Inflation Reduction Act so dangerous.
Let's be clear: President Biden's energy transition obsession
is going to move us from energy independence to energy and
mineral dependence on China and Russia and OPEC. It's not the
kind of transition Americans want or need. Today, I issued a
report exposing how the inflationary IRA will actually make
America weaker and our adversaries stronger. Starting with its
name, everything we have heard from Democrats about this
disastrous bill is a lie. This partisan bill--truly one-sided
bill--is going to send America and our nation further in the
red while enriching red China. It is going to leave taxpayers
on the hook for hundreds of billions of dollars in new
borrowing, and with a debt of $33 trillion, which is growing.
We cannot afford that.
President Biden has a terrible track record of protecting
taxpayer money. As Vice President, he personally announced the
award of a loan guarantee to politically connected solar
company Solyndra. And Mr. Chairman, you made mention of that
company in your opening remarks. We all know how it turned
out--$500 million bankruptcy, with taxpayers footing the bill.
With the IRA, the American people can expect to see more
Solyndras. The recent revelation that the Department of Energy
selected Chinese-connected companies, which you referenced, Mr.
Chairman, for financial awards should alarm every American, but
should not surprise us. The White House said it welcomes
Chinese companies as big players in renewables and electric
vehicle markets. The Administration has said it's perfectly
happy to work with China on electric vehicles, and the IRA
encourages more of this. It is a terrible mistake. Republicans
and Democrats should be able to agree that taxpayer dollars
shouldn't be used to strengthen China. It's not just foolish
awards that benefit China, this ill-conceived bill is going to
push the United States away from the fuels and the technologies
that we dominate toward those that China and others control.
And as your poster and map showed, Mr. Chairman, it points
out these things perfectly. Chinese companies have led wind
turbine, solar panel, and battery production for many years.
That is not changing. Now, China is the world's largest
manufacturer of electric vehicles. China also controls the
supply chains of many of the critical minerals that these
technologies use. So while the Biden Administration has been
selecting Chinese companies for grant awards, it has been
working to block mining in the United States. Even if we could
do more mining here in America, we would still need huge
amounts of critical minerals from China, Russia, and elsewhere
to make up for the number of electric vehicles that Joe Biden
is demanding. It's not possible to do it otherwise.
Contrast this future dependence with America's recent
global leadership in oil, natural gas, and coal production.
President Biden and Congressional Democrats seem happy to
surrender America's energy advantage. And Mr. Chairman, you
mentioned in your opening comments what we see happening now in
Venezuela with allowing drilling there that we are not allowing
in the United States, and we do it much more safely and with
more respect for the environment than they ever will.
So let's be clear about what this means. It means more
pleading with dictators, like Russia and Iran and Venezuela, as
the Administration just did yesterday. It means U.S. businesses
and workers being held hostage to the whims of our enemies. It
means stronger adversaries, weaker allies. We do not need a
pro-Iran and pro-China energy policy. That's what we are
getting out of this Administration. We need to return to a pro-
America, all-of-the-above energy strategy that is good for
America and for the free world. The stakes are too high, Mr.
Chairman. The IRA, to me, should stand for irresponsible,
reckless, and alarming. It can't be salvaged. It needs to be
repealed.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Barrasso, and the great
thing about our democracy is, we can be friends and agree to
disagree. And I will say in response, with the IRA, a lot of
implementation--you know that I have a concern about how it's
being implemented, but we have to be clear about the facts. We
are producing more energy in the country today than ever in the
history of our United States of America--4.6 billion barrels of
oil is being produced as we speak, 37 trillion cubic feet of
gas. We are at 13.5 billion cubic feet of LNG a day. That is
going to go to 25. We have increased our wind and solar
production. We have doubled it in one year. It's an all-in
policy that is working.
Now, the differences we have is sometimes some
Administrations want to do a little bit more than what the bill
intended. But the balance we have right now, it has done that
job. And I will say with my dear friends on my Republican side,
my Republican friends, a lot of that thought that went into
that bill was things that we discussed for four or five years
because we need more energy. We need an all-in policy. What we
are afraid of though, is we might need a little bit longer
until we have the new technologies that can replace the
dispatchable fuels that people want to replace. And we are not
going to take something away until we can do it as good, if not
better, and that is where we are.
So with that being said, I want to turn to our witnesses
today.
We have the Honorable David Crane, the Under Secretary for
Infrastructure, Department of Energy, and we are glad to have
him.
We have Mr. Jigar Shah, Director of the Loan Programs
Office, Department of Energy, and glad to have him here.
And we have the Honorable Teri Donaldson, Inspector
General, Department of Energy.
So with that, we are going to our witnesses' remarks, and
we are going to start with the Honorable David W. Crane, from
the Department of Energy.
STATEMENT OF HON. DAVID W. CRANE, UNDER SECRETARY FOR
INFRASTRUCTURE, U.S. DEPARTMENT OF ENERGY
Mr. Crane. Thank you, Mr. Chairman and Ranking Member and
distinguished members of the Committee. Thank you for this
opportunity to discuss the Department of Energy's
implementation of the BIL and IRA. All of us at DOE are
extremely grateful for the leadership of this Committee
informing and enacting these landmark pieces of legislation and
the ongoing partnership during their implementation. We are
bolstering our national energy security at this time of global
instability. We are creating millions of lasting, good-paying
jobs and helping communities across the country tackle huge
challenges and take full advantage of opportunities made
available to them by these landmark pieces of legislation. We
are also assisting communities in realizing the impacts of
rapid energy technology transitions and ensuring that cities
and towns across America have access to new energy technologies
that can reduce families' and businesses' energy bills as
quickly as they can be deployed.
Between BIL and IRA, Congress has provided more than $97
billion for over 60 new programs under the purview of the
Department of Energy. I am proud to say, as we sit here today,
that we have announced 111 funding opportunities, totaling over
$72.8 billion for applications from the public and private
sectors, with a special mission to ensure that tribes and
underserved and traditional energy communities have a seat at
the table. Of this total, we have selected so far 455
recipients for award negotiations, totaling $17.8 billion
through competitive funding and $14.3 billion through allocated
formula funding, including the home rebates program. In fact,
in just the last week, we have announced award selections for
over $10 billion between hydrogen and transmission awards. From
selection, we move directly to negotiation of awards and then
to full design project development and groundbreaking. During
all these phases, we must ensure that the taxpayer dollars are
well spent on well-developed, impactful projects that drive
innovation. We are here to demonstrate technology and drive
market adoption and stimulate private-sector financing of
projects that will serve as fundamental elements of the 21st
century economy for decades to come.
I look forward to sharing how DOE is meeting these goals
through a thoughtful program design, extensive community and
stakeholder outreach, rigorous and merit-based decisions led by
career staff who are subject matter experts, ongoing project
management, and a robust risk and vetting process for awardees
and applicants. The Department takes seriously its
responsibilities to match competitive funding opportunities and
loan programs purposefully to the benefit of the taxpayers. It
is of great importance, both to me and to this Committee, that
we have a robust due diligence and oversight mechanism to
ensure integrity in our programs and to ensure we are meeting
and exceeding the goals of the legislation. The majority of the
programs under BIL and IRA are competitive funding
opportunities to demonstrate and to deploy next-generation
energy infrastructure. For FOAs, we conduct extensive outreach
to industry, communities, non-profits, and think tanks, other
stakeholders, and with other DOE offices to develop a better
understanding of the opportunities and challenges.
Once applications are submitted, we undertake a rigorous
merit review process that includes an initial check for
eligibility, followed by review by a panel of independent
experts. This includes a review of technical merit, financial
and market viability, the work plan, management team, and the
proposed community benefits. This review may include additional
questions to the applicants, potential interviews, and review
by the RTES--Office of Research, Technology, and Economic
Security--which I will explain more. With the enactment of BIL
and IRA, it has become more important than ever for the
Department to have a comprehensive and rigorous approach to
research, technology, and energy security--or as we say, RTES--
for both awards and loans. Over the past year, DOE developed
and continues to improve upon a number of measures to mitigate
risks that foreign governments who are adversarial to the U.S.
pose to our scientific and technological development ecosystem
supply chains and intellectual property.
DOE enhanced its existing vetting processes to ensure that
risks of undue foreign influence are considered earlier in the
competitive process and throughout the life of a DOE support
project loan. DOE also included strict RTES requirements for
financial assistance and loan programs. For example, no person
participating in a foreign talent program sponsored by a
country of risk may participate in a project. We are examining
foreign connections associated with individuals and entities
proposed to participate in the project. This includes sharing
some intellectual property, foreign collaborations, foreign
ownership, and foreign affiliations.
In conclusion, the Department of Energy looks forward to
seeking the guidance of this Committee as we continue to ensure
the integrity of the implementation of the BIL and IRA. These
historic laws provide an unparalleled catalytic investment to
our nation's infrastructure and energy security, and the
Department stands ready to meet this moment while ensuring that
we are executing stringent oversight and stewardship of the
taxpayer dollar. As we look to secure the U.S. global
leadership in energy technology development and infrastructure,
we also know that the investment in our nation's energy
infrastructure is not just a five-year or decade-long project,
it is a very long-term investment in the energy future of the
United States. We look forward to working with this Committee
and for the partnership between the Department of Energy and
the members of this Committee.
Thank you, Mr. Chairman.
[The prepared statements of Mr. Crane and Mr. Shah were
submitted as one document, and appear after Mr. Shah's opening
statement on page 12.]
The Chairman. Thank you, sir.
And now we are going to have the Honorable Mr. Jigar Shah,
Director of the Loan Programs Office, Department of Energy.
