One Year into the Trump Administration: DOE’s FY26 Budget Cuts and the Path Forward
This piece is the last in a series analyzing the current state of play at DOE, one year into the second Trump administration. The first piece covers staff loss and reorganization; the second piece looks at the status of BIL and IRA funding and the impact of award cancellations.
Overview of DOE Funding for FY26
On January 15th, Congress passed the FY26 E&W Appropriations as part of a second minibus along with the Commerce, Justice, Science and the Interior and Environment Appropriations (bill text and joint explanatory statement). Assuming the President signs this package into law, it will dictate DOE’s funding through the rest of FY26, which ends in September, and potentially into FY27 if any continuing resolutions are passed in the next appropriations cycle.
Though the administration originally requested drastic cuts to all of DOE’s offices involved in clean energy RDD&D, the FY26 E&W Bill takes a much more restrained approach to budget cuts and reprograms some BIL funds to bolster EERE, NE, FE, and SC budgets. Notably, Congress increased appropriations levels for SC, NE, and SCEP, despite DOE’s request to zero out the budget for SCEP. Overall, compared to FY25, the FY26 Appropriations enact a 1.4% cut to the agency’s budget – a modest amount compared to DOE’s original request for a steep 7.0% cut.
Nevertheless, these cuts will decelerate progress on energy innovation, manufacturing, and infrastructure necessary for the United States to meet energy demand growth, reliability, affordability, and security challenges – precisely when we need it the most.
Reallocation of Unobligated BIL Funds
Section 311 of the FY26 E&W bill repurposes $5.16 billion in unobligated funding from BIL for the following programs:
- $1.28 billion from the Civil Nuclear Credit Program;
- $1.5 billion from the Carbon Dioxide Transportation Infrastructure Finance and Innovation program (CIFIA);
- $1.04 billion from the Regional Direct Air Capture (DAC) Hubs;
- $950 million from the Carbon Capture Large-Scale Pilot Projects and the Carbon Capture Demonstration Projects; and
- $394 million from BIL programs funded through EERE’s account, including those implemented by MESC and SCEP.
The Civil Nuclear Credit Program is a new addition that was not present in either the House or the Senate’s original versions of the E&W bill. The other programs targeted for reallocation and the corresponding amounts were all proposed in either the House and/or the Senate’s original versions of the E&W bill. Notably, funding for the Hydrogen Hubs was spared after conferencing, despite previous inclusion in both chambers’ E&W bills.
The reprogrammed funds are to be used as follows:
- $3.1 billion for NE to be used for the Advanced Reactor Demonstration Program;
- $375 million for the Grid Deployment Office “to enhance the domestic supply chain for the manufacture of distribution and power transformers, components, and materials, and electric grid components, including financial assistance, technical assistance, and competitive awards for procurement and acquisition”;
- $1.15 billion for EERE activities;
- $100 million for NE activities;
- $140 million for FE activities;
- $150 million for SC activities; and
- $150 million for Title 17.
These moves reflect Congress’ emphasis on advanced nuclear demonstration projects, growing concern over grid supply chain bottlenecks, and continued commitment to funding EERE activities, as well as skepticism about the goals and execution of carbon management demonstration programs.
Zooming in: EERE Suboffices
DOE’s FY26 budget request proposed a major contraction of the EERE portfolio, explicitly requesting zero funding for four sub-accounts Hydrogen and Fuel Cell Technologies, Solar Energy Technologies, Wind Energy Technologies, and Renewable Energy Grid Integration. For the first three, the Department argued that these technologies had reached sufficient market maturity to rely primarily on private capital—which is definitely not the case for hydrogen and fuel cell technologies, and inconsistent with DOE’s continued funding for more mature technologies such as nuclear, coal, and gas. For Renewable Energy Grid Integration, DOE argued that the work would be absorbed into other programs. DOE also sought to near-eliminate the budget for the Building Technologies Office (BTO) and the Vehicle Technologies Office (VTO) by requesting only $20 million and $25 million, respectively, signaling a broader retreat from technologies that would support electrification, energy efficiency, and affordability.
