Impact of Eliminating the Office for Clean Energy Showcases
The Office of Clean Energy Demonstrations (OCED), a key player in funding first-of-their-kind projects in clean energy technology, could be shut down as early as next week. Reports of extensive cuts to OCED emerged several weeks ago, and if the plans come to fruition, it could potentially hinder America's competitiveness in large new industries like climate tech.
Established in 2021 during the first Trump Administration and authorized by the Energy Act of 2020, OCED has been instrumental in providing funding for projects such as the Direct Air Capture Hubs, Clean Hydrogen Hubs, and the Advanced Reactor Demonstration Program. These initiatives are years in the making and play a crucial role in de-risking such projects for private investors.
OCED's unique role in facilitating public-private partnerships, a practice less common in the U.S., has been a significant factor in its success. The office has built a new muscle for U.S. project development, providing a much-needed boost to the clean energy sector.
The President's budget request is being used to ask Congress to shut down OCED and realign appropriations. If the office is indeed closed, most, if not all, of its staff is expected to be cut. This move could potentially destroy the government's capacity to run such programs, according to Jigar Shah, who led the Loan Programs Office under the Biden administration.
Shah emphasised the importance of OCED in helping American companies succeed in tough sectors like steel, chemicals, and cement. He also highlighted the bipartisan support for OCED, with politicians like Joe Manchin and Lisa Murkowski having worked on its development for years.
Andrew Beebe, managing director at Obvious Ventures, stated that having the government involved in getting technologies into their respective markets is an "easy win". He expressed concerns that not everyone seems as committed to competitiveness as those who put these programs in place.
While other mechanisms may eventually step up to fill the gap left by OCED, their effectiveness is uncertain. The potential closure of OCED could be counterintuitive to the administration's stated goals of maintaining and increasing U.S. competitiveness in industries like climate tech. Changes to projects in the U.S., especially in a public-private partnership model, can be challenging, time-consuming, and potentially project-sinking.
As the potential closure of OCED looms, stakeholders in the clean energy sector are calling for a reconsideration of this decision. The loss of OCED could have far-reaching implications for the future of clean energy technology in the United States.