STATEMENT OF JIGAR H. SHAH, DIRECTOR, LOAN PROGRAMS OFFICE,
U.S. DEPARTMENT OF ENERGY
Mr. Shah. Chairman Manchin, Ranking Member Barrasso, and
distinguished Committee members, I, too, would like to express
my gratitude for the opportunity to join you today. I have had
the privilege of serving as the Director of the Loan Programs
Office, or LPO, since 2021. LPO supports the DOE's private-
sector-led, government-enabled approach to developing a new
American industrial strategy.
The United States faces a deployment challenge. LPO exists
to help bridge that gap. Since 2005, LPO has financed
innovative energy and manufacturing projects, catalyzing the
deployment of nuclear power, utility scale wind and solar, and
domestic advanced technology vehicle manufacturing, while
directly supporting nearly 50,000 family-sustaining jobs in the
process. At the same time, LPO has prioritized its
responsibility to protect taxpayer resources. Since the
creation of LPO, dedicated federal staff have strengthened
program oversight, institutionalized world-class risk
management practices, and implemented portfolio-wide safeguards
and monitoring of all LPO projects. The fact is, similar to
what Under Secretary Crane explained for competitive funding
opportunities, LPO conducts rigorous due diligence that is
comparable to, if not more stringent than, what might be done
in the private lending market.
The Bipartisan Infrastructure Law and the Inflation
Reduction Act enhanced and augmented LPO's authorities, sending
a signal that Congress trusts and expects LPO to meet this
moment. And the private sector has noticed. Our applicant
pipeline has 177 active applications seeking over $157 billion
in financing from advanced nuclear to carbon management to
sustainable aviation fuels. We do not pick and choose the
technologies that come to our door, and we evaluate
applications across all statutorily eligible technologies on a
level playing field. Since the start of the Biden-Harris
Administration, LPO has issued or committed more than $21
billion for projects across the country, including in Arizona,
Kentucky, Louisiana, Nevada, Utah, and other states. These
projects support deployment of clean hydrogen technology,
virtual power plants, domestic critical materials production,
and more.
We have also clarified our application process for
borrowers and are implementing recent changes, including
Section 1706 and State Energy Financing Institution (SEFI)
authorities. LPO will continue partnering with the private
sector to finance high-impact projects while taking measured
risk and exercising rigorous due diligence to ensure that our
future energy is built by American workers on American soil.
I look forward to answering any questions you might have.
[The jointly prepared statement of Mr. Crane and Mr. Shah
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, sir.
And now, we have the Honorable Teri Donaldson, Inspector
General, Department of Energy.
STATEMENT OF HON. TERI L. DONALDSON,
INSPECTOR GENERAL, U.S. DEPARTMENT OF ENERGY
Ms. Donaldson. Thank you, Mr. Chairman. Thank you, Ranking
Member Barrasso, and members of the Committee for inviting me
to speak here today.
I am going to comment on just a few of the many risk
factors, then I am going to talk for a little while about due
diligence and why the private sector model isn't going to work.
So in my testimony, we lay out 12 different categories that all
present substantial risks. I want to emphasize, probably the
most important fact that brings me here today is that all of
those things are happening at the same time, and I have never
seen that. Seventy-one new programs all trying to develop
criteria, including due diligence criteria. You have massive
amounts of money moving quickly. All of these things happening
at once create a level of risk that may, candidly, be
unprecedented in terms of amounts of federal money moving in
such a complicated landscape. You know, even the PRAC money,
huge amounts of which were lost and stolen, had simpler
criteria than the dollars we are talking about here today. So I
cannot say often enough that this is a very risky landscape.
On the issue of not funding our adversaries, I am greatly
concerned about how things are going in that regard. The
Department has set up a vetting center, which is a step in the
right direction, but it's now six months old. It has three
employees. It has no written procedures. There is no clear path
on what projects will be vetted or what criteria will be used
when they are vetted. It has a very, very long way to go, and
that is of huge concern to me.
Now, a few minutes on due diligence. My background is--I
was in a very large law firm and I was doing due diligence on
large energy deals for many years. So this is something I know
a little bit about. Private sector due diligence is two groups
of trained gladiator lawyers going into a room with a very
clear goal that the project make money. And that model works
really well. I was one of those gladiators in the room--blood,
guts, and hair--but it works really well because there is a
clearly defined goal. You are protecting your clients'
interests. In this setting, clearly defined goals really don't
exist. Loss has not even been defined, right? What amount of
loans defaulting will even be successful? So due diligence is
very different.
The huge difference is that on the government side of this
equation, it's not their money, right? And back in the '70s,
the Federal Government finally responded to what I refer to as
the ``Monopoly money syndrome.'' It is a lot easier to spend
the government's money than to spend your own or even your
client's money. Clients hold people highly accountable. So in
response to that, they came up with the Inspector General Act.
So what inspectors general do is perform that independent audit
function, and they answer the question of where did the money
land. So I am not accountable to anyone other than you, right,
to say did this even work. So there has to be a clearly defined
goal.
The analogy in the private sector is the audit chair on the
board. Completely independent. It typically does not report to
anyone other than the board, and that function is very, very
well-funded. So there is a graph in my materials which shows
what volume of these dollars, what amount of projects I am
currently funded to audit. And I will tell you that in the
private sector, you would never see a graph that looks like
that. Projects are rigorously audited, and they are audited
independently for a very, very important reason, because that
is how you know whether or not you got the benefit of the deal,
by having an independent set of eyes looking at those
materials.
So as we sit here today, I am the poorest-funded inspector
general in the Federal Government, viewed proportionately. The
Department of Energy took on massive new mission elements,
massive amounts of money. I was funded very, very little. And
as we sit here today, I don't have the support of the Secretary
in seeking to transfer some of those already appropriated funds
over to the Office of the Inspector General, and that is
unfortunate, because at the end of the day, inspectors general
don't lose money, they make money. The more you audit, the more
you recover. So a dollar for an inspector general, at least as
of 2021, the Council of the Inspectors General was calculating
return on investment at about 1 to 20. So a dollar to an
inspector general is $20 you get back. So the more you care
about those mission elements, the more you should pay attention
to making sure that your independent audit function has the
staff and the people to be doing its job.
Thank you.
[The prepared statement of Ms. Donaldson follows:]
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The Chairman. Thank you. We appreciate it very much. And we
will start our questions right now and I am going to go right
to you, Ms. Donaldson. I think it was a great presentation of
what we are concerned about.
With all the good that can be done and all the intent that
was done for the good that should be returned, have you taken
this to the Secretary? Where do you go for your support? Do you
go to the Secretary level and ask for that support?
Ms. Donaldson. Yes, and to OMB. And many of you--I have
briefed many of you on the same subject.
The Chairman. Okay.
Ms. Donaldson. So we are about two years behind now. So we
have been on the Hill and working to try to correct this
problem for about that amount of time.
The Chairman. And you have not gotten any favorable
response you need or the support that you need right now, with
all the money that is coming toward that. And I will go right
to Mr. Shah now.
The amount of money that is going, unprecedented, to where
you have responsibilities and making sure it is done, can you
look at the technologies that we are trying to develop here and
can you say that there are any pie in the sky that don't have
proven technology, or is this a lot of proven technology that
hasn't been matured? How would you rate that?
Mr. Shah. Senator----
The Chairman. Such as hydrogen. It has been around forever,
right?
Mr. Shah. Thank you so much for your question.
You know, as the Inspector General suggested, I have also
been in the private sector for a long time, doing a lot of due
diligence on projects. What I would say is that the Department
of Energy Loan Programs Office has an ability to do due
diligence on these projects that many private-sector banks
don't have because we have access to the 10,000 engineers,
scientists, and experts on the DOE platform. So for the vast
majority of these projects, I would say the technology has
actually originated from R&D programs that were funded by the
Department of Energy. So for many of these technologies that
are, frankly, scary to the private sector, which is why the
Loan Programs Office was created, we can do rigorous due
diligence and look back into demonstration projects and other
data that we have to see whether the technology will work.
So we never take ``will it work or won't it work'' risk
today here at the Loan Programs Office. We do take execution
risk, scale-up risk, a lot of other risks that are real risks
that we have to do due diligence on. Also, the average due
diligence process for the Loan Programs Office is over 12
months. And so, we are hiring independent engineers, market
advisors, and others to give us a third-party view, as was
suggested and required by the Congress in the 2020 Act.
The Chairman. Let me ask this question--do you all work
together, or are you close, in the same offices, or anything of
that sort? Where is your office located?
Ms. Donaldson. We are all in the exact same building,
Senator.
The Chairman. In the exact same building.
Do you all work on the concerns you have and him being
responsible for the loans that go out the door? And what you
are saying, I believe, that this has been missed or not looked
at, are you all collaborating on that?
Ms. Donaldson. We do. I have a monitoring project. So we
have data that we are collecting on a monthly basis from the
Department. That is how I know about the vetting center, and we
do have fairly regular meetings where we discuss risk.
The Chairman. Well, I think you all know, our concern is
basically countries that don't have our same values, and
basically, right now, it's targeted on China, since China has a
monopoly on things that we seem to want to do as an
Administration that we don't have a secure supply chain to do
it on our own. So we are trying to accelerate how we can get
into that market and be more self-reliant or relying on actors
that we have that are basically reliable, such as free trade
agreement countries, things of that sort. And that's where the
credits come in. Are we able to basically find out what maybe
China is still receiving? Because we are circumventing what the
intent was of the bill to basically make us independent and
break as quickly as we can from China dependency and stop that
from happening or prohibiting a loan going out.
And next of all, our loans--is money going out the door
before people are taking the risk to get a production tax
credit or investment tax credit? They have to either be
producing or investing. They have to put their own capital at
risk. Is any money going out the door before they have come to
the table with their risk, you know, their capital risk?
Mr. Shah. Senator, thank you for the question. I am happy
to answer it for the Loan Programs Office and happy to have
David answer it for the rest of DOE.