Congress largely rejected wholesale eliminations in the FY26 bill they passed. Compared to FY24 and FY25 enacted levels, the deepest cuts for FY26 were for Solar Energy Technologies (31%) and Wind Energy Technologies (27%). Hydrogen and Fuel Cell Technologies was also targeted for deep cuts in the original House and Senate appropriations bills, but ended up with only a 6% budget cut after conferencing and passage, putting the office in a better position than many of the other EERE suboffices that lost more than 10% of their annual budget. The only two offices that received budget increases were Geothermal Technologies (27%) and Water Power Technologies (10%), reflecting Congress’ prioritization of clean firm energy technologies.
EERE suboffice funding amounts are dictated in the Joint Explanatory Statement, a report that accompanies annual appropriations bills and provides detailed guidance on how funds are to be allocated within the topline account numbers set by the appropriations bill. Historically, agencies have always adhered to report language; even under full-year continuing resolutions, agencies would still follow the funding guidance set in the prior fiscal year’s report language.
The second Trump administration broke this precedent: DOE’s FY25 spend plan – released more than three-quarters of the way through the fiscal year – shifted more than $1 billion away from core clean energy programs under EERE, disregarding Congressional direction in the FY24 appropriations report.1 DOE moved funding away from Vehicle, Hydrogen and Fuel Cell, Solar, Wind, and Building Technologies, towards Renewable Energy Grid Integration and Water Power, Geothermal, Industrial, and Advanced Materials and Manufacturing Technologies. These actions have raised concerns about whether the administration will attempt to do the same in FY26.
Zooming in: National Labs
The Joint Explanatory Statement does not provide guidance on how DOE allocates funding to national labs, though there tends to be a trickle down effect depending on which offices labs are reliant on funding from. DOE proposed drastic cuts to the FY26 budgets of many national labs, particularly those that get a significant amount of funding from EERE. Under the proposed budget cuts, the national labs would reportedly plan to lay off 3,000 or more scientists and other staff.
The National Renewable Energy Laboratory (NREL) – recently renamed the National Lab of the Rockies, or NLR for short – faces the largest proposed budget cut of 72% because it’s affiliated with EERE and gets the majority of its funding from that office. Such deep cuts would require NLR to lay off up to a third of its staff and shut down many of its facilities and ongoing activities.
With the passage of FY26 appropriations, hopefully, DOE will reconsider funding for national labs and adjust budgets upwards to reflect the much milder cuts that Congress passed.
Long-Term Impacts
Sustained budget cuts to DOE pose significant long-term risks to the nation’s scientific enterprise and ability to compete globally. Because DOE is the federal government’s primary engine for energy research and advanced technology commercialization, reductions in funding have both immediate operational consequences, as well as lasting structural ones.
Budget cuts translate directly into workforce attrition across DOE program offices, national laboratories, and partner institutions. When staffing levels fall, the federal government’s capacity to execute world-leading scientific research diminishes. Essential functions like managing user facilities, overseeing complex R&D portfolios, and ensuring the continuity of long-term research programs are all jeopardized, slowing the pace of innovation and limiting the nation’s ability to respond to emerging scientific and energy challenges.
Loss of program funding and workforce capacity raises a broader strategic concern: the U.S. may no longer retain the scientific and engineering talent necessary to develop next-generation energy technologies. DOE plays a critical role in cultivating and sustaining technical talent pipelines through early-career research programs, national lab fellowships, university partnerships, and long-term R&D initiatives that span decades. When the continuity of these programs is disrupted, students, postdocs, and mid-career researchers may exit the field entirely or shift their expertise abroad, diminishing the domestic talent base. These losses cannot be quickly reversed as rebuilding a skilled scientific workforce takes sustained investment, stability, and opportunity signals that cuts fundamentally undermine.
Attrition is not limited to DOE itself. The broader U.S. science and innovation workforce – spanning clean energy startups, universities, private-sector R&D, and communities that host national laboratories – absorbs the shock of federal retreat. Reduced research funding forces universities to shrink labs, scale back graduate cohorts, and limit collaborations with DOE facilities. National laboratory communities, often in rural or specialized high-tech regions, face economic consequences when jobs disappear or major facilities reduce their operating capacity. The ripple effects of lost researchers, technical staff, and support personnel weaken the entire innovation ecosystem that underpins clean energy deployment.
