In this post, I’ll explore how the DOE Loan Programs Office (LPO) is supporting advanced fossil projects.
As electrification, end-use efficiency, and renewables adoption sustain reductions in U.S. power sector emissions, the Energy Information Administration’s (EIA) 2023 Annual Energy Outlook projects the domestic capacity of fossil-fired generation will drop through 2030 before leveling off for the foreseeable future. Even though they comprise a declining share of electricity generation, fossil fuels are expected to continue to play a role in the nation’s economy. Growing global demand for fuels and exports like chemicals, fuels, and fertilizers has led EIA to project natural gas and oil production will continue, especially as the U.S. industrial base is expected to grow. The opportunities to decarbonize the production of petroleum-derived exports cannot with chemicals production and oil refining accounting for ~11% of the U.S.’s total energy-related carbon dioxide emissions in 2021, according to DOE’s Decarbonizing Chemicals and Refining Liftoff Report.
Whereas Carbon Capture, Utilization, And Sequestration projects will be important for the decarbonization of legacy power assets and may offer scalable solutions to industrial decarbonization in the future, there are many Advanced Fossil technologies ready today with the potential to reduce carbon emissions in hard-to-decarbonize sectors. These include abating emissions associated with upstream oil and gas extraction and midstream transport activities, recycling fossil fuel-derived products, and producing fossil-dependent manufacturing feedstocks more cleanly or with decarbonized alternatives. With the right technologies and processes, fossil fuels can also be used as zero- or low-emissions inputs in the production of hydrogen, explained further in our Hydrogen Sector Spotlight.
LPO can support Advanced Fossil technologies through its loan programs in a few different ways. Title 17 Clean Energy Financing Program’s Innovative Energy and Innovative Supply Chain categories (Section 1703) can provide financing for deployment of advanced fossil technologies or for supply chain projects that manufacture advanced fossil technologies; if qualifying Advanced Fossil projects receive meaningful support from a State Energy Financing Institution, they do not need to be innovative. The Title 17 Energy Infrastructure Reinvestment (Section 1706) category provides financing for projects that either retool, repower, repurpose, or replace fossil infrastructure that has ceased operations or to enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases, including the repair and/or replacement of natural gas pipelines to reduces methane leaks. Finally, the Tribal Energy Financing program can support advanced fossil technologies in eligible projects to federally recognized tribes and qualified tribal energy development organizations.
As of the end of September 2024, financing requested from LPO for Advanced Fossil projects totaled $16.7 billion. For more current details, view LPO’s Monthly Application Activity Report, which explains the level of interest from applicants for LPO financing and what technology sectors have been most actively engaged with LPO.