KEY POINTS
- Watchdog calls for a halt to U.S. energy loans over conflict concerns.
- DOE defends its practices, says loan processes comply with regulations.
- Final report on the investigation is expected in the coming months.
The U.S. Department of Energy’s (DOE) inspector general has called for an immediate halt to new loans for green energy projects. This recommendation follows concerns that contractors responsible for vetting loan applications may have undisclosed conflicts of interest.
The watchdog’s interim report, released Tuesday, urges the DOE’s Loan Programs Office (LPO) to stop issuing loans until it can verify that contracting officers and their representatives are complying with conflict of interest regulations.
The LPO oversees more than $385 billion in low-interest loans for clean energy initiatives like battery storage, nuclear energy, and electric vehicles. It has roughly $20 billion in loan capacity left to issue before President Joe Biden leaves office on January 20, 2025.
According to Reuters, the inspector general, Teri Donaldson, stated that the DOE must ensure all contractual obligations related to conflicts of interest are being enforced. Donaldson, previously general counsel for the U.S. Senate Environment Committee, was appointed to the watchdog role in 2018 by former President Donald Trump.
DOE defends its processes, disputes watchdog’s claims
The DOE pushed back against the inspector general’s findings, calling the interim report inaccurate. A DOE spokesperson stated, “The Inspector General fundamentally misunderstands the implementation of contracting in LPO. We stand confident in knowing LPO is in full compliance with the Department of Energy’s conflicts of interest regulations.”
Jigar Shah, head of the Loan Programs Office, echoed this position, noting that despite an extensive review of over 100 contract files, no organizational conflicts of interest had been identified. Shah emphasized that the LPO takes potential conflicts of interest very seriously.
“The Inspector General has not identified any organizational conflicts of interest,” Shah said. He affirmed that the DOE would continue its work as mandated by Congress.
The report comes as the LPO recently issued a record $15 billion conditional loan to PG&E, a California-based electric utility company. The funding is part of broader efforts to support green energy development and increase the United States’ energy resilience.
Political backdrop adds scrutiny to the watchdog’s findings
The LPO’s handling of loans has faced political scrutiny in the past. Critics, including some conservative lawmakers, have accused the office of favoritism and inadequate oversight. The watchdog’s interim report reinforces some of these concerns, but DOE officials insist the process is transparent and compliant with federal regulations.
The inspector general’s report comes at a time when federal agencies are under pressure to demonstrate accountability in how they allocate green energy funds. The DOE has been a key player in advancing President Biden’s clean energy agenda, supporting projects in clean transportation, renewable energy, and advanced nuclear technology.
Despite the watchdog’s recommendations, the DOE maintains it will “continue moving forward in its work as Congress has instructed.” This includes ongoing support for critical green energy projects aimed at reducing U.S. dependence on fossil fuels and boosting domestic production of clean energy technologies.
The full report from the inspector general is expected in the coming months, with stakeholders on both sides of the debate closely monitoring the outcome.
