Dive Brief:
- The U.S. Department of Energy outlined a plan to increase defense spending by 21% while cutting non-defense spending by 16% in a congressional budget justification released last week in support of President Donald Trump’s proposed budget for fiscal year 2027.
- The administration is asking Congress to increase DOE’s total discretionary budget by nearly 10% to $53.9 billion. Much of that increase would go to the National Nuclear Security Administration to develop “new warheads” and “next-generation reactor technology for future naval systems,” among other military applications, according to the White House. Since it was created in 2000, the NNSA has accounted for a large portion of DOE’s budget.
- Outside of nuclear military capabilities, the proposal would shrink DOE’s budget by “slashing Green New Scam initiatives,” including more than $15 billion in Infrastructure Investment and Jobs Act funding, the White House said. Overall, the Office of Electricity inside DOE would see a 22% cut from 2026, according to the proposal. About $4.7 billion of the IIJA money would be “repurposed” for “firm baseload power” — coal, natural gas, nuclear, hydropower and geothermal generation, as well as transmission — and to “support seven AI supercomputers at the Argonne and Oak Ridge National Laboratories.”
Dive Insight:
Frank Maisano, a senior principal at Bracewell law firm, cautioned against putting too much stock in the president’s budget, which he said is always more about messaging than policy. In that context, the proposed cuts to renewable energy, energy efficiency and utility bill assistance are to be expected, but may not happen, he noted.
In January, Trump signed a stack of appropriations bills for 2026 that did not include many of the priorities he had outlined in his proposal. For example, the bill containing the DOE’s funding gave $320 million to the agency’s wind and solar programs, which Trump had sought to eliminate.
“Congress is going to decide this,” Maisano said. “The president can give us his sense of where he wants to go, but that’s just all he does.”
Still, some analysts look to the proposal for hints to the administration’s future policy plans. Investment bank Jefferies said in a note that additional funding for baseload assets indicates DOE plans to continue using its 202(c) emergency authority to prevent coal and natural gas plants from retiring.
Samuel Thernstrom, president of the Energy Innovation Reform Project, said he was not surprised to see an emphasis on defense and military spending or cuts to energy technologies the administration disfavors, like renewables.
But other cuts to electricity and grid security programs were “a little surprising,” he said. Cybersecurity, energy security and emergency response were slated for a 16% cut, according to the DOE’s justification.
“What comes out from the White House is limited on these things,” Thernstrom told Utility Dive in an interview. “The DOE budget document has more information, but it doesn’t really offer an explanation for the decisions.”
“All budget proposals from all White Houses are starting points for conversation,” he continued. “With energy being an especially sensitive issue at this particular time, I would expect Congress to look especially closely at the energy provisions.”
Other aspects of the proposed budget are recurring requests that have not gained much traction in the past.
Trump’s budget proposes “for the sixth time” to eliminate the Low Income Home Energy Assistance Program administered by the Health and Human Services Department. The administration would “instead support low-income individuals through lower energy prices and an America First economic platform,” it said.
“A reduction in LIHEAP funding could lead to additional affordability concerns as more vulnerable customers are impacted,” Jefferies said.
But Maisano called the push-and-pull over LIHEAP a “kabuki dance” between the White House and Congress in which lawmakers inevitably back LIHEAP.
“I think you’ll see Congress take the pen on the budget side and have a much, much different approach,” he said.
