Trump axes loan for Grain Belt power transmission project

By Timothy Gardner

WASHINGTON, July 23 (Reuters) - The administration of President Donald Trump on Wednesday axed a loan guarantee for the Grain Belt Express transmission project to send power from wind and solar energy projects in Kansas to cities in the Midwest and East.

American farmers had opposed the conditional $4.9 billion loan guarantee that was initiated by the administration of former President Joe Biden, mainly due to the Grain Belt filing dozens of eminent domain, or compulsory acquisition, petitions against state landowners.

The 800-mile (1,290 km) project by privately held Invenergy was described by the company as the second-longest transmission line in U.S. history and a national "energy security backbone" that would connect four grid regions, including the PJM Interconnection, the largest U.S. grid spanning states from Illinois to New Jersey.

The Department of Energy's Loan Programs Office, or LPO, issued the conditional loan guarantee in November. The department said in a release on Wednesday it found the conditions necessary to issue the guarantee were unlikely to be met and "it is not critical for the federal government to have a role in supporting this project."

Invenergy said it would finance the project privately.

"While we are disappointed about the LPO loan guarantee, a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance while delivering billions of dollars in energy cost savings, strengthening grid reliability and resiliency, and creating thousands of American jobs," a project spokesperson said in an emailed statement.

Jigar Shah, who led the office that approved the loan guarantee during the Biden administration, said the cancellation was against the law.

"This decision is illegal," Shah said in a post on LinkedIn. "When the Loan Programs Office (LPO) applicant meets all of the requirements that are set for the conditional commitment, then the Department of Energy is obligated to close the loan."

The White House on May 9 had praised a $1.7 billion Invenergy investment in the project in a "list of wins" that bolster the U.S. economy and enhance national security.

But Grain Belt also jarred with the administration's opposition to renewable energy sources, which it views as unreliable and expensive compared to fossil fuels.

Environmental group Sierra Club said the decision would increase electricity costs in a state that is dependent on coal-fired power.

"This reeks of desperation to satisfy political interests at the expense of Missouri families and businesses throughout the state that may have to pay higher electric rates because of this decision,” said Gretchen Waddell-Barwick, director of the Sierra Club's Missouri chapter.

Trump only tapped the LPO for nuclear power in his first term. The Energy Department has said it is reviewing loans, including the $85 billion in closed loans and conditional commitments LPO made between the day Trump won the election in November to the day he came back into office in January.