Three Federal Funding Pools Every Industrial Project Developer Should Know About

This guide by RMI outlines three primary federal funding mechanisms available for clean industrial projects in the United States: grants from the Office of Clean Energy Demonstration (OCED), loans from the Loan Programs Office (LPO), and tax credits administered by the Department of the Treasury under the Inflation Reduction Act (IRA).

• The Office of Clean Energy Demonstration (OCED), established in December 2021 under the Bipartisan Infrastructure Law, provides competitive grants to move clean energy technologies from laboratories to markets. While initially allocated $500 million, the Inflation Reduction Act increased this funding to $6.3 billion, with the agency covering up to 50 percent of costs for demonstration projects that are not yet commercially scaled.
• The Department of Energy's Loan Programs Office (LPO) acts as a 'bridge to bankability' with an estimated $412 billion in total loan authority. Unlike commercial banks, LPO strategically prioritizes riskier, first-of-their-kind projects to lead commercial funders into vulnerable market segments. LPO does not use a competitive process; it funds all projects that meet its eligibility criteria, provided they show a reasonable prospect of repayment through secured offtake and demonstrated technology.
• The Inflation Reduction Act (IRA) significantly expanded uncapped section 45 tax credits for carbon management, heavy industry, and hydrogen. Key changes include increasing the value of existing credits (such as Section 45Q credits for sequestration, now at $85/ton), creating new credits for clean hydrogen (Section 45V) and clean transport fuels (Section 45Z), and introducing '10% adders' for projects in 'energy communities' or meeting domestic manufacturing thresholds.
• New monetization methods for tax credits under the IRA allow developers to access value without needing large tax liabilities or heavy reliance on tax equity investors. These methods include 'direct pay' and 'transferability,' the latter of which allows developers to sell credits to entities with large tax bills, typically at a discount.

APA

RMI (2023). Three Federal Funding Pools Every Industrial Project Developer Should Know About. https://rmi.org/resources/three-federal-funding-pools-every-industrial-project-developer-should-know-about/

Chicago

RMI. Three Federal Funding Pools Every Industrial Project Developer Should Know About. 2023. https://rmi.org/resources/three-federal-funding-pools-every-industrial-project-developer-should-know-about/.

Wikipedia

{{cite report |author=RMI |title=Three Federal Funding Pools Every Industrial Project Developer Should Know About |date=19 May 2023 |url=https://rmi.org/resources/three-federal-funding-pools-every-industrial-project-developer-should-know-about/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023three, author = {{RMI}}, title = {{Three Federal Funding Pools Every Industrial Project Developer Should Know About}}, institution = {RMI}, year = {2023}, month = may, url = {https://rmi.org/resources/three-federal-funding-pools-every-industrial-project-developer-should-know-about/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }