Quick Hits: House FY27 DOE Budget Marks
By Nick Montoni, EERE alum; Janie Thompson, CI alum; and Paul Donohoo-Vallett, OP/EERE alum
The U.S. Department of Energy (DOE) released their FY 2027 budget request last week. A few takeaways on major proposed new programs and office changes:
$3.5 Billion Transfer for Baseload Power Initiative
The proposed budget would create a new “Baseload Power Initiative" with a transfer of $3.5 billion of unobligated funds from the Regional Clean Hydrogen Hubs (H2Hubs) program originally funded by the Infrastructure Investment and Jobs Act (IIJA) in 2021. The details on the program are not provided, but overall it aims to preserve 9 GW and add 9 to 13 GW of firm baseload power including preventing coal retirements, expanding and hardening gas infrastructure, supporting uprates at existing nuclear facilities, reconductoring existing transmission with advanced conductors, and uprating federal hydropower facilities.
DOE already has tools to deploy some of these solutions through for example the SPARK program and using expertise within existing offices. It remains to be seen if DOE will propose standing up a new office to focus on deployment for these grid technologies or not.
$1.2 Billion Transfer for Genesis Mission Supercomputing
DOE proposes to fund the new Artificial Intelligence and Quantum office with $1.2 billion also from the unobligated balances of the H2Hubs program, in part to expand the supercomputing capabilities at the national laboratories, building upon existing efforts, and supporting the overall science objectives of the Genesis Mission.
$15.2 Billion in Proposed IIJA Rescissions
Similar to the FY26 proposed budget, DOE is requesting Congress take back over $15 billion in IIJA funding provided to the Department for a number of grid infrastructure and large technology demonstration programs. These rescissions target large scale deployment programs like H2Hubs and Direct Air Capture (DAC) Hubs, along with other programs that appear to be supportive of other administration priorities. For example, it proposes $765 million in rescissions under the accounts that funded GRIP and the Department’s recent SPARK solicitation. DOE also proposes rescinding $583 million for hydropower incentive programs aimed to maintain and improve the efficiency of existing hydropower facilities - even as it proposes a new Baseload Power program in part supporting existing hydropower.
Congress did not rescind the proposed IIJA funds in the final FY26 budget, opting instead to transfer just over $5 billion to fund advanced nuclear demos and to offset some annual appropriations. The Network will be looking to Congress to see if anything similar happens for FY27.
Transfers Would Require Reuse of Funds from Terminated Awards
The H2Hubs program was appropriated at $8 billion from the IIJA. By the end of the Biden administration all of those funds were awarded across seven Hubs, totalling $7 billion, along with $1 billion for demand side support to be distributed by three entities selected in January 2024. The $3.5 billion and $1.2 billion that the Administration proposed to reprogram from H2Hubs for Baseload Power and Genesis Mission, respectively, along with the $3.1B that the Administration has proposed for total recission, total $7.8 billion. This means that the proposed budget would require the full cancellation of all of the existing H2Hubs awards. As outlined in the DOE Alumni Network’s Innovation Interrupted report, $2.2 billion of H2Hub awards were officially terminated, and the remaining $5 billion of Hubs awards were threatened.
Two other programs would require cancellation and recovery of funds already committed in order to meet the proposed rescission levels: Two DAC hubs, one in Texas and one in Louisiana, have $1.2 billion committed out of a total $3.4 billion appropriated by IIJA. The FY26 budget already rescinded $1.04 billion of the unobligated DAC Hubs funding, so to rescind an additional $2.265 billion as proposed in the FY27 budget would zero out the budget already committed.
Similarly, the IIJA provided DOE with $3.474 billion for large-scale pilots and demonstrations of carbon capture projects. The FY26 budget already rescinded $950 million of these funds, so for DOE to recover another $1.859 billion from the remaining funds under Section 41004, it would have to collect most of the sums obligated to the five carbon capture pilot and demonstration projects that DOE cancelled in May 2025 due to “no longer effectuating program goals or agency priorities.”
These would be the first instances of DOE planning to repurpose funds from projects canceled last year.
8 Clean Energy Offices Proposed to be Defunded
Similar to the FY26 proposal, DOE is again proposing to massively cut or zero out a number of technology areas, even after Congress mostly ignored those requests. This includes zero budget requests for offices focusing on wind, solar, renewables integration, hydrogen, and weatherization assistance, and 78% to 96% cuts for vehicles, bioenergy, hydrogen, and industrial efficiency focused offices. As with the proposed rescissions, the Network is monitoring congressional reactions to these major cuts.
Many of these proposed cuts would also flow through to research supported at the National Laboratories, with hundreds of millions of dollars of proposed reductions representing double digit percentage reductions across five national labs. Most significantly the National Laboratory of the Rockies, formerly known as the National Renewable Energy Laboratory and housing long-standing R&D programs on technologies like wind and solar, would see a 52% reduction in funding. Cuts of this magnitude would likely lead to significant staffing reductions at labs and a loss of energy-related technical expertise.
Political Oversight on Federal Awards
Buried in the Analytic Perspectivesappendix to the overall federal budget proposal is a new elevation of the role of political appointees in the merit review process, saying that the administration's budget proposal:
“Implements a systematic process for grant administration in which political appointees have the last word on grants announcements and awards, ensuring that all Federal financial assistance aligns with Administration priorities.”
Unbiased merit review and selection of applicants to federal programs is the foundation of the Federal research and development functions. The Network is monitoring any changes in DOE’s merit review process or whether the notion of political appointees making award decisions has a chilling effect on potential applicants, based on political considerations such as their location.
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This piece was drafted by trusted and vetted alumni of the U.S. Department of Energy. Any views and opinions expressed are that of the author(s) and do not reflect those of the DOE Alumni Network.
