Agencies and advocates warn the move could slow climate tech progress and undermine industrial innovation

The U.S. Department of Energy (DOE) announced on Friday it has canceled $3.7 billion in awards originally intended to support carbon capture, decarbonization, and clean energy demonstration projects across the country. The abrupt decision affects major energy firms including Calpine, PPL Corp., Ørsted, and Exxon Mobil Corp., among others.

The canceled funding originated from the DOE’s Office of Clean Energy Demonstrations (OCED), which was created in 2021 to administer roughly $27 billion in project support made available through the bipartisan Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). The agency said the cancellations followed a financial and strategic review aimed at ensuring the funded projects were both viable and aligned with national energy priorities.

“After a thorough and individualized financial review of each award, the DOE found that these projects failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return on investment of taxpayer dollars,” the department stated in a written explanation.

Among the largest awards revoked were two grants totaling $540 million for carbon capture and storage (CCS) projects proposed by Calpine Corp. One project was located at the company’s 550-megawatt natural gas-fired Sutter power plant in Yuba City, California, and the other at its 810-megawatt Baytown plant in Baytown, Texas.

These projects were intended to capture carbon dioxide emissions from fossil fuel power generation and permanently sequester them underground. Calpine’s efforts were part of a larger nationwide strategy to deploy CCS technologies across the electric power and heavy industry sectors.

The DOE confirmed that the majority of the canceled projects — 16 out of 24 — were originally awarded during the lame-duck period between former President Donald Trump’s election loss in November 2020 and the inauguration of President Joe Biden on January 20, 2021.

The department said it is currently reevaluating a broader set of 179 awards that collectively total more than $15 billion in federal financial assistance. This review is part of a phased process introduced earlier this month.

“DOE is prioritizing large-scale commercial projects that require more detailed information from the awardees for the initial phase of this review, but this process may extend to other DOE program offices as the reviews progress,” the department said.

The decision has sparked sharp criticism from clean energy advocates, climate-focused organizations, and energy industry stakeholders who argue the cancellations could jeopardize the future of carbon management innovation in the United States.

Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, called the DOE’s move “shortsighted.” He said, “Locking domestic plants into outdated technology is not a recipe for future competitiveness or bringing manufacturing jobs back to American communities.”

Jessie Stolark, executive director of the Carbon Capture Coalition, also expressed concern about the broader implications. “The award cancellations are a major step backward in the nationwide deployment of carbon management technologies,” Stolark said. “Ensuring projects funded by the bipartisan Infrastructure Investment and Jobs Act move forward toward commercialization are necessary to demonstrate the technology across fossil fuel power generation and key industrial sectors, including natural gas-fired power generation, cement, and basic chemicals.”

The Sierra Club’s Iliana Paul, deputy director for industrial transformation, argued that the decision could undercut momentum toward both emissions reduction and economic revitalization. “American workers, fenceline communities, and forward-thinking companies have had the rug pulled out from under them,” Paul said. “DOE’s decision is a blow to American competitiveness, new jobs and cleaner air.”

While the DOE has said it remains committed to supporting clean energy technology demonstrations, it has emphasized a need for “cost-effectiveness, public benefit, and long-term impact” in how taxpayer dollars are spent.

A full chart of the canceled awards, provided by the Department of Energy, was made public alongside the announcement. It shows that affected projects spanned a range of technologies and locations, from carbon capture systems on gas and chemical plants to emerging decarbonization methods in the industrial sector.

As the DOE continues its review of pending and past awards, stakeholders in both the public and private sectors will be watching closely to see how federal funding for climate solutions evolves — and which projects will move forward to shape the next generation of American clean energy.

Originally reported by Ethan Howland in Construction Dive.