Quantifying these long-term losses is essential. Each scientist or engineer who leaves the field takes with them years of specialized training, intellectual and institutional capital, and future contributions to technological advancement. The economic value of these foregone innovations – from delayed commercialization timelines to missed breakthrough discoveries – can be substantial. A shrinking innovation pipeline also slows private-sector investment domestically and increases dependence on imported technologies at a moment when global competition in clean energy, advanced computing, and critical minerals is accelerating.
In the long run, sustained budget cuts compromise the United States’ ability to remain a global leader in science and innovation. They jeopardize advancements in energy innovation, undermine national competitiveness, and reduce the nation’s capacity to deliver affordable, secure, and clean energy solutions. Protecting DOE’s workforce and research infrastructure is therefore not only a matter of annual appropriations, but also a long-term investment in America’s economic strength and technological leadership.
Conclusion: The Path Forward
As we begin the second year of the second Trump administration, DOE sits upon the precipice of transformation. Over the past year, the rapid pace and unprecedented scale of changes to the agency’s staff, organizational structure, programs and awards, and budget have generated waves of uncertainty and volatility that has rippled out across the energy sector, destabilizing commercial projects worth billions of dollars, as well as DOE’s relationship with the private sector, state and local governments, its own career staff.
After all these changes, whether DOE transforms for better or worse will depend on the decisions this administration makes over the next three years. Realizing this administration’s priorities of energy dominance and abundance will require DOE to rebuild its technical and organizational capacity to design and implement programs, oversee loans and awards, and engage in public-private and intergovernmental partnerships.
This should start with carefully managing the agency’s reorganization and providing clearer, more detailed explanations to the public on the mandate and internal structure of new offices and where existing programs and activity areas have been moved, and guidance to employees about how the reorganization will impact their roles and the programs on which they work. DOE leadership should then evaluate the functions and capacities missing under the new organizational structure and rehire for those roles, ideally with the reinstatement of remote work flexibility.
As the agency rebuilds internal capacity, it should reorient efforts away from reacting to the previous administration and towards actions that will build the infrastructure necessary to modernize and expand the energy system, ensure reliability and affordability in the face of demand growth, secure energy supply chains, and maintain U.S. leadership in energy innovation. The wave of funding opportunity announcements for BIL critical minerals programs over the past few months was a good start, but that is not DOE’s only mandate. DOE must also restart activities across other technologies and sectors. Luckily, the agency still has $30 billion plus in funding from BIL and IRA that has yet to be awarded. In implementing the remaining funding, DOE can learn from the many lessons learned reports on the previous administration’s experience and adopt internal reforms. The agency should also make sure to adhere closely to the statutory intent behind this funding.
Lastly, stable year-to-year funding is essential for progress. As Congress begins the FY27 appropriations process this month, congress members should also turn their eyes towards rebuilding DOE’s programs and strengthening U.S. energy innovation and reindustrialization. Higher DOE funding levels will be necessary to put the United States back on a growth trajectory with respect to global energy leadership and competitiveness.
Acknowledgements
The authors would like to thank Megan Husted and Arjun Krishnaswami for their pivotal roles in shaping the vision for this project, planning and executing the convenings that informed this report, and providing insightful feedback throughout the entire process. The authors would also like to thank Kelly Fleming for her leadership of the project team while she was at FAS. Additional gratitude goes to Colin Cunliff, Keith Boyea, Kyle Winslow, and all the other individuals and organizations who helped inform this report through participating in workshops and interviews and reviewing an earlier draft.
Over the course of 2025, the second Trump administration has overseen a major loss in staff at DOE, but these changes will not deliver the energy and innovation impacts that this administration, or any administration, wants.
Politically motivated award cancellations and the delayed distribution of obligated funds have broken the hard-earned trust of the private sector, state and local governments, and community organizations.