Now the office, which offers financing to clean energy technologies that struggle to borrow from banks and received a huge boost of money from the Inflation Reduction Act (IRA), is rushing to do just that before president-elect Donald Trump takes office in January. The incoming president, flanked by Republican majorities in both chambers of Congress, is expected to target unspent funds under the IRA, including LPO programs – putting at risk billions of loan dollars yet to be granted or finalized.

With Inauguration Day looming, the office has increased its activity in recent weeks. Since last Monday alone, the LPO announced four new conditional commitments for loans and loan guarantees and finalized a pending offer.

On Tuesday, long-duration energy storage company Eos closed a $303.5 million DOE loan guarantee to help it scale production. The day before, the DOE stated it planned to lend up to $7.5 billion to finance two electric-vehicle battery-manufacturing plants in Kokomo, Indiana. And one week earlier, the agency announced a conditional loan guarantee of nearly $5 billion to finance Grain Belt Express Phase 1, an interregional transmission line that will run between Ford County, Kansas, and Callaway County, Missouri.

Last Monday, the agency also announced conditional commitments for a direct loan of $6.6 billion to Rivian to build an EV manufacturing plant in Stanton Springs North, Georgia, and a loan guarantee of $290 million to Sunwealth to deploy up to 1,000 solar photovoltaic systems and battery energy storage systems across 27 states.

Clean energy funding in doubt over expected Republican backlash

Under the Biden administration, LPO has so far doled out just under $55 billion in funding across 32 deals for battery and EV manufacturing, nuclear reactors, ​“clean” hydrogen facilities, virtual power plants and critical minerals projects. The majority of the LPO’s investments have gone to Republican districts, according to a Politico analysis.

Most of the financing deals LPO has announced – about $41 billion worth – remain conditional, meaning the loans or loan guarantees are not yet finalized and depend on the companies meeting certain benchmarks.

Legal experts say that while the LPO’s 14 closed loans, which total more than $13 billion in investments, should remain safe from Republican backlash, delaying or undoing conditional funds could be much easier. ​“Immediately following inauguration of the new president, there is likely to be a period of inaction on financial assistance awards that are in negotiation and on announced funding opportunities,” Hogan Lovells attorney Mary Anne Sullivan wrote.

A Republican-majority Congress could potentially roll back not-yet-obligated funding in order to help offset the costs of a likely extension of Trump’s 2017 tax cuts, which are estimated to add $4.6 trillion to the national debt over the next decade.

As of November 30, the office had 212 outstanding applications with a total of $324 billion in loans requested. In November, LPO raised its estimated remaining loan authority to nearly $400 billion.

The LPO was created in 2005 to support innovative clean energy projects – or in Shah’s words, to ​“build a bridge to bankability” for technologies that haven’t yet reached the at-scale deployment needed to attract commercial lenders. The Inflation Reduction Act supercharged the office’s lending authority, taking it from $40 billion to more than $400 billion.

It’s unclear what will end up happening to the loan program with a Republican trifecta in office. Project 2025, the Heritage Foundation’s blueprint for the next Republican president, proposes eliminating the LPO altogether. Billionaires Vivek Ramaswamy and Elon Musk, who have been tasked by Trump to lead a new task force called the Department of Government Efficiency, may also target the office in their sweeping proposals to slash federal programs and personnel. (Musk’s EV company, Tesla, received a $465 million loan from the office in 2010.)

Other lawmakers have suggested that the LPO could be reformed to finance more energy sources favoured by Republicans and Trump’s pick for Energy secretary, fracking company CEO Chris Wright, such as nuclear and geothermal. ​“The LPO needs to have all energy, if we go forward with it at all,” Representative Brett Guthrie, a Republican from Kentucky, told Politico’s E&E News.

DOE officials noted that local economic growth and jobs could be jeopardized should LPO investments be curtailed.

“There is steel in the ground and job openings at new or expanded facilities around the country,” a DOE spokesperson said in a statement. ​“It would be irresponsible for any government to turn its back on private sector partners, states, and communities that are benefiting from lower energy costs and new economic opportunities spurred by LPO’s investments.”

This story was originally published by Canary Media. It has been edited to conform with Corporate Knights style.

Photo by Ajay Suresh.

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Her plans were hardly idiosyncratic. The notion of green growth – the idea that environmental goals can be aligned with continued economic growth – is still the common economic orthodoxy for major institutions like the World Bank and the Organisation for Economic Co-operation and Development (OECD).

The OECD has promised to “strengthen their efforts to pursue green growth strategies […], acknowledging that green and growth can go hand-in-hand”, while the World Bank has called for “inclusive green growth” where “greening growth is necessary, efficient, and affordable”. Meanwhile, the EU has framed green growth as “a basis to sustain employment levels and secure the resources needed to increase public welfare […] transforming production and consumption in ways that reconcile increasing GDP with environmental limits”.

However, our survey of nearly 800 climate policy researchers from around the world reveals widespread scepticism toward the concept in high-income countries, amid mounting literature arguing that the principle may neither be viable nor desirable. Instead, alternative post-growth paradigms including “degrowth” and “agrowth” are gaining traction.

Differentiating green growth from agrowth and degrowth

But what do these terms signify?

The “degrowth” school of thought proposes a planned reduction in material consumption in affluent nations to achieve more sustainable and equitable societies. Meanwhile, supporters of “agrowth” adopt a neutral view of economic growth, focusing on achieving sustainability irrespective of GDP fluctuations. Essentially, both positions represent scepticism toward the predominant “green growth” paradigm with degrowth representing a more critical view.

Much of the debate centres around the concept of decoupling – whether the economy can grow without corresponding increases in environmental degradation or greenhouse gas emissions. Essentially, it signifies a separation of the historical linkage between GDP growth and its adverse environmental effects. Importantly, absolute decoupling rather than relative decoupling is necessary for green growth to succeed. In other words, emissions should decrease during economic growth, and not just grow more slowly.

Green growth proponents assert that absolute decoupling is achievable in the long term, although there is a division regarding whether there will be a short-term hit to economic growth. The degrowth perspective is critical that absolute decoupling is feasible at the global scale and can be achieved at the rapid rate required to stay within Paris climate targets. A recent study found that current rates of decoupling in high-income are falling far short of what is needed to limit global heating to well below 2°C as set out by the Paris Agreement.

The agrowth position covers more mixed, middle-ground views on the decoupling debate. Some argue that decoupling is potentially plausible under the right policies, however, the focus should be on policies rather than targets as this is confusing means and ends. Others may argue that the debate is largely irrelevant as GDP is a poor indicator of societal progress – a “GDP paradox” exists, where the indicator continues to be dominant in economics and politics despite its widely recognised failings.

7 out of 10 climate experts sceptical of green growth

How prevalent are degrowth and agrowth views among experts? As part of a recent survey completed by 789 global researchers who have published on climate change mitigation policies, we asked questions to assess the respondents’ positions on the growth debate. Strikingly, 73% of all respondents expressed views aligned with “agrowth” or “degrowth” positions, with the former being the most popular. We found that the opinions varied based on the respondent’s country and discipline (see the figure below).

While the OECD itself strongly advocates for green growth, researchers from the EU and other OECD nations demonstrated high levels of scepticism. In contrast, over half of the researchers from non-OECD nations, especially in emerging economies like the BRICS nations, were more supportive of green growth.

Disciplinary rifts

Furthermore, a disciplinary divide exists. Environmental and other social scientists, excluding orthodox economists, were the most sceptical of green growth. In contrast, economists and engineers showed the highest preference for green growth, possibly indicative of trust in technological progress and conventional economic models that suggest economic growth and climate goals are compatible.

Our analysis also examined the link between the growth positions and the GDP per capita of a respondent’s country of origin. A discernible trend emerged: as national income rises, there is increased scepticism toward green growth. At higher income levels, experts increasingly supported the post-growth argument that beyond a point, the socio-environmental costs of growth may outweigh the benefits.