For the Loan Programs Office, we have a deal that we
recently announced for Kore, and in that, we are talking about
an American company that has been around for 60 years. In order
to accelerate bringing lithium-ion battery manufacturing to the
United States, they partnered with a Chinese company. That
company has put their technology into Arizona, right? And they
have--we have done several things here. One is----
The Chairman. I understand that that technology was
basically stolen from the United States to begin with and they
matured it.
Mr. Shah. That is exactly what I was going to say. I mean,
you know, as somebody who is an entrepreneur and has done this
for a long time, I mean, there really was a policy in this
country for commercializing your technology in other
continents, right? We did not have the tools here. The
Inflation Reduction Act has given folks the tools to be able to
commercialize our technology here in this country. Some of that
is, you know, being brought back from other continents, back to
this country, and there are ways for us to protect the U.S.
taxpayer, a couple things. One is, there are foreign entities
of concern that are trying to put provisions into board
representation. So we do full due diligence on that to make
sure that none of those provisions exist. Second, we make sure
that all IP licenses are one-way, so the technology comes to
the United States, tied to the American worker, but no
additional innovations that occur here can go back to that
country. And we did that diligence here.
Third, foreign talent recruitment programs. The vast
majority of our companies don't know what a foreign talent
recruitment program is. So we have to explain to them what it
is, how to monitor for it, and how to make sure that they are
not susceptible to it. And the last piece of it is, we need to
make sure that they understand that we need to see the
ownership stake of those companies going down, so the Chinese
ownership stake goes down.
The Chairman. Mr. Crane, I am over my time. Real quick--I
want you to think because I am going to come back and ask at a
later time, but the GREET model we have talked about,
especially with hydrogen and what it is doing, and you met
briefly with some people we have a lot of concern about. I want
to get back to that so you can think about that one, okay?
The thing I am more concerned about right now, are any of
you all looking at what the CBO score was on the IRA and what
is happening now, how you implement that bill that might be
greater than what the model was?
Mr. Crane. An analysis? No, not in my part of the
Department of Energy are we scoring.
The Chairman. Are you scoring, basically looking at CBO
score versus what you are looking at now as far as the demand?
Mr. Crane. No.
The Chairman. Are you looking at that, Teri?
Ms. Donaldson. Sir, I don't have a project underway looking
at that exact issue.
The Chairman. Okay. We will get back to that.
At this time, I want to turn to Senator Barrasso.
Senator Barrasso. Thanks, Mr. Chairman.
Inspector General Donaldson, welcome back to the Committee.
Ms. Donaldson. Thank you.
Senator Barrasso. I appreciate you being here and your
testimony. It was excellent. You talked about how there are 12
categories of increased risk to taxpayer money and being used
properly. Now, you are in a position confirmed by the United
States Senate to be responsible in looking at protecting
taxpayer money. And what I heard you say is that in proportion
to the amount of money going out from the Department of Energy,
the ability that you have to look into that from the size of
your staff is the worst in government, and you have asked the
Secretary for more, and the Secretary has stonewalled or
blocked the opportunity to get that money. So there is a
concern as we are looking at taxpayer dollars.
So let me talk about this because you said there are 12
categories of increased risk. I am going to ask about this one.
So there is a private trade association. It was founded by Mr.
Shah, sitting next to you. And he is in charge of the
Department of Energy Loan Program. It is called Cleantech
Leaders Roundtable. He founded the organization. From what I
see, it appears to be a gatekeeper for companies seeking DOE
funding from him, and he founded the organization--not anymore,
but one is called Sunnova, which recently received a $3 billion
loan from the Department of Energy--$3 billion. One of the
board members of the group that he founded is also on the board
of Sunnova that got the $3 billion, same guy getting the money,
on his board that he founded. My concern is this could be the
next Solyndra. Solyndra was $500 million. This could be $3
billion of taxpayer money.
Now, Mr. Shah has reportedly been a guest speaker at at
least ten Cleantech-sponsored events, a group he founded. And
at these events, if you are a member of his group that he
founded, they get special access to him. And he is the guy that
is directing the loan program. So the Department of Energy,
even recently, co-hosted an event with Cleantech, this group
that he founded. Do you believe the Department of Energy's
safeguards to prevent conflicts of interest in its loaning
practices are satisfactory or do they need to be improved?
Ms. Donaldson. Thank you, Senator Barrasso.
I do have a project underway. It is still very new, looking
at conflicts of interest, particularly in the Loan Programs
Office. I will say--and there are quite a few facts that you
were chatting about there--Mr. Shah does have access to
outstanding ethics counsel at the Department of Energy, and I
am sure he is already working with her on some of those issues.
My job, and how I have structured this project, which will look
at conflicts, is not to see whether or not the minimum existing
conflicts laws and rules are being met, it is to provide a
broader universe of tools that they may want to strap on and
enact and follow because of some of the very special
circumstances surrounding this program.
So the whole idea of ethical protections is something that
you can--you start at the floor, right, the federal
requirements. You can certainly do more. So my staff is looking
at both----
Senator Barrasso. Good, appreciate it.
Ms. Donaldson [continuing]. Are they meeting the floor, and
making recommendations on what other things they may want to
consider to protect these funds?
Senator Barrasso. No, I appreciate that because we are
talking about $3 billion.
Ms. Donaldson. A lot of money.
Senator Barrasso. Six times larger than Solyndra, but
actually, there are hundreds of billions of dollars in play.
So Mr. Shah, you appear to be all-in on the Cleantech
Leaders Roundtable. Going to their meetings, special access to
members, that's the trade association that you founded. You
have spoken to at least ten or more private events hosted by
them. You have even given a loan to a company that shares a
board member, and that was for $3 billion, but what this
Climatetech executive is now saying is, it's hundreds of
billions, hundreds--dollar sign, dollar sign, dollar sign,
dollar sign, dollar sign. We love Jigar Shah, love you.
[Poster image with quote from Climatetech executive
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. They love you. Hundreds of billions of
dollars. I mean, I think conflict of interest, potential
conflict of interest, Jigar Shah just became one of the most
important players in energy--this is the new CEO of the company
that you founded--they get access to you. It is astonishing.
This is a social media post from your former trade
association's current executive director. It sounds like she
thinks she hit the lottery, and apparently she did. She is
openly touting Cleantech's access specifically to you, hundreds
of billions of taxpayer dollars, that you are the one that is
handing it out. I think it's a very bad look for you personally
and a very bad look for the Department of Energy.
Will you commit to refrain from associating with your
previous trade association for the rest of your tenure at the
Department of Energy?
Mr. Shah. Senator Barrasso, thank you for that very
important question. I think it's important to take a step back
and understand the role that I have at the Loan Programs
Office. The Secretary, when she was in her confirmation
hearing, suggested, truthfully, that the Loan Programs Office
was dormant. So my job has been to gain private-sector trust.
And so, I am all-in, for sure, on American innovators and
entrepreneurs. And I have spared no, you know, event or time or
conference to figure out how to promote the Loan Programs
Office. But because of your excellent oversight and the
oversight of the Inspector General, the Loan Programs Office
has been substantially improved since 2011 and 2012. We now
have a risk management group, a portfolio management group. And
so, I have no role to play, whatsoever, in choosing who gets a
loan. In fact, those decisions are made by federal staff. My
job is to get people to take the extraordinary step of spending
a lot of time and effort to participate in the Loan Programs
Office and ask us for a loan so that we can evaluate it.
Senator Barrasso. So Mr. Chairman, let me just reflect that
the witness just refused to commit to refrain from associating
with his previous trade organization. Hold that back up again.
He has refused, in front of this Committee, to commit to
refrain from associating with his previous organization that
talks about hundreds of billions of dollars from him. I asked
him a straightforward question--will you commit to refraining?
He refused to answer. So whether or not you found some nice
little loophole, this is Ethics 101. It's a bad look for you,
it's a bad look for the program, it's a bad look for the
Secretary of Energy, and it's a bad look for the Biden
Administration.
Thank you, Mr. Chairman.
The Chairman. We now have Senator Heinrich.
Senator Heinrich. Moving on from that little bit of
theater, Mr. Shah, let's start with why we need an LPO. Why
doesn't the private sector do this? And what is the value of
the Loan Programs Office?
Mr. Shah. Senator, thank you for your question. The Loan
Programs Office was originally established in the 2005 Energy
Act because what we realized was that the Department of Energy
was extraordinary and still is extraordinary at invention, but
that we have not been as extraordinary at getting those
technologies commercialized here and tied to the American
worker. Part of the reason for that is because our commercial
banking system really does not want to take any perceived or
actual risk in scaling up technology. And so the Loan Programs
Office sits to be able to evaluate these technologies and to
help commercialize them here. Our remit is only on American
soil. So we can only fund projects that are scaling up
technology here, and we have been active across the board, as
the Chairman suggested, in nuclear power, advanced fossil
projects, hydrogen, renewables, and many other sectors.
Senator Heinrich. So for either of you--for years, we saw
American manufacturing and capital flow out of the United
States, particularly to China, but to many different parts of
the world--Southeast Asia. And today, we are seeing, to some
degree, that pattern reversing. That is a policy win. How do we
protect the American taxpayer and our American intellectual
property while that occurs?
Mr. Crane. Well, Senator, thank you for the question and
the focus on manufacturing and it's still fairly early days,
but you are right, even the Wall Street Journal has talked
about the manufacturing renaissance in the United States, and
that's before the Department of Energy money is being deployed.
So that----
Senator Heinrich. Let's start there. What's the scale of
that? Since the Inflation Reduction Act was passed, how many
factory announcements have we seen? How many--how much private
capital?
Mr. Crane. I thought, you know, we can get you a more
accurate number, but the number is $100 billion or more.
Jigar, do you have----
Senator Heinrich. And growing by the day.
