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Department of Energy Loan Guarantee Program Update: New Energy Dominance Financing Mechanism
Friday, July 18, 2025

On July 4, 2025, the One Big Beautiful Bill Act (H.R.1) (the “OBBB”) was signed into law by President Trump. This comprehensive budget reconciliation bill includes provisions related to federal spending, tax policy, healthcare, border security, energy and more.

Notably, the OBBB amends Section 1706 of the Energy Policy Act to establish a new financing program supporting Energy Dominance Financing (“EDF”). Originally introduced in the Inflation Reduction Act of 2022 (the “IRA”), Section 1706 previously granted authority to the US Department of Energy Loan Programs Office (“LPO”) to administer a loan guarantee program in support of energy infrastructure reinvestment financing (“EIR”), which we previously described in further detail here. With the passage of the OBBB, the EIR program has been replaced with the EDF. Any amounts previously appropriated under the IRA for LPO to carry out activities under the EIR program and not obligated prior to the enactment of the OBBB are rescinded.

Under the new EDF authority, LPO may guarantee loans that:

  1. retool, repower, repurpose or replace energy infrastructure that has ceased operations;
  2. enable operating energy infrastructure to increase capacity or output; or
  3. support or enable the provision of known or forecastable electric supply at time intervals necessary to maintain or enhance grid reliability or other system adequacy needs.

The OBBB also redefines the term “energy infrastructure” as used in Section 1706 to mean “a facility, and associated equipment, used for enabling the identification, leasing, development, production, processing, transportation, transmission, refining, and generation needed for energy and critical minerals.” OBBB Section 50403(a).

Among the most notable changes between EDF and EIR is that Section 1706 no longer expressly supports the financing of projects that “enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases.” IRA Section 50144(c).  Although funded projects may accomplish these objectives in fact, for purposes of eligibility under EDF, such projects must instead satisfy one of the three statutory eligibility categories. 

The EDF manifests certain policy goals that have been expressed by the Trump Administration. The OBBB adds a third EDF eligibility category for projects that support grid reliability or other system adequacy needs. This third category is likely intended to more clearly enable financings of non-intermittent and baseload power resources for which the Administration has voiced its support, such as advanced nuclear (see the Deploying Advanced Nuclear Reactor Technologies for National Security Executive Order issued on May 23, 2025), geothermal and hydropower (see the Establishing the National Energy Dominance Council Executive Order issued on February 14, 2025). 

In addition, Section 1706’s definition of “energy infrastructure” has been expanded by the OBBB. The term “energy infrastructure” is used in the first and second EDF eligibility categories to determine whether an existing project could qualify as the basis for a new project to be financed under EDF. While the IRA’s definition focused on electric energy and fuels for determining EIR project eligibility, the OBBB’s definition refers more generally to facilities that are used for energy or critical minerals. The expansion of “energy infrastructure” to include facilities and equipment used in connection with critical minerals is consistent with previous Administration actions to increase American mineral production, such as the Immediate Measures to Increase American Mineral Production Executive Order issued on March 20, 2025, discussed in further detail here.

As a result of these changes:

  1. Some greenhouse gas emission reduction projects that previously qualified for EIR financing may no longer qualify for EDF financing. However, many projects that were previously eligible may still qualify under the expanded scope for EDF financing if they increase capacity or output or support grid reliability or other system adequacy needs;
  2. New categories of projects, such as those used in the critical minerals supply chain, are now expressly eligible for EDF financing; and
  3. Projects that previously qualified under EIR because they “retool, repower, repurpose, or replace energy infrastructure that has ceased operations” are likely to still qualify under EDF given the broader definition of “energy infrastructure” that applies to the existing assets serving as a basis for EDF financing.

The OBBB maintains in place the EIR’s cap on the aggregate loan principal guaranteed through Section 1706 loan guarantees at $250 billion, but extends the time period for LPO to issue loans thereunder until September 30, 2028. The vast majority of this aggregate principal amount remains to be utilized in closed loan guarantees. Additionally, while unobligated amounts previously made available under the IRA for the EIR program were rescinded, the OBBB appropriates $1 billion in funding to carry out activities under the EDF program, including the credit subsidy cost of guarantees issued thereunder and administrative expenses.

We expect DOE to issue further information over the coming months, including regulations, program guidance and/or application materials regarding the application process and the terms of loan guarantees to be issued under the EDF program. In the meantime, participants in the energy and critical minerals industries should consider whether their projects might qualify for EDF financing. 

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