The Department of Energy’s $400 billion green‑loan programme is under intense political pressure after Li‑Cycle Holdings, a Toronto‑based battery‑recycling company, warned investors that it may soon cease operations. The company disclosed in a Monday SEC filing that it has "incurred significant losses since inception" and that there is "substantial doubt" about its ability to continue as a going concern.
Li‑Cycle’s loan and financial position
Li‑Cycle was approved for a $375 million federal loan in November, just days after President Joe Biden’s election loss. The loan formed part of $20 billion in last‑minute approvals. Jigar Shah, head of the DOE’s Loan Programs Office, urged CEO Ajay Kochhar to pursue the funding during a September 2023 meeting in Pittsburgh.
The company reported a $137 million net loss for 2023 and said it cannot currently meet the federal requirements needed to draw down the DOE funds. Even if the loan were released, Li‑Cycle would first have to secure "significant additional capital", which it has not yet obtained. Its Rochester, N.Y., recycling facility remains stalled because of the financial shortfall.
Other recipients in distress
Sunnova Energy, approved for a $3 billion DOE loan guarantee in 2023, is now negotiating with creditors after coming close to bankruptcy. Plug Power, which received a $1.6 billion loan guarantee in the final week of the Biden administration, laid off 200 workers in New York last week.
Political reaction and oversight concerns
Republican lawmakers have questioned the programme’s oversight. The Inflation Reduction Act expanded the loan office’s budget from a modest sum to $400 billion, but the agency’s inspector general warned last year that the loan office was not adhering to conflict‑of‑interest rules, creating a "significant risk of fraud".
Senator John Barrasso (R‑Wyo.) highlighted Li‑Cycle’s financial instability in a 2023 letter to Shah, describing the loan as an example of "bad judgment" with "huge risk profile". The DOE declined to comment on the status of the Sunnova Energy loan guarantee.