Mr. Crane. Yes, exactly. And that is also an indirect
impact of the Inflation Reduction Act, which has led to that
manufacturing in anticipation. But you ask how do we protect,
and this gets back to the vetting center and my colleague, the
Inspector General's comments. And I can just say, being more
involved with what we call the equity side to the house, the
financial assistance, the vetting center process has worked for
us. We are going through that. Most of the programs we have are
more sure technology. So it's more about Chinese ownership than
it is about proprietary technology, although we have that in
long-duration energy storage. And we work with the vetting
center and they go through all our projects. They access the
intelligence and counterintelligence end.
And so far, if you look at, you know, the recent selections
that we have announced, you know, I think the process is
working. There is always room for improvement.
Senator Heinrich. Sure.
Mr. Crane. We look forward to working with the Inspector
General, but----
Senator Heinrich. One way to measure----
Mr. Crane. Go ahead.
Senator Heinrich [continuing]. Whether things are working,
obviously, is return on investment. So Mr. Shah, what is the
track record of LPO generally and then more recently, if the
data allows, in terms of return on investment?
Mr. Shah. Yes, thank you so much for that question. The
Loan Programs Office measures its impact in a couple of ways,
right? We are not here to make a profit, right? We are here to
commercialize American technology. But the U.S. Congress has
allocated to us a credit subsidy, which is money that we can
use for a loan loss reserve. We have allocated roughly $5 for
loan loss reserve for a realized loss of roughly one dollar,
right? And so we have allocated a lot more for losses. And as
the Chairman suggested, the interest income that we have earned
has exceeded by four times any losses. And so there is a couple
ways of looking at that.
But the more important way of looking at it, in my opinion,
is that we provided a loan guarantee to the first five 100-
megawatt solar projects in the United States. We catalyzed over
a trillion dollars of investment into solar because of the
early support we provided when no bank would do that deal. The
same thing is true with our loan to Tesla on the automotive
side. I think that, you know, America's dominance in electric
vehicle technology really comes from our early bet on Tesla. I
do believe that the early investments we are making in this
particular round will also have that level of success over
time, and there will still be some losses, right?
Senator Heinrich. Right.
Mr. Shah. I mean, I think that the Congress----
Senator Heinrich. And we should understand that.
Mr. Shah. Absolutely.
The Chairman. Mr. Shah, you might want to clarify, because
I think the question was asked by Senator Barrasso. The
companies that you had previously been involved with that have
an exclusive to where a person has to have--there is a fee
being paid to come to those and you being to that, or if it was
a public event. So a public event is a public event. People
come. There are no requirements. There are no fees with that.
Do you want to explain that at all, because I know that was
quite contentious at the end there, how you feel about that?
Mr. Shah. Thank you, Chairman. You know, I attend a lot of
events. And you know, I am happy to distance myself from any
further dinners from the Cleantech Leaders Roundtable.
The Chairman. I think all we are saying is, like with the
Cleantech Leaders, if people have to pay to have access, that
is what they are talking about. If they are not paying to
access, as a public, I think you should be able to do whatever
you think is a benefit.
Mr. Shah. Chairman, the point I want to make here is that I
am trying to figure out what access they are paying for, since
I don't make any decisions on which loans we actually
underwrite or approve. Having access to me is like, you know, I
am more accessible than a ham sandwich, right? I go to like,
you know, conferences like RE+. I go to conferences like
CERAWeek. I go to lots of places, wherever American innovators
and entrepreneurs need to meet me so that they can be convinced
that this country wants them to onshore and re-shore their
technology here in this country, I am willing to talk to them.
But what I am concerned about is the insinuation that the
oversight that the Senate and the Congress has done, as well as
the Inspector General, has not been fully implemented. In fact,
it has.
And so there is no political influence on these loans.
These loans are being overseen by career federal staff.
The Chairman. Thank you. I just wanted to make sure to give
you an opportunity on that.
Now we are going to go to Senator Cassidy.
Senator Cassidy. Hello, gentlemen, thank you all.
Mr. Crane, there was a recent awarding of--and ladies, I'm
sorry. There was a recent awarding of the HALO Hubs, and
Louisiana was an applicant but did not receive. The Secretary
was kind enough to call me and tell me that, but that's just
the breaks, as I first took it, but since, I have become
concerned about the process. Since we are talking about the
integrity of the process, that's what I would like to explore.
I am told that of the merit reviewers of the Louisiana
application, several of them did not provide any comments or
ask any questions regarding the application. Frankly, that was
like, ``excellent,'' ``bad,'' ``needs to improve,'' like
nothing. So it's unclear to me that they actually reviewed it.
In fact, there is no evidence that they actually reviewed it.
What I am worried about is that the fix was in before we even
started.
So next, on August the third of this year, HALO Hub
leadership in the State of Louisiana had a phone call at DOE to
discuss the status of the program. This occurred as other
hydrogen hub applicants were being asked to interview with DOE
in relation to their applications. The HALO Hub in Louisiana,
Arkansas, and Oklahoma had not been contacted for an interview.
But DOE said two things, specifically--that the interviews were
to answer questions about gaps in the applications, and the
interviews did not represent a down-selection process. Is all
that correct?
Mr. Crane. Yes, the interviews did not----
Senator Cassidy. Okay. So how many----
Mr. Crane. But what was the question before? Was it a down
select? It was a two-part question. What was the----
Senator Cassidy. I was just setting context.
So how many hydrogen hubs that were not interviewed were
ultimately selected as an awardee?
Mr. Crane. None of the hydrogen hubs that were not
interviewed were----
Senator Cassidy. But the interviews were specifically said
not to be part of a down-selection process, but as it turns
out, if you were not interviewed, you were not ultimately
selected.
Mr. Crane. That's the way it turned out, but at the time of
the phone call, the people doing the interviews did not know
whether a hub would be selected that was not interviewed.
Senator Cassidy. I accept that perhaps, but the fact that
multiple reviewers looking at the HALO Hub from Louisiana,
Arkansas, and Oklahoma didn't make a comment or didn't ask a
question? When the Secretary called me, she mentioned she had
been told, when I asked why wasn't Louisiana selected, and our
three-state consortium, it said it was because Shell had pulled
out of the HALO Hub and that communities were not supportive.
It turns out, Shell did not pull out of the HALO Hub and that
Louisiana was never notified that there were communities not
supportive. Do you have any sense of why she was told those
were the reasons that we were not selected?
Mr. Crane. Well, Senator, first of all, I would say that,
to me, the main reason is that the competition for these hubs
was intense. We got----
Senator Cassidy. Well, let me go back to that.
Mr. Crane. It was a bit----
Senator Cassidy. What I am trying to understand is the
criteria by this.
Mr. Crane. Yes.
Senator Cassidy. Because frankly, I'm thinking the fix was
in.
Mr. Crane. Senator, I would respectfully suggest that no
fix went in----
Senator Cassidy. Let me go to the next point.
Mr. Crane. Okay.
Senator Cassidy. We were also told that there was an issue
that with the HALO Hub that there was no--that the existing
hydrogen pipeline in Louisiana was not open access. How many
states which were rewarded these hubs, how many of them
currently have a hydrogen pipeline?
Mr. Crane. I don't think there is any state.
Senator Cassidy. Texas, that's it.
Mr. Crane. I think the only hydrogen pipeline is the non-
open-access one between Louisiana and Texas.
Senator Cassidy. So I guess what I am concerned about is,
if we are being told that it's because there is not an open-
access pipeline, but like, of the other 15 states, besides
Texas, none of them had a hydrogen pipeline at all, that Shell
had not pulled out, and we were never told that the communities
objected, and that several reviewers did not comment or say
anything about the application, implying they never looked at
it. My gosh, why would I have a different impression than that
the fix was in?
Mr. Crane. Senator, I accept your concern at this point.
The part that I would particularly say is almost certainly
inaccurate is the part about the independent merit reviewers,
because all 28 applications were forensically reviewed by----
Senator Cassidy. But there were no comments or questions
written by them. This is according to the State of Louisiana,
which has reviewed this.
Mr. Crane. Well, I mean, the questions of clarifications--
there was not a uniform setting of questions or clarifications
to any of the 28. I mean, you know----
Senator Cassidy. So, so far, I haven't really found a
reason why the reviewer would find fault. The other thing that
has been clear, although this was not part of the legislation
that we passed--after announcing the hub competition, the
Department of Energy announced plans to use $1 billion of the
hub money to run a centralized DOE plant--so called demand-side
program--to stimulate hydrogen demand. Now, in the Louisiana-
Arkansas-Oklahoma application, which was unsuccessful, not
clear why because every reason we have been given so far does
not seem valid, and several of the reviewers did not comment
upon. The applicants had committed to taking 3,000 metric tons
of production of hydrogen a day and demand would match this
production by 2030. So that which DOE said they had to model
and create was part of the application and was a fait accompli,
if you will.
So again, when I look at why would this application not be
selected, I can't help but notice that 11 of the 15 or 16
states are kind of represented by Democratic senators,
including states that don't have a history of this sort of
production of hydrogen and other components, such as Louisiana
does, that don't have an existing infrastructure such as we.
And yet, somehow, they managed to get a billion-dollar project.
Tell me why I should have faith in this process.
Mr. Crane. I could go through the process to show that, you
know, the independent merit review, the federal panels, the
selection officers, are all career civil servants and they
evaluated many, many criteria. You mentioned some of the
criteria which, I think, were to the advantage of the Louisiana
hub. Also, because the bill, it was effectively an intra-
regional competition. So the Gulf Coast had multiple very, very
strong competitive----
Senator Cassidy. But there was only one that ended up
getting it and that was the one in Texas. And yet, you look at
other places without our ecosystem, without our infrastructure,
they did get it. That's why I'm kind of like, whoa, the place
with all the infrastructure got one and it is otherwise
scattered around a lot of states, disproportionately
represented by Democrats, and as Deion Sanders would say, Mr.
