The Department of Energy's Loan Office -- and its over $100 billion in available loan capacity -- is looking to place big bets in nuclear and fusion energy, hydrogen, carbon capture, storage, and the sustainable aviation fuel technologies of tomorrow.
According to the Director of the Department of Energy’s Loan Office, Jigar Shah, provisions in the Inflation Reduction Act are boosting the office’s reach, and, in turn, driving the office to invest heavily in sectors beyond renewables like solar and wind.
In addition to adding $100 billion in loan authority to the office’s existing programs, and a new program called the Energy Infrastructure Reinvestment Program to retool, repower, repurpose, or replace energy infrastructure, the office is seeing an increase in pre-consultation applications for loans.
At present, the office has 96 active applications, totaling requests of $92.6 billion, and $7 billion in requests a month.
When the average loan request the office sees is upwards of a billion dollars, getting a loan granted can take up to four months. And considering that the IRA passed almost three months ago, the office is just beginning to feel its effects.
Speaking at the Washington Post Live’s series on the role of technology in saving our planet, Shah joined the Chair of the California Air and Resources Board, Liane Randolph, on a recent episode to discuss innovation.
In terms of the applications the office is receiving, Shah emphasized the minor role the office plays in mature technologies. Instead, they focus on the tech that will reduce emissions after 2050.
“We have a lot less applications now for solar and wind,” Shah said.
While there’s significant innovation in solar and wind such as applications for advanced solar tower design and racking solutions for PV resilience amidst hurricanes, most innovation that passes the office’s threshold for next-generation technology lies in advanced sectors like nuclear, sustainable aviation fuels, carbon sequestration and storage, and hydrogen.
Instead of “moonshot” technologies, Shah refers to these next-gen innovations as “Earthshots.”
The Earthshots aren’t quite there yet but those that have the most promise are technologies already proven like geothermal, long-duration energy storage, and hydrogen.
The problem is that they are expensive. As opposed to research and development, getting them across the “bridge of bankability” will hinge on deployment.
That’s where the Loan Office comes in.
“It will require roughly $100 billion of private sector involvement for every single sector,” the director said, likely traversing across at least 20 sectors. “The good news is that that $2 trillion exists.”
People have made those commitments at events like the United Nation’s International Climate Conference, Shah said. The question remains on how to coordinate with capital providers in derisking those sectors.
Despite the debate over the feasibility of carbon capture to make notable dents in our emissions, the director says it's important for people to recognize the plethora of technologies we need to reach national decarbonization goals, referencing the dual goals of 100% clean energy by 2035 and net-zero emissions no later than 2050.
“Carbon sequestration and storage technologies are part of that.” The administration’s climate plan emphasizes that a gigaton or more of CO2 must be sequestered annually starting in 2050. “Those technologies have to be ready, mature, at scale, and fully market-accepted by the private sector by that time. We have a critical role to play there.”