By Jennifer Hiller

The Energy Department is preparing dramatic cuts that could halt nearly $10 billion in federal funding for clean-energy projects -- and some of its highest profile partnerships with Exxon Mobil and Occidental Petroleum are at stake.

The proposed cuts would upend government contracts with energy companies working on hydrogen, carbon capture, long-duration energy storage and other technologies, according to department memos reviewed by The Wall Street Journal. Thousands of DOE jobs are expected to be eliminated.

The cuts are part of a broad campaign by President Trump's Department of Government Efficiency to shrink the scale of the government and its spending. DOGE efforts, led by Trump adviser Elon Musk, have slashed contracts and resulted in thousands of job cuts across the federal workforce so far.

The $10 billion sum reflects potential funding cuts in two DOE offices and likely a slice of the DOGE-driven cancellations under consideration across the Energy Department, according to current and former officials.

Trump has made no secret of his disdain for clean energy. On Inauguration Day, he told supporters: " Big ugly windmills, they ruin your neighborhood." His " energy dominance" plan includes unleashing American oil and gas on the world stage and reviving the dwindling coal industry.

Among the partnerships at risk of losing DOE funding are those with Exxon to use hydrogen for fuel at a large ethylene plant, NextEra Energy for long-duration storage and Occidental Petroleum for carbon capture in South Texas. The companies declined to comment.

"No final decisions have been made and multiple plans are still being considered," a DOE spokeswoman said by email.

The Energy Department has a range of responsibilities, including overseeing the nation's nuclear weapons stockpile, research and development of new energy technologies, environmental cleanup and providing the public with energy data.

It is also considering withdrawing funding from four regional hydrogen hubs, largely in Democratic-leaning regions, while continuing to help fund three hydrogen hubs in largely Republican areas. The regional hubs are meant to accelerate the commercial use of hydrogen, which doesn't produce carbon emissions when burned.

More than 250 projects tied to EV charging, wave energy, battery recycling, solar, wind and other technologies are at risk as well.

"I am deeply disturbed by reports that Elon Musk's DOGE continues to relentlessly push its agenda to cancel existing contracts with U.S. businesses," said Sen. Martin Heinrich (D., N.M.), ranking member of the Senate Energy and Natural Resources Committee. "DOGE's indiscriminate cancellations will kill jobs, increase energy prices, make our grid less secure, and stop energy innovation."

The administration is pursuing deep staffing cuts across the department. Of roughly 17,500 Energy Department positions, about 9,000 are considered essential, according to an internal memo.

Follow-through on those numbers could lead to steeper job cuts at DOE than in other parts of the federal government. Oxford Economics, a data provider and consulting firm, estimates the federal workforce of 2.4 million will shrink by 200,000, or less than 10%, by the end of the year.

More than 1,200 DOE employees either accepted a deferred resignation offer that was made to all federal employees in late January, or were put on administrative leave based on their roles promoting diversity, equity and inclusion efforts. The agency has offered another round of buyouts but hasn't yet revealed how many people accepted.

Most of the DOE's grants and loans have been in limbo since February, when Trump used an executive order to pause the release of federal funds appropriated under signature legislation of the Biden administration. The Infrastructure Improvement and Jobs Act and the Inflation Reduction Act were approved in 2021 and 2022 and have faced criticism from Trump as the "green new scam."

The DOE's Loan Programs Office, a prominent federal clean-energy program that received hundreds of billions of dollars through the IRA, has released funding for just a handful of projects, including the restart of the Palisades nuclear plant in Michigan.

Jigar Shah, who ran the office during the Biden administration, said the risk is companies will take their technologies, manufacturing and projects to other countries. The U.S. has a long history of making key advancements in technologies -- including solar, battery storage and EVs -- but letting China dominate their development and commercialization.

"That just makes me so sad that we had convinced all of these investors that this time was different and that we really wanted people to look to the United States to commercialize their technology, and now they're receiving the opposite message," Shah said.

Write to Jennifer Hiller at jennifer.hiller@wsj.com

(END) Dow Jones Newswires

April 17, 2025 11:00 ET (15:00 GMT)

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