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SHAH INTERVIEW: The Department of Energy’s Loan Programs Office made headlines last week when it announced a $700 million conditional loan to Ioneer for the development of its Rhyolite Ridge mining facility in Nevada. If finalized, it would be the first major cash infusion from DOE to support the mining of lithium—crucial to EV battery production in the U.S.
The Washington Examiner caught up with Jigar Shah, the head of the Loan Programs Office, to discuss both the Ioneer loan and his broader vision for leading the office—tasked with investing in large-scale, cutting-edge clean energy technology projects—and how he’s managing risks and losses inherent to the role. Here’s what he had to say.
Significance of the Ioneer loan: If finalized, the Rhyolite Ridge project is expected to produce enough lithium to support 370,000 electric vehicles per year—-reducing gas consumption by nearly 145 million gallons annually, according to DOE.
Shah noted that the investment came only after years of work from Ioneer project developers to secure private capital and to complete lengthy permitting processes and independent engineering reports required for applicants. Notably, it changed its entire mine plan after it was found to infringe on the location of Tiehm’s buckwheat, a rare flower that gained endangered species status late last year. Ioneer CEO James Calaway estimates the company has spent around $1 million to conduct studies, build greenhouses, and hire botanists to protect the flower.
Shah said that loan applicants are “coming 80% [of the way], we’re going the last 20%.”
Ioneer has already secured deals with Ford and Toyota, and barring any unforeseen hurdles is expected to come online in late 2025.
Avoiding the next Solyndra: It’s been 14 years since Solyndra flamed out shortly after getting more than $530 million in federal loan guarantees, subjecting the Obama administration to much criticism. Shah said the office is prepared to avoid a similar setback.
“The office was 12 people at the time at which that [Solyndra] loan was underwritten, and we’re now at over 200 people,” he said. It now includes both a Risk Management Group and Portfolio Management Group dedicated to vetting applicants and ensuring compliance throughout the approval process—including getting the green-light from an external interagency review board, an internal review committee, and others.
What’s next? In addition to critical minerals and battery manufacturing projects, the office is interested in advanced nuclear projects—such as small-scale nuclear reactors—and carbon management projects.
“We’re looking to support the next generation of applications,” Shah told Breanne. That means avoiding applicants they think can get commercial debt in the marketplace—such as wind and solar technologies, for example.
Avoiding picking winners and losers: Out of the 125 applications that have been formally submitted to the LPO, Shah said about one-third are fully prepared to get through – creating a sort of a self-selecting or weeding-out process.
“And so we try not to pick which companies, so much as we say: ‘Here are the standards that all companies have to meet according to the 2020 Energy Act that Congress passed, which define the reasonable prospect of repayment. And if you reach the standard, then we’re here to offer you a loan.’”
All told, he said, the office had a 3.3% loss rate in its first portfolio—roughly the same as a commercial bank: Some think that’s too much, others think it’s too little, given that they’re supposed to be investing in large-scale, next generation technology.
”I think that the Secretary has been very clear about the fact that to meet our mission, we’re going to have to take real risk,” he said. “The second thing I’d add is that I think that there is a growing recognition by everyone, frankly, in the United States, that in order for critical minerals to be onshored and reshored [here], there does need to be some government involvement.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
PHILLIPS GAVELS IN FIRST FERC MEETING AS COMMISSIONER: Acting FERC Chairman Willie Phillips chaired his first meeting as head of the commission this morning since former Chairman Richard Glick stepped down from the top job.
It marked a new day on the commission, which is now short a member and will operate on an even 2-2 partisan basis until a fifth commissioner can be appointed and confirmed in the Senate.
Phillips said his strength is consensus-building and pledged during the meeting, which was interrupted several times by protesters, that reliability would be “job no. 1” during his tenure.
The vacant seat: An incomplete commission has major implications for a body that’s under immense and competing political pressures to either approve gas infrastructure more expeditiously or to add new hurdles for pipeline applications by foregrounding emissions, climate change, and environmental justice.
Some key decisions agreed to during Glick’s tenure, most notably the interim greenhouse gas policy statement adopted last year, were 3-2 splits that wouldn’t be possible now.
Democratic Commissioner Allison Clements said the split would be a challenge for the commission. Often FERC decisions are unanimous, she said, but the “very hard orders” are not.
“The reality is that on the very hard orders, the decisions about how we will approach important changes to a regulatory framework that is outdated and undermatched for the challenges at hand, we have less o a winning record on consensus,” she said.
More from Phillips: FERC later dialed back its policy statements to draft form after blowback from many in Congress and industry who said it would inhibit new projects, and it’s still working out what to do with them.
