DOE Loan Office Defies Inspector General, Gives $7.2B In Loan Guarantees To Rivian & Plug Power

The Loan Program Office gave loan guarantees to the two companies, which have lost more than $24 billion since 2021.

On December 17, the Department of Energy’s Inspector General issued a report urging the agency to halt all loans and loan guarantees from the Loan Program Office until it could ensure that it is complying with “conflicts of interest regulations and enforcing conflict of interest contractual obligations.”

Despite the IG’s request, on Thursday, the LPO gave loan guarantees worth $7.2 billion to EV maker Rivian and Plug Power, which calls itself the “industry leader behind the end-to-end green hydrogen ecosystem.” Rivian got a $6.57 billion guarantee, and Plug received a $1.66 billion guarantee.

The LPO, headed by Jigar Shah, replied to the IG’s report by saying that no conflicts of interest had been identified and that halting loans and loan guarantees was “baseless and vastly disproportionate.” The investigation into the LPO was instigated by Senator John Barrasso (R-WY), who was concerned about connections between Shah and Plug Power. Further, as Barrasso explained last June, he had “significant doubts about Plug Power’s financial viability.” Barrasso also said he was concerned that the “LPO may accelerate its lending in anticipation of a potential change in administration.”

Barrasso was right to be concerned about Plug. He should also be worried about Rivian’s financial viability. Indeed, the LPO gave loan guarantees to the two companies even though neither has ever made a profit. Both companies are losing staggering amounts of money. And both are competing in markets where production costs are high and demand is falling.

Further, the LPO did exactly what Barrasso feared. It handed out the two loan guarantees in the last few hours of the Biden administration. But then, maybe that’s not surprising. The Bidenistas have been promoting claims about a “robust clean energy economy” (that’s from the Plug press release) and a “clean transportation future” (that’s from the Rivian release) for four years. And thus, they are handing out as many government favors as possible on their way out the door.

But even last-minute government favors may not be enough to make Rivian and Plug profitable. Let’s take a look.