Crane, look at me. Yeah, they are career, but look at me. They
don't answer----
Mr. Crane. I'm looking at you, Senator.
Senator Cassidy. They don't answer to political leadership?
Of course they do. I am very concerned about this.
Let me ask in closing, because you have been indulgent
letting me go over.
Would the Department of Energy be willing to share,
completely, the deliberative process and the documents thereof
with my office so that we can review, as part of my function
with this oversight committee?
Mr. Crane. We would be happy to set a meeting with your
office to go through, in considerable detail, the selection
process----
Senator Cassidy. And to share with us those documents so we
can make our own assessment as well?
Mr. Crane. I would have to get back to you on that,
Senator, because----
Senator Cassidy. Otherwise, I have to file a FOIA, which
seems inappropriate for a Congressional oversight committee.
Mr. Crane. I thought that FOIA, I thought there was
commercially sensitive information--I am not an expert on
FOIA--but we are, I think we would be happy to work with your
office to set up a more detailed briefing, and if we start
there and if you are unsatisfied, we could take it from there.
Senator Cassidy. I appreciate that. I yield. Thank you for
your indulgence.
The Chairman. Thank you, Senator.
Senator Hirono.
Senator Hirono. Thank you, Mr. Chairman.
Secretary Crane, we have heard Ms. Donaldson recommending
that expanding funding for the DOE's Office of Inspector
General by rescinding some of the funds given by Congress for
carrying out the Infrastructure Investment Act and the
Inflation Reduction Act, including funding for programs under
your oversight, would be a good thing. Does DOE have the legal
authority to transfer funds to the Office of the Inspector
General?
Mr. Crane. Senator Hirono, I am not an expert in that. I do
know, as you are saying, that the Department, and I certainly
support this, that the Inspector General's Office needs more
funding. I think we have asked for 92 percent more funding for
the next fiscal year for the Inspector General's Office, which,
of course, we all support. The idea of can you reassign money,
I am new to government, I have no idea if you are allowed to do
that.
Senator Hirono. Okay, well, you know what? Frankly, I
believe that you in fact do not----
Mr. Crane. Okay.
Senator Hirono [continuing]. Have that authority. You
should check, okay? Because while you agree that there should
be more funds for the Inspector General under the programs that
I mentioned, under the acts that I mentioned, I don't think you
have that authority. So maybe we need to change the law or
something so that you can provide more funding. We should think
about that.
So one of the points, again, made by Ms. Donaldson, is that
the vetting process--and Secretary Crane, you mentioned that
the vetting center process has worked. Is this the three-person
center that Ms. Donaldson referred to?
Mr. Crane. I don't think three persons is the current
staffing of the----
Senator Hirono. What is the current staffing?
Mr. Crane. I am not, you know, I am not sure that that is,
I mean, given the sensitive nature of what the vetting center
does, I think it's more than double that in terms of the
immediate employees, but they also leverage these other
resources, like the intelligence and counterintelligence
office. Senator Hirono, what I would say is, at least in terms
of the financial assistance programs, the vetting center takes
as much time as they need to review all that they need to
review. So if you look at the $10 billion of awards that we
announced within the last week on transmission hydrogen, if it
had not been for the vetting center process, we would have been
announcing those awards at the beginning of September.
So they take their time. It's only when they are done and
they are comfortable that we move forward with selection.
Senator Hirono. Well, they have a big job to do, I take it,
because it is a vetting center that makes all kinds of
determinations relating to some $97 billion that the DOE got
under these two acts that I mentioned. So even a doubling, that
is six people. You can see that we have a concern about the
adequacy of the resources that the vetting center has, and I
think that it would behoove you to take a look at whether or
not they are adequately sourced.
Mr. Crane. Senator, it's a very good point. They are
staffing up. And just, the Inspector General's concerns, all of
our concerns about the $92 billion, we are all aligned on that.
What I am just here to assure you is, none of the awards that
we have announced in the last couple months have gone out
without being thoroughly vetted by----
Senator Hirono. I think it's very clear that we have
concerns about making sure that the funds that were
appropriated--historic funds--and I am not saying that we
shouldn't have done it. In fact, we are really behind the eight
ball in terms of climate change and the impact. So these bills,
these acts were a good thing. We just want to make sure that
these funds are going where they should.
So turning to wildfires, Secretary Crane, communities in
Maui are still recovering from the August wildfires. And one
thing is certain, wildfire is becoming an increasing threat in
communities all across Hawaii and in the West, particularly.
Various utilities, including in California and Oregon, have
taken steps in recent years to improve their equipment to
better monitor for and be resilient during wildfire events. And
these steps have come at significant cost. For communities with
a relatively small population and utility rate base, like those
in Hawaii and the rural West, what role do you see the Federal
Government playing in helping utilities become more prepared
for increasing wildfire risk?
Mr. Crane. Senator, it's so important to every American
that is exposed to that. And Hawaii did win one of the wildfire
resilience awards for Maui, that was announced after the
terrible fires there. The transmission awards that were just
announced yesterday included four other awards across the
western states for wildfire mitigation. And certainly, one of
the good things about the transmission program is, there is a
second tranche of funds that are going to be put to
solicitation within the next couple months. And certainly, we
are very happy with the wildfire mitigation we are doing in the
first round. We'd love to see more of it in the second round.
So----
Senator Hirono. So basically, the role of the Federal
Government is to provide resources--money to enable smaller
communities in rural areas, communities such as in our state,
to do the kind of mitigation that they need--that you are there
as a source of funds.
Mr. Crane. Yes, Senator, we are here to help.
Senator Hirono. Thank you. We will need more of it.
Thank you.
The Chairman. Thank you.
Senator Hawley.
Senator Hawley. Thank you, Mr. Chairman. Thanks to all the
witnesses for being here.
Mr. Shah, can I just follow up. I didn't understand your
answer to the Ranking Member or to the Chairman. Did you say--
so you do attend dinners with industry leaders where they pay
to see you speak? Was that a yes or a no? I didn't hear.
Mr. Shah. No, I attend many, many events, some of which I
am invited to speak at----
Senator Hawley. And they don't pay?
Mr. Shah. And many don't pay and some are, like paid
conferences and others, but one of the things----
Senator Hawley. Wait, I'm sorry, wait, wait. That was a yes
and a no. So let's just go back. Do you attend events where
people pay to see you speak?
Mr. Shah. I have attended where people pay to attend the
event.
Senator Hawley. Do you think that's a good idea?
Mr. Shah. I think it's important for us to meet potential
applicants, American innovators and entrepreneurs, who want to
scale up their technology.
Senator Hawley. Applicants for loan programs?
Mr. Shah. Applicants for DOE funding.
Senator Hawley. Wait a minute. Wait a minute--you think
it's a good idea to go to events where people are trying to get
federal money and they are paying to see you?
Mr. Shah. They are not paying to see me.
Senator Hawley. I thought you just said you spoke at events
where people paid.
Mr. Shah. Not to see me. I mean, I'm not that important.
[Laughter.]
Senator Hawley. Wow. You learn new things every day. You
are--what is your title? You are the Director of what?
Mr. Shah. Of the Loan Programs Office.
Senator Hawley. You are the Director of the loan programs
for the Federal Government, Department of Energy. People who
want to get loans from the government are paying to see you,
and you think that that's fine?
That's not a rhetorical question.
Mr. Shah. I think I have answered that I go to many
conferences and events. I have had hundreds of stakeholder
events. The goal is to get people----
Senator Hawley. You are going to events where people are
paying to see you, who want money from the government. You are
the Director of the loan program. Do you think that that's
okay? You don't see any conflict of interest with that?
Mr. Shah. I think, given the extraordinary amount of
improvements that we have made in our office, based on our work
with the Inspector General and the Herb Allison report, et
cetera, there is--I do not make a decision on whose
applications are accepted within the loan program.
Senator Hawley. But you don't think there is an appearance
of a conflict of interest that people are paying to get access
to you?
Mr. Shah. I think it would be a conflict of interest if
people are paying to get access to me, but I don't believe----
Senator Hawley. Isn't that what they are doing when you
speak at events people pay to get into? I mean, correct me if
I'm wrong, I mean, if they are not paying, that is fine, but I
thought you just said a second ago they are paying.
Mr. Shah. We do a lot of public events, and we are very
transparent as part of this Administration. Every time I get a
question which is hard to answer, we help update our blog post
and make sure that everyone knows what we are doing, but the
goal of the Loan Programs Office is to get as many people as
possible to think that they can actually commercialize their
technology----
Senator Hawley. Well, what I think they think is that they
can get access to you by paying to go to these dinners. I mean,
listen, it may not be an ethics violation. It should be, but
maybe it's not. I just suggest to you, I don't think it's a
good look. I don't think it's a good idea to go to paid dinners
where people are paying money to get access to you because, in
your own words, they want loans. They want loans, federal
dollars, taxpayer money. They are paying money to go get access
to you. I just, maybe that's really common. In fact, knowing
this government, it probably is really common. But if it is,
it's a bad idea. I just submit to you, I am kind of amazed by
this.
Ms. Donaldson, can I just ask you about another ethics
issue at the Department of Energy? I'm so glad you are here, by
the way. Thank you for being here and thank you for doing this
job. The Wall Street Journal published back in February a
report. I am just going to quote the headline. Here it is:
``Hundreds of Energy Department Officials Hold Stocks Related
to Agency's Work Despite Warnings.'' Have you been tracking
this? Have you seen these reports?
Ms. Donaldson. I have, Senator.