Phillips said the policy statements are a priority and that he wanted to reach a consensus on this. Remember, Republican Commissioners James Danly and Mark Christie strongly opposed them.
US NEEDS TO DOUBLE LNG EXPORTS FOR CLIMATE’S SAKE: REPORT: The United States needs to increase gas production and double its exports to enable countries in Europe and Asia to displace combustion of coal, a new report from the Progressive Policy Institute argues.
Coal use increased globally last year because of the high prices and tighter supplies for natural gas, posing challenges to national decarbonization targets. China, India, and Indonesia, the three largest coal producers, all achieved record coal production last year.
Rapid growth in U.S. liquefied natural gas exports would be able to facilitate a reversal of these trends, according to Paul Bledsoe, a former Clinton White House climate aide and author of the PPI report.
“We should be increasing U.S. LNG on straight climate grounds, even if you ignore the huge security and economic benefits,” Bledsoe told Jeremy, stressing that such growth in exports has to be accompanied by further reductions in methane emissions to avoid undercutting the value of fuel switching.
The Biden administration is keenly focused on increasing exports to Europe in particular and has approved additional export volumes at existing terminals and those in the construction queue. Between existing terminals and new ones expected to be fully up and running by 2025, exporters would be able to provide about half the LNG needed to meet the doubling goal, according to Bledsoe.
Contra more exports: Biden has committed to facilitating more exports, although doing so entails a need for more gas infrastructure, and the administration is under immense pressure from environmental groups not to sign off on that.
Some in industry, alongside green groups and some Democrats, have also implored the Energy Department to depress exports to keep gas in domestic markets for U.S. consumers’ sake.
FUSION STARTUPS GET DOE GRANT CASH: A half dozen nuclear fusion companies were awarded new grant funding this week to research and test their technologies in collaboration with the Department of Energy’s national laboratories.
The grants totaled $2.3 and will go to fusion companies doing both inertial confinement (it makes use of lasers — what scientists used in the recent breakthrough) and magnetic confinement to replicate fusion reactions.
Tokamak Energy, one of the awardees, will use the funding to test speciality steel materials in extreme fusion conditions, the British company said.
HERTZ TO BRING 5,000+ EV RENTALS TO DENVER: Hertz and the city of Denver announced a new initiative today to bring more electric vehicles to the city for rental customers and rideshare drivers.
The car rental company is calling the project “Hertz Electrifies” and will bring a fleet of up to 5,200 rental EVs to Denver. It will also participate in adding more charging capacity at its locations, in residential neighborhoods, and at the Denver International Airport to support the vehicles.
Denver Mayor Michael Hancock said the initiative would help the city reach its goal reducing its carbon emissions 80% by 2050.
Hertz dove into EV waters in 2021 when it announced the purchase of 100,000 Tesla models, an order worth more than $4 billion.
RUSSIA TO BOOST SEABORNE LIQUIFIED PETROLEUM GAS TO BOOST PROFITS: Russia is increasing its seaborne exports of liquified petroleum gas (LPG) by more than 62% in February, rerouting supplies it previously sent to Poland via rail as it looks to command higher profits and offset pain caused by Western sanctions.
Russia is preparing to ship 156,400 tons of LPG from its Baltic Sea port of Ust-Luga, compared to just 90,400 tons in January, while exports from its Temryuk port will rise from 15,200 tons to 22,000 tons in the same period.
Meanwhile, Russia’s land-based LPG exports are slated to drop by nearly 22% according to data first seen by Reuters.
The shift comes as LPG prices along the Belarus-Poland border have fallen to their lowest level since the start of 2021. Prices there are roughly $400 per ton, traders said, compared to other parts of Europe and the Mediterranean, where they run at least $150 higher.
NEW YORK ON TRACK TO HAVE LOWEST JANUARY SNOWFALL SINCE 2008: New York has not seen measurable snow in 300 days, and is on track to see its lowest January snow level since 2008, according to ew data from AccuWeather meteorologists.
Already, the lack of snow is the fourth-longest stretch in New York history since records collection first began in 1868. If the trend continues through Feb. 5, it will be the single-longest period ever seen without snow.
The trend is due in large part to high temperatures that have extended across large swaths of the Northeast, and in parts of Europe as well—where high January temperatures shattered records in some 15 countries and forced some ski towns to open their terrain to mountain bikers and hikers instead.
The Rundown
Energy Intel Much to learn from Norway’s EV success
Financial Times Oil price cap and falling cost of crude worry Kremlin
Calendar
FRIDAY | JANUARY 20
The 10-day Washington, D.C. Auto Show kicks off.
