Biden Administration's $400 Billion Green Loan Program Under Scrutiny
Li-Cycle Holdings, a battery recycling company approved for a $375 million federal loan in November, warned investors it may soon cease operations. The Toronto-based firm disclosed in its Monday SEC filing that it has "incurred significant losses since inception" and faces "substantial doubt" about continuing as a going concern.
The Department of Energy finalized Li-Cycle's loan just days after President Joe Biden's election loss, part of $20 billion in last-minute loan approvals. This followed direct encouragement from Jigar Shah, head of the DOE's Loan Programs Office, who urged CEO Ajay Kochhar to pursue the funding during a September 2023 meeting in Pittsburgh.
Li-Cycle is not alone in financial distress. Sunnova Energy, approved for a $3 billion DOE loan guarantee in 2023, is negotiating with creditors after nearing bankruptcy. Plug Power, recipient of a $1.6 billion loan guarantee in the final week of the Biden administration, laid off 200 workers in New York last week.
Republican Lawmakers Question Loan Program's Oversight
The DOE's loan program expanded dramatically under the Inflation Reduction Act, growing from a shoestring budget to $400 billion in available funding. However, the agency's inspector general warned last year that the loan office wasn't following conflict-of-interest rules, creating "significant risk of fraud."
Sen. John Barrasso (R., Wyo.) had flagged Li-Cycle's financial instability in a 2023 letter to Shah, criticizing the loan as an example of "bad judgment" with "huge risk profile." The DOE did not respond to requests about the status of the Sunnova Energy loan guarantee.
Li-Cycle's Rochester, N.Y., recycling facility remains stalled due to financial issues. The company reported a $137 million net loss in 2023 and stated it cannot currently meet federal requirements to access the DOE funds. Even if released, the loan would require Li-Cycle to first secure "significant additional capital," which it has not yet obtained.