Senator Hawley. So that includes, sadly, the Secretary of
Energy, who testified right there, to this Committee, in
response to questions from me that she didn't own any
individual stocks. I asked her three times in April--do you own
individual stocks? Three times. She said, no, absolutely not,
absolutely not, absolutely not. Two months later she wrote the
Chairman and said, actually, she did. And she didn't divest of
them until May and then she did not tell us until a month
later. That's a big problem. And the fact that she misled this
Committee and did not tell us. The fact that we have all of
these Energy Department officials holding stocks related to the
agency's work. I mean, what is going on at DOE? Do you have
authority to look into this, Ms. Donaldson?
Ms. Donaldson. There is a mechanism set up in the law,
which----
The Chairman. Please use your microphone. Ms. Donaldson,
please, just speak into it if you would, then we can all hear
you.
Senator Hawley. Maybe just, yes, pull it a little closer.
Ms. Donaldson. So you can, in fact, hold stock and be an
employee of the government. You cannot participate in any
decisions that might impact the value of that stock. So there
are different rules that apply here and those can be driven by
Congress or they can be driven by regulation or policy. In that
particular situation, when you spoke about--your questions
about other DOE employees----
Senator Hawley. Right.
Ms. Donaldson [continuing]. They get notices reminding
them, basically, so if they own stock in Ford, they will get a
notice saying, don't forget, nothing having to do with Ford.
Senator Hawley. Yes.
Ms. Donaldson. So those notices don't carry with them any
kind of penalty. It is part of the process set up to make sure
they keep track of their own--what you would view to be a
conflict or potential conflict.
Senator Hawley. Okay. Well, my time is expired. Thank you
for your work, Ms. Donaldson. I am going to send you a letter
about this and hope that we might ask you to look into the--and
I know the Ranking Member has already asked you to look into
Secretary Granholm's testimony before this Committee. But I am
firmly of the view that we need to change the law here. Senior
executive branch officials should not be able to own individual
stock, nor should Members of Congress. We shouldn't be stock
trading, and nor should anybody who is sitting at this table.
And so, I just am distressed by--it just piles up. And I
will just say, this isn't a partisan issue. It happened in the
last Administration. It is members of both parties of Congress.
We shouldn't be doing it. I have got bipartisan legislation
that would end this, and I think we need to end this practice
once and for all. Thank you for being here.
The Chairman. Thank you, Senator. And I will say that I
think I am very supportive of that legislation.
Let me say this to you all to clarify. Of 535 Members of
Congress, I think that the majority, if not all of us, have
spoken at conferences where people had to pay a registration
fee to be there. They didn't have--I understand appearance-
wise, but you know, you have get your point across. I think the
thing that we were concerned about, sir, Mr. Shah, is the one
that you had definite ties to and if they had come back in. But
still yet, we all were going to conferences. I give you
CERAWeek. CERAWeek, that is a big, one--$1,000, $1,500,
Democrats, Republicans, we all go and speak there because we
think it's an access to that. And so, with that being said, I
know you might feel you are unfairly targeted here, but----
Senator Barrasso. But Mr. Chairman, I think there is a
difference between going to a meeting and speaking where people
pay a registration fee, but the group that we are talking about
is a group that he founded--that he founded. And you have to be
a member of the group to get special access to ten different
opportunities to go with him, special access after you are a
member, and they brag about it. They brag about it online.
Hundreds of billions of dollars. They love him. He's the co-
founder of the group. Sign up. Join the group and you get
special access. It's just wrong, Mr. Chairman.
The Chairman. Got you.
Anybody else want to say anything about that?
Senator Heinrich. I don't think it's any different than
going to CERAWeek. And we have all gone to conferences where
people have paid to be there. I think what we have seen here
is, after years and years of people complaining that government
is unresponsive to private industry, we finally have an
Administration who will meet anyone with any technology,
whether it's fossil or renewable or nuclear, and actually work
with them in a way that is friendly to the private sector. And
that is not something that I think we should be discouraging,
we should expect more of it.
Senator Barrasso. Mr. Chairman.
The Chairman. Senator Barrasso.
Senator Barrasso. I want to submit for the record an
article entitled ``Biden's Energy Loan Czar Founded a Trade
Association. Now It's Selling Access to Him--Jigar Shah's
Cleantech Leaders Roundtable regularly hosts events for
companies looking for federal loans,'' it says, ``exclusive''
and ``invitation only,'' and included discussion panels with
DOE officials on topics such as ``Show Me the Money.''
Mr. Chairman, this is absolutely wrong and it needs to
stop.
The Chairman. Do you wish to submit that for the record?
Senator Barrasso. I do.
The Chairman. Without objection.
[The article referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Senator Hickenlooper.
Senator Hickenlooper. I'm dying to weigh in on this
discussion, you know?
[Laughter.]
Senator Hickenlooper. Back when I was a geologist----
The Chairman. Here we go.
Senator Hickenlooper [continuing]. We would go to CERAWeek.
We would go to the American Association for Petroleum
Geologists, the Geological Society of America. They would
always have these special dinners where you would have to pay
to go to the dinner and you would be there and Republicans
would pay, Democrats would pay, and they would talk to--or just
people like me. Back in those days, I was not much involved in
politics, but you wanted to hear from the highest sources you
could what the landscape looked like. And I'm a big believer in
pretty much every opportunity to get more information out to
more people what we do better as a country.
Mr. Crane, let me start with you. Obviously,
electrification is key to this great transition, as we call it.
We are going to need a reliable and robust grid if we are going
to take full advantage of the renewable resources that we are
bringing online. Oftentimes, where we have renewable resources,
we don't have the needed transmission to get those resources to
where the demand is. We recently introduced our BIG WIRES Act,
that will hopefully make the grid more reliable. It will
connect that low-cost power to where the greatest demand is,
whether it's from electric vehicles or whatever. Has DOE taken
a close look, and maybe you could describe it a little bit, in
terms of interregional transmission connectivity?
Mr. Crane. Senator Hickenlooper, thank you for your
question. Thank you for your leadership in this area. From
Secretary Granholm on down, the focus on strengthening and
smartening up the transmission system is of the highest
priority within the Department of Energy. The particular
challenge of interregional transmission is first and foremost
on our mind. It is a big part of what the Transmission Office
is focused on. We are excited about some awards that are going
to be announced in the next few weeks as part of the
Transmission Facilitation Program, which was part of the
Bipartisan Infrastructure Law. And we look forward to your
legislation, and anything we can do to strengthen the
transmission system is good news for us.
Senator Hickenlooper. And this basically is a catalyst, and
accelerates the investments we are making in other aspects,
right, in the generation?
Mr. Crane. Precisely.
Senator Hickenlooper. Great, I appreciate that. And you
know, the other thing that, just finishing that last thought,
we all--Republican and Democratic Senators all come to you all
for these grants that are going out at breakneck speed. I think
you guys are doing a remarkable job. The Chair received a
hydrogen hub grant of significant size. Colorado did not. I
would argue that we are more than qualified. I can go down all
the lists, but that is--the key here is to make sure that we
have full access, which we all did. We provide the information.
You have professionals helping make these best decisions we
could possibly make. Who gets a loan? Who gets a grant? I think
that is the nuts and bolts of this is that these are complex
issues where we are doing the best we can. And the best
requires that we have access, as much as possible, to the
people that are going to utilize these grants or these loans.
Mr. Shah, let me ask you a question. Your job, your office
is responsible for seeking out and boosting the most promising
innovations that will help us on this great transition in
energy. Critical minerals--I always call them essential
minerals, but that's back--I am dating myself--when I got on my
master's in earth and environmental science. When we introduced
BIG WIRES, part of that really shone a bright light on--you
know, my geology background said that we had to dig deeper--pun
intended--into critical minerals, or essential minerals. How is
the DOE working to build our domestic capabilities on critical
minerals, particularly when it comes to processing and advanced
manufacturing?
Mr. Shah. Thank you, Senator, for that great question.
The Department of Energy has many different offices working
on critical minerals. The Advanced Manufacturing Office, the
Manufacturing Supply Chain Office, and then the Loan Programs
Office was allowed to invest into critical minerals through the
Advanced Technology Vehicle Manufacturing Program for minerals
that are related to EV batteries, and then out of Title 17 for
other critical minerals. We have worked in collaboration with
our partners at DOE, but also at DOD, where they have a Defense
Production Act mandate to do earlier-stage investigation. So, I
think what we found is, is that the ecosystem around critical
minerals really has to be built up. And so, for those folks who
are earlier stage, they are going to the Department of Defense.
We really focus on the folks who are at the end of the process
that are ready to start processing critical minerals.
And so, with that, we have issued a couple of conditional
commitments. One for a graphite processing facility in
Louisiana, where we are taking some of the highest quality
natural graphite away from China and redirecting it here to the
United States, as well as finding ways to get lithium out of
the ground in Nevada. We have also provided two loans to folks
who are using next-generation technologies on recycling
existing batteries and old batteries that are spent. One was
Redwood Materials in Nevada and the other one is Li-Cycle in
Rochester, New York. We have several billion dollars, about $7
billion of additional loan applications that have come in, and
we work very closely with them, including referring them to
other offices if they are too early for us.
Senator Hickenlooper. Great.
Well, thank you all for your public service, and I realize
these are tumultuous times around the field of energy, and I
have great respect for your willingness to keep working at this
despite all the tumultuous events.
Mr. Crane. Senator Hickenlooper, would you mind--your
previous comment where you didn't ask a question was about
Colorado's application in the hydrogen hub area and it's--I
should have made a point to Senator Cassidy, which I am now
making to you, which is, our goal with these regional hydrogen
hubs is for them to expand organically. And there were lots of
worthy projects. A winning project in Texas, which we would
like to see expand into Louisiana. A winning project,
essentially, in North Dakota, that we would like to see expand
into Colorado. I have already given that message directly to
your friend and mine, Mr. Frenzel of Xcel, that this is the
goal, is to create a national hydrogen economy as quickly as we
can.
Senator Hickenlooper. Right, a full-blown network. I
understand. And I was really just trying to needle the Chair a
little bit about his hydrogen hub that he is so proud of.
The Chairman. We are extremely proud, sir.
[Laughter.]
Senator Hickenlooper. Thank you. Appreciate it.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman, and we are kind
of happy that we qualified for the GRIP grant coming out of DOE
this week. That was good news for Alaska. Not quite the
hydrogen hub, we are still in the envy category there, and we
are continuing to work on that. We did get a communication that
we were being discouraged on that, but we will not be
discouraged because we have extraordinary opportunity, as I
think most of you know.
This first question, Mr. Shah, should be super-easy, and it
follows on Senator Hickenlooper talking about critical
minerals. You mentioned the graphite project there in
Louisiana. You have heard me, and the Secretary has heard me
comment that I think it's better if we can get the domestic
resource here. That is why we call it domestic resource. Let's
get it here. Let's not get it in Mozambique. I would just hope
that you can commit to this Committee that the LPO will
prioritize loan applicants that are developing domestic sources
and U.S.-based supply chains for our critical minerals. That
should be an easy one, I hope.
Mr. Shah. We absolutely believe that we should be onshoring
and reshoring our entire critical mineral supply chain and I
completely agree with you, Senator.
Senator Murkowski. Good, good.
Let me talk about a couple of our big projects, neither of
which are new to either one of you. I mentioned GRIP and our
grid modernization. That is really exciting, I think, for our
potential moving forward. Another one that we have been working
on for decades and decades is how we can monetize and move our
natural gas from the North Slope. It's big, and you know it's
big. But it also has extraordinary potential, not only for
Alaska's energy security, but the entire West Coast and our
partners and allies in Asia, who are very, very interested in
this. And during the negotiations of the Infrastructure Law, we
asked the Department, what is the language that we need to
allow the gas line to qualify for loan guarantee from the LPO.
And we got the necessary language. We reviewed it. We all
agreed that it worked. We included it into the Bipartisan
Infrastructure bill. It was signed into law. And I know we all
have different lawyers that can come up with different legal
arguments, but we are looking at the response now from DOE and
kind of saying it feels like we got the rug pulled out from
underneath us with regards to where the Department is coming
from in the authorities there.
So the question this morning, and to either one of you, is
whether or not you are aware of any authorities that either you
or the Secretary has to utilize already-appropriated dollars
for the purposes that were laid out in this Infrastructure Law.
And I am hoping that we are going to be able to resolve this to
make sure that we are meeting the intent under the laws there,
so any comments that you may have on this--we just met the
Governor yesterday on this and are trying to get some
clarification from the Department.
Mr. Shah. Thank you, Senator.
As you know, I have regularly met with the team that is
working on developing that project, and I think we also
continue to provide technical assistance to your staff and the
rest of the delegation. You know, the goal here is to have
American innovators and entrepreneurs be able to build their
projects here in the United States. And so I think we are fully
aligned with your intent here around making sure these big
projects come to fruition.
Senator Murkowski. Well, you can understand the
frustration, though, when we worked with the Department to get
the assistance on the language. We all thought that we were
pretty clear here. And now the law is in place and we have
differing interpretations. I am hopeful that we are going to
see, in this next budget, that the Secretary includes whatever
resources are necessary to establish this program in the
office, if you believe it goes otherwise, but we continue to be
pushing on this. And again, we feel pretty strongly that the
Secretary has the authorities to move forward with this.
Let me move forward to another big project. And again, this
is one where you have great familiarity. This is one of my
favorite geothermal projects in Alaska, trying to develop the
Makushin Project outside of Unalaska in the Aleutian chain. The
Chairman is very familiar with it as well. But it's exciting
because what this would do is decarbonize one of the busiest
fishing ports by volume in the world, not just in the United
States, but in the world. And Makushin has been doing their due
diligence. They've been working with the Q Tribe there in
Unalaska for years. Trident Seafoods, you know, significant
seafood producers looking to decarbonize their own processes.
They have developed plans to move their processing facility to
Unalaska to capitalize on this renewable power from Makushin.
So together, it's extraordinary what can happen. It is
transformative what can happen. And it's kind of one of these
chicken and egg type things right now. And we have significant
large-scale infrastructure projects that are contingent on
completion of some of these energy innovations. So what we are
trying to do, as you all know, is reduce emissions. We are all
in agreement here. This works for everybody. And so we need to
be able to be working together to get to ``yes'' rather than
continuing to find ways that if you have not met this
chronological gate here, we can't move forward. There is so
much riding on this, and I need to emphasize and re-emphasize
the significance of what this can mean, not just for this
state, but for the global seafood industry. But again, we are
trying to stand on our own here and we just need a little bit
of help.
So if either one of you have any great updates that you can
share with me, that would be very welcome.
Mr. Shah. Senator, as you know, I am not allowed to share
any details under the Trade Secrets Act from folks who have
applied to the Loan Programs Office, but what I will say is
that we have had a great partnership with your office and the
State of Alaska. As you know, your state energy financing
institution provision in the bill has been fully implemented.
We have onboarded AIDEA as----
Senator Murkowski. And they are very excited about that.
Mr. Shah. As well as we are looking at several other
institutions in Alaska to do that. We have also hired, I think
you know, Joe Jacobson, in Alaska, to really focus on making
sure we are providing the customer service that we need to all
the extraordinary projects that we are seeing out of your
state.
Senator Murkowski. Mr. Chairman, I have a whole bunch of
other questions I will submit for the record, but I look
forward to follow-up with both you, Mr. Crane and Mr. Shah, and
to our IG, thank you for your work, appreciate it.
The Chairman. Thank you.
Senator Padilla.
Senator Padilla. Thank you, Mr. Chair.
You know, earlier in her comments, Senator Murkowski
mentioned the GRIP program, and I know Senator Hirono asked
questions that I want to build on, but I want to remind us all
that part of the Bipartisan Infrastructure Law allows for the
Grid Deployment Office to administer the $10.5 billion Grid
Resiliency Innovation Partnership Program to enhance grid
flexibility and resiliency. Now, resiliency of the grid to
extreme weather events has been a major priority of mine, with
California being sort of an exhibit A on the real-time impacts
of the climate crisis. So I was thrilled to hear yesterday's
announcement of $3.46 billion under the GRIP program for 58
projects across 44 states, including multiple projects in
California.
Now, as with any award, there is good news for those who
received an award and questions by those who had applied but
were unsuccessful, at least in this particular round. A
question for Mr. Crane--how are we ensuring that there is a
wide array of selected applicants, particularly the types of
entities owning and operating the infrastructure they are
trying to enhance?
Mr. Crane. Thank you, Senator, for the question. Welcome to
the Committee and congratulations on the awards that California
received yesterday. I actually got to visit with the Mayor of
Los Angeles. She came through our office yesterday. And so we
were very excited about that. I don't know--the expression
``the proof is in the pudding''--I think the 58 awards for the
grid were in 40 states. And the good news, you mentioned the
$10.5 billion. Only $3.5 billion is going out. So there will be
a second round of awards. And as I mentioned a little earlier,
we are very keen to see more wildfire mitigation. And one of
the things we are doing on all the follow-on FOAs is doing a
gap analysis, so that as we put out the second FOA, we can sort
of guide applicants from across the country to what we felt was
left undone by the first.
And so, we have webinars, you know, we put it right into
the FOA language, and we are happy to have direct
conversations, if you would like.
Senator Padilla. Wonderful.
And just confirm for me that that would include not just
new applicants, but applicants that were unsuccessful this
round getting some sort of feedback and guidance on how to have
a higher quality application, maybe, next go-round, and be more
competitive.
Mr. Crane. We definitely are willing to give feedback to
applicants as much as we can, you know, it's just some of these
processes are ten times oversubscribed. So sometimes it can--we
know there is a lot of frustration there. We are trying to work
through that, Senator, but we will do our best to provide any
direct feedback on individual unsuccessful applications that we
can.
Senator Padilla. Okay.
Now, another element of the Bipartisan Infrastructure Law
was the creation of the Joint Office of Energy and
Transportation in our efforts to help deploy zero-emission
vehicles and expand related infrastructure. It seems that to
date the joint office is focused almost exclusively on light-
duty vehicles, despite the fact that it is heavy-duty vehicles
that disproportionately contribute to the adverse air quality
in communities where there are concentrations of goods-movement
facilities and infrastructure. So one of the reasons I am glad
to be part of this Committee now is to help raise this issue,
and anybody who has monitored hearings in the Environment and
Public Works Committee, where I am a member, knows that I have
repeatedly asked about the impacts to California's air quality,
particularly to those areas with significant goods-movement
infrastructure and the need to transition to zero-emission
heavy-duty vehicles and build out that corresponding
infrastructure.
So Mr. Crane, once again, how could the Joint Office expand
its focus to also prioritize zero-emission medium- and heavy-
duty infrastructure as part of its core mission?
Mr. Crane. Thank you, Senator, and thank you for your focus
on this area. I spoke to Gabe, who runs the Joint Office,
specifically about this point a few months ago and he confirmed
what you said, that most of their programs were on light-duty
vehicles. We think now that we have the selections out there,
particularly on hydrogen, and of course, as you know, there is
a question of where do battery vehicles stop and hydrogen
begins? We have the California hub, for which a key part of its
success was the possibility of creating hydrogen-powered
vehicles to do drayage out of the Port of Los Angeles and Long
Beach. There is also the Pacific Northwest hub. We would love
to see the western states become--for Class 7, Class 8
vehicles--a hydrogen-powered corridor, you know, both for
decarbonizing and for local air quality purposes.
So we would love to work with you and Senator Cortez Masto
to do that in your region.
Senator Padilla. Thank you.