The results were even more pronounced when we factored in the Inequality-adjusted Human Development Index (IHDI), suggesting that aspects beyond income, such as inequality and overall development, might influence these views.

In a world grappling with climate change and socio-economic disparities, these findings should not simply be dismissed. They underline the need for a more holistic dialogue on sustainable development, extending beyond the conventional green growth paradigm.

Post-growth thought no longer a fringe position

Although von der Leyen firmly stood in the green growth camp, this academic shift is increasingly reflected in the political debate. In May 2023, the European Parliament hosted a conference on the topic of “Beyond Growth” as an initiative of 20 MEPs from five different political groups and supported by over 50 partner organisations. Its main objective was to discuss policy proposals to move beyond the approach of national GDP growth being the primary measure of success.

Six national and regional governments – Scotland, New Zealand, Iceland, Wales, Finland, and Canada – have joined the Wellbeing Economy Governments (WEGo) partnership. The primary aim of the movement is to transition to “an economy designed to serve people and planet, not the other way around.”

Clearly, post-growth thought is no longer a fringe, radical position within those working on solutions to climate change. Greater attention needs to be given to why some experts are doubtful that green growth can be achieved as well as potential alternatives focussed on wider concepts of societal wellbeing rather than limited thinking in terms of GDP growth.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Ivan Savin is an associate professor of business analytics, and research fellow, at ICTA-UAB, ESCP Business School, and Lewis King is a postdoctoral research fellow in ecological economics at Universitat Autònoma de Barcelona.

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The financial crisis was only 12 years ago, but it seems almost everything has changed since.

At that time, policy was myopically concerned with two things. First, restoring liquidity in financial markets; central banks took unprecedented steps to do that. Second, bolstering aggregate demand through very large fiscal stimulus packages.

The crisis was devastating. But it and the policy responses did not seem all that complex. The fiscal stimulus was mostly of a conventional form. Lots of shovels-in-the-ground sort of thing. And it was almost all focused on the near-term. Indeed, Canada, like almost all other countries, dramatically swung to austerity just 24 months into the crisis aftermath, when the economy was still far from recovered.

Governments should, and appear to, have a lot more on their minds today.

Yes, there is some need to bolster aggregate demand for goods and services. But the pandemic has also hit aggregate supply hard, and that requires different approaches.

The focus is much longer-term now. There is a realization, at least in Canada, that we are slipping into a path of much lower potential growth, jeopardizing the well-being and the sustainability of the country’s finances as well as their ability to deliver needed public services.

There is also a realization that the historical sources of growth for Canada may not be there in the future. In 2008, Canada was years into a resource boom. It was dented by the crisis, but prices became strong again until 2014. Now we are in the sixth year of a depressed resource sector, and prospects for the future do not look so bright. Talk of peak oil supply has been replaced in this brief period by talk of peak oil demand. Canada’s powerful manufacturing sector had started to shrink by 2008, and it has continued on that downward trend, taking well-paying jobs with benefits with it.

Since the last recession, talk of peak oil supply has been replaced by talk of peak oil demand.

Even the environmental movement has become more sophisticated since 2008. An almost singular focus on greenhouse gas emissions has evolved into broader considerations of well-being, or the quality of life. And tangible evidence of the effects of climate change has heightened concern. There is less dogma around the idea that you can have growth or the environment but not both. Many now realize that with smart strategy both can be enjoyed.

These changes in context require a new perspective. We must find new sources of economic growth in Canada that promote or at least are compatible with environmental objectives. If this perspective can be put in the context of recovery from COVID-19, so much the better. But it goes much further than that. It is a perspective to deliver longer-term benefits to Canadians.

With our close economic relationship and physical proximity to the United States, a dark cloud of fatalism has hung over Canada the past four years, with many convinced that attempts at clean growth were futile given the apparent lack of interest in all things environment at the White House, even though actual developments were not as unfavourable as the rhetoric.

But now the clouds have been lifted, and our major trading partners in both the United States and Europe have adopted clean growth as their North Star.

Canada has all the ingredients to prosper in the clean economy, but it will take a lot more tangible action on the part of government and business if we are going to seize the opportunity.

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