October 19, 2023

Manchin Questions Department of Energy Witnesses About Protecting Taxpayer Dollars

Washington, DC – Today, the U.S. Senate Energy and Natural Resources Committee held a hearing to examine the U.S. Department of Energy’s (DOE) due diligence process for awarding competitive grants and loans funded through the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) and the Department’s overall innovation investment strategy. During the hearing, Chairman Joe Manchin (D-WV), highlighted ongoing issues in the implementation of the IRA and BIL — including the IRA’s electric vehicle tax credit — the need to ensure China doesn’t benefit from taxpayer funding, and being responsible with taxpayer dollars. 

“In the past two years, our state has celebrated announcements for battery manufacturing plants, carbon capture projects, microgrid-powered industrial sites, with many more projects on the way that stand to benefit from DOE support. In the case of our hydrogen hub, the private sector is proposing to invest up to $6 billion on top of the nearly $1 billion from DOE. If you look at the $1 billion, we have that’s a 13% investment the U.S is making for an 87% return. That’s a tremendous thing for us to incentivize and be willing to share some of that risk that makes these projects possible. And the story is similar across our country, with private sector announcements pouring in as a result of the opportunities created by these laws,” said Chairman Manchin.

Chairman Manchin continued, “While I am thrilled to see all of these impactful investments being made, it has also been disheartening to witness this administration distort the intended purpose of these laws to fulfill their own agenda. These laws were deliberately crafted to secure our energy supply chains, but so far, we’ve seen too many indications that this administration is willing to sacrifice security to pursue their unrealistic anti-fossil goals. The most apparent example of this is through their implementation of the IRA’s EV tax credit. That credit was designed to encourage automakers to onshore their supply chains in order to break our reliance on China who has dominated the EV supply chain. Unfortunately, actions by this administration to cut the sourcing requirements in half and water them down in other ways just to get more EVs on the road—Chinese or otherwise—clearly are not a reflection of the text or intent of the IRA and Infrastructure Law.”

Chairman Manchin commented on the need to ensure China doesn’t benefit from taxpayer funding.

“The IRA and the Bipartisan Infrastructure Law are an investment in American energy security to protect ourselves and our allies while breaking our reliance on countries like China, Russia, Iran, North Korea and other nations who do not share our values and should not be relied upon to provide critical elements of our supply chains. While I was pleased to see that DOE rescinded the Microvast award, I am alarmed that the company was able to get through even the first round of vetting. We continue to hear about other companies seeking to use taxpayer dollars to make a devil’s bargain with Chinese technology providers, like Ford’s potential licensing deal with CATL seeking to qualify for IRA credits or the conditional loan approved by DOE for Kore Power that involves purchasing technology from a Chinese firm. Let me be clear, I do not want—and I don’t believe any of our committee members wants—a cent of this funding benefiting China in any way,” said Chairman Manchin.

During the hearing, Chairman Manchin questioned Jigar H. Shah, Director of the Loan Program’s Office (LPO) at the DOE about the LPO’s process for evaluating the feasibility of certain technologies.

“Look at the technologies we’re trying to develop here. Are there any that are pie in the sky that don’t have proven technology? Are you looking at proven technologies that haven’t been matured?”  asked Chairman Manchin. 

“The vast majority of these projects I would say the technologies actually originated from R&D programs that were funded by the Department of Energy. So, for many of these technologies which are frankly scary to the private sector, it is why the LPO was created, we can do rigorous due diligence and look back into demonstration projects and other data that we have to see whether the technology will work. We never take will it work or won’t it work risk today here at the LPO. We do take execution risk, scale up risk, a lot of other risks that are real risks that we have to do due diligence on,” said Mr. Shah. 

Chairman Manchin questioned witnesses about American taxpayer dollars going to Chinese companies and ensuring entities that apply for loans are taking on appropriate risk.

“Are we able to find out what maybe China is still receiving? Because this administration is circumventing what the intent of the bill [IRA] was which is to make us independent and break as quickly as we can from our dependency on China,” asked Chairman Manchin.

“As somebody who is an entrepreneur and has done this for a long time, there really was a policy in this country for commercializing your technology in other continents. We did not have the tools here. The Inflation Reduction Act has given folks the tools to be able to commercialize our technology here in this country. Some of that is being brought back from other continents back to this country, and there are ways for us to protect the U.S. taxpayer. Couple things, one is there are foreign entities of concern that are trying to put provisions into board representation. So, we do full due diligence on that to make sure that none of those provisions exist. Second, we make sure that all IP licenses are one way. So, the technology comes to the United States tied to the American worker, but no additional innovations that occur here can go back to that country. Third, foreign talent programs, the majority of our companies don’t know what a foreign talent program is, so we have to explain to them what it is, how to monitor for it, and how to make sure that they’re not susceptible to it. The last piece of it is we need to make sure that they understand that we need to see the ownership stake of those companies going down,” said Mr. Shah.

Chairman Manchin also asked about caps on grants and loans in both laws.

“Do you all agree that the grants and loans under your offices are capped by the IRA and the Bipartisan Infrastructure Law? asked Chairman Manchin.

“We have a specific amount of loan authority and a specific amount of credit subsidy,” said Mr. Shah. 

“Absolutely, and if we ever look like we were committing more money than you’ve given us OMB [Office of Management and Budget] would be on us like a ton of bricks,” said The Honorable David W. Crane, Under Secretary for Infrastructure, U.S. Department of Energy.

Chairman Manchin also asked The Honorable David Crane about the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model which is currently being updated by Argonne National Labs. Appropriate use of this model will ensure that the Inflation Reduction Act’s hydrogen production tax credit emissions requirements will be grounded in the science and support different types of feedstocks used to produce hydrogen, including coal-mine methane. The DOE has yet to release an updated GREET model that would certify clean hydrogen.

“Can you assure me that the Department will stay within the science of the Argonne National Lab for the GREET model and it will not discriminate against feedstocks based on this administration’s political preferences? And when do you think that Argonne National Laboratories will have the GREET model released for the hydrogen hubs?” asked Chairman Manchin.

“The direct answer to your question is I will assure you that the GREET model won’t be modified for any political purposes. It won’t be prejudice against pathways, but coal-bed methane as you mentioned, also renewable natural gas, is a very important part of that effort. We have an internal review process going on next week to find out where the state of play is across the agency,” said The Honorable David W. Crane.

The hearing featured witnesses from the U.S. Department of Energy.

To watch the hearing in full, please click here.

To watch a video of Senator Manchin’s opening remarks, please click here.

To watch a video of Senator Manchin’s questioning, please click here.