And I, too, will be submitting some additional questions
for the record after today's hearing, but just to end on this
note, I look forward to working with you to ensure that
eligible utilities, particularly those serving areas around
high-priority ports, industrial zones, and freight corridors
are submitting the high-quality, high-need applications. And we
also want to look at leveraging funding across programs and
across agencies to get to maximum benefit.
So thank you, Mr. Chair.
The Chairman. Thank you, Senator.
Senator Cortez Masto.
Senator Cortez Masto. Thank you, Mr. Chair.
So let me follow up because I, too, obviously, in the State
of Nevada, as you well know, Under Secretary, we talked about
this. We applied for the Southwest Hydrogen Innovation Network,
and I get it, there is only so much money to go around at any
one point in time. I hear from all my colleagues. Some of us
are disappointed. Some of us are happy. I guess that is a good
thing because you are not pleasing everyone, right, at the same
time you are hearing from everyone. But the goal here, I think,
for many of us, and I am open to this and I appreciate your
comments about some sort of a broader coalition in the regions
when it comes to some of the renewable energy, particularly
around the hydrogen innovation, as you well know. We have Air
Liquide in Nevada. We have partnered in Nevada with Arizona. I
think there is an opportunity for us to explore this even
further. So thank you for your comments.
I am going to jump to something off of hydrogen right now,
which is the battery grant programs. Nevada is leading the
nation in battery manufacturing and recycling. We have the
capacity to support the entire supply chain in my home state.
For example, Nevada has enough lithium to supply the world for
85 years--85 years, and in the last years alone, we have seen
the clean transportation battery industry create 7,400 new jobs
in Nevada and deliver $13 billion of investment. That is why I
call Nevada--it's an innovation state. I am very proud of it. I
have worked to lead the efforts to capitalize on this clean
energy revolution through the Bipartisan Infrastructure Law.
And now, companies in my state, like American Battery
Technology, Redwood Materials, and others are receiving vital
investments from the Department of Energy. And so, thank you.
Under Secretary Crane, let me just say, would you agree
that these facts and the recent DOE investments in Nevada show
the vital role that we can play in addressing our country's
supply chain needs?
Mr. Crane. Yes, I would agree that Nevada is a critical
part of the critical mineral supply for batteries, which, of
course, are essential to the electric vehicle revolution. And
as you know, you have the two awards from the first battery
solicitation. There is a second battery solicitation--or supply
chain solicitation that will be out shortly and we are looking
to even do more across the battery supply chain.
Senator Cortez Masto. And we will be paying close
attention.
Would you also agree that ensuring these investments are
happening throughout the country, and not just in some of the
traditional manufacturing regions of the U.S., actually
strengthens our economy and our national security?
Mr. Crane. Absolutely, and I believe when it's all said and
done, we will have Bipartisan Infrastructure Law investments in
every state.
Senator Cortez Masto. Thank you.
I only have about two minutes left, and a number of
questions for everyone, but I am going to focus, Mr. Shah, on
the Tribal Energy Loan Guarantee. As you are aware, I worked
with my colleagues last Congress to provide a crucial fix to
the Tribal Energy Loan Guarantee Program. Specifically, the
Inflation Reduction Act allows for the Department to issue
loans to tribes and tribal organizations through the Federal
Financing Bank. Now, you touched on this in your written
testimony. One, can you build on that and outline the ways that
the IRA fix provided those necessary resources and structure to
assist tribes and get energy projects up and running? And then,
two, has DOE LPO seen an increase in interested applicants
since the enactment?
Mr. Shah. Thank you for your question, Senator.
It is absolutely true that when I came into office the
Tribal Energy Financing Program was not well-structured and the
feedback that we got from the tribes was that it was not really
meeting its needs. We have spent a lot of time with the tribes
to make sure that we could reposition the program in a way that
would actually meet their needs. For instance, we had very high
fees to access the program. We had a lot of complications in
the way in which it was structured. Those have largely been
simplified. And then, as you suggested, the access to the
Federal Financing Bank was really the key, right? Before that
was passed, a tribe would have to work through a local bank,
many of whom, you know, wanted them to waive their sovereign
rights, et cetera. And we could provide only a guarantee.
Today, we have the ability to work with the tribes in the way
in which they wished to be worked with. And it has resulted in
many applications coming in.
So we have over a billion dollars of applications today
that we are evaluating. We hope that the first one will be out
the door here soon, but it requires a couple of additional due
diligence points to be completed. But we are very excited about
making sure that the tribes actually have that ability to
realize all of the energy projects that they really want to
participate in.
Senator Cortez Masto. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
I have one, just one question for the second round, real
quick, and Mr. Crane it is to you.
In order for the hydrogen hub in West Virginia--we will use
that because it is a big transitional area with a lot of fossil
and we are looking at how can we mitigate a lot of that to the
point where we do not threaten the fossil that we need today by
being able to produce the energy that we are going to need in
the future. So with that, the Administration needs to provide
investment certainty to hydrogen producers. The producers of
hydrogen have been working with Argonne National Lab, I think
you know, for nearly a year, to ensure the GREET model. I don't
know if you have ever heard of the GREET model, but the GREET
model is Greenhouse gases, Regulated Emissions, and Energy use
in Technologies. That is the GREET model.
So Argonne National Lab has been doing that model, and it
follows the science, not the politics, but the science for
different types of feedstocks used to produce hydrogen,
including coal-mined methane, which is very harmful, as far as
the emission and vetting. So any way we can get that out of the
atmosphere soon would be great. However, I have been informed
that the Department of Energy has delayed the release of the
updated GREET model to certify clean hydrogen.
So Mr. Crane, I guess what we are asking is, can you assure
that they will stay with the science of the Argonne Lab for the
GREET model, and it will follow that science to not
discriminate against different feedstocks based on the
Administration's, maybe political preferences, and when do you
think the Argonne National Laboratory will have the GREET model
for the hydrogen credit released?
Mr. Crane. Well, Senator, thank you for the question. Thank
you, actually, for raising my own awareness about the
importance of the GREET model, which, as you know, as you just
alluded to, has historically been used for national lab
purposes and now is part of informing tax policy in the United
States. And the direct answer to your question is, I will
assure you that the GREET model won't be modified for any
political purposes.
The Chairman. That's good.
Mr. Crane. It won't be prejudiced against for pathways, but
coal-bed methane, as you mentioned, also renewable natural gas,
is a very important part of that effort, and we, thanks to your
question, we have an internal review process going on next week
just to find out where the state of play is across the agency,
so----
The Chairman. Great. I misled you. I have one more.
[Laughter.]
The Chairman. This is to Mr. Shah and Mr. Crane.
Do you all agree that the grants and loans under your
office are capped by the IRA and the Bipartisan Infrastructure
Law? Are they capped?
Mr. Shah. Yes, I mean, the way that the----
The Chairman. You know what you have to work with, right?
You are capped out at that.
Mr. Shah. Yes, we have a specific amount of loan authority
and a specific amount of credit subsidy.
The Chairman. Okay.
Mr. Crane. And on the financial assistance side,
absolutely, and if we ever looked like we were committing more
money than you had given us, OMB would be on us like a ton of
bricks.
The Chairman. Well, I know some of the testimony today
sounded like we are just throwing caution to the wind, just
kind of throwing the money out there.
Mr. Crane. No.
The Chairman. And also, inflation. Inflation, I will say,
came down from nine percent to three percent a year after
Inflation Reduction Act took effect. So I have my challenges
with the Administration. I think you all know it. But on the
whole, we are producing more energy than ever. That is a fact.
And we are producing more wind and solar. And we are
investing--we are producing the energy we need today and we are
investing in the energy we want tomorrow. But we are not going
to get rid of what you need today until we have the ability to
replace it with basic dispatchable power that gives us 24/7.
That is what we are working toward. And we have to get
permitting advanced and we are working very diligently on that
and hopefully we will have something to offer to the Committee
very shortly.
Senator. Okay.
Senator Cortez Masto. I do want to add to the conversation.
I appreciate, Mr. Chairman, your comments, and this idea that,
at the end of the day for our renewable energy portfolio, it is
very diverse, but one thing we keep forgetting, and I heard it
right today, I think, for the first time, other than my
advocacy for it, is from the Senator from Alaska, is
geothermal--right? Along with the investment tax credits we did
for solar, we also did really incentivize geothermal, which is
a key energy producer for us that is clean.
So Under Secretary, can you talk a little bit about what
DOE is doing with respect to promoting geothermal energy as
well?
Mr. Crane. Well, the other side of the DOE is doing a lot
on geothermal on the R&D side within the Infrastructure Under
Secretary. We do not have a specific bucket of money for
geothermal the way we have for advanced nuclear or hydrogen.
But we do have programs like what we call the ERA, the rural
and remote, the billion dollars there where we would welcome
geothermal proposals so that we could help advance, because we
share, and the Secretary very much shares the idea that
geothermal should be a building block of American energy
security.
Senator Cortez Masto. Thank you.
The Chairman. Senator Heinrich, do you have any--Senator
Heinrich, you are okay?
Let me just thank all of you. I know it has been a little
long, and we enjoyed it, but I think it has been very
informational and I think you get a little flavor of how, first
of all, we are all very, very committed to energy that our
country needs and how we can lead the world. And I think we
have a chance of doing that. We want to hold ourselves
accountable, and Ms. Donaldson, we think you will do that and
we want to make sure you have the resources to do that. We want
to make sure that we are able to get the new technology that we
need and also be able to fulfill our commitment to the climate
that we all have a responsibility for, but also provide the
energy the country needs. I think it's kind of an all win-win
situation if we work together.
So with that, members are going to have until the close of
business tomorrow to submit additional questions for the
record.
And with that, I thank you. The meeting is adjourned.
[Whereupon, at 11:58 a.m., the Committee was adjourned.]
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