In a significant development for energy policy and infrastructure, Congress has approved the FY2026 Energy and Water Development and Related Agencies Appropriations Act. The bill allocates $49 billion to the Department of Energy (DOE), marking an important moment for sustainable energy programs and infrastructure development across the United States. This legislation also highlights Congress’s intent to support DOE’s mission, with substantial funding increases for key initiatives.
The appropriations bill notably exceeds the White House’s original budget requests in several areas, signaling strong Congressional backing for a wide range of energy programs. For the Energy Efficiency and Renewable Energy (EERE) program, a budget of $3.1 billion was enacted, far surpassing the initial request of $888 million. Although this represents a decrease from FY2025’s $3.46 billion allocation, it underscores continued investment in clean energy advancements.
Funding priorities include electrification of medium- and heavy-duty vehicles through the SuperTruck program, investments in battery technologies, and support for zero-emission mobility pilots. Additional funding focuses on distributed wind, next-generation geothermal demonstrations, and advanced HVAC and heat pump technologies. Other notable allocations include $8.4 billion for the DOE Office of Science and $720 million for the Office of Fossil Energy, emphasizing research in hydrogen production and critical minerals extraction from unconventional sources.
The bill also allocates $3.1 billion to the DOE’s Office of Nuclear Energy for developing Gen3+ small modular reactors, a program that could result in up to two advanced reactor awards. ARPA-E, responsible for scaling high-impact technologies, received $350 million for projects such as Arctic microgrids, modular mineral processing, and small-scale geothermal systems.
One of the most significant aspects of the legislation is its emphasis on reshaping DOE priorities. The bill repurposes funds from the Infrastructure Investment and Jobs Act (IIJA) toward initiatives like enhancing the domestic supply chain for power transformers and other electrical grid components. The Grid Deployment Office will receive $375 million, while the Office of Energy Dominance Financing (EDF) is granted an additional $150 million to finance advanced nuclear projects. The bill specifically directs DOE to prioritize projects expanding the domestic supply of critical minerals under the Title 17 loan guarantee program.
To align with these priorities, DOE announced a reorganization of the Energy Efficiency and Renewable Energy (EERE) division. This restructuring will create the Office of Critical Minerals and Energy Innovation (CMEI), which will include three pillars: the Office of Critical Minerals, Materials, and Manufacturing; the Office of Energy Technology; and the Office of Innovation, Affordability, and Consumer Choice. The changes are already being implemented.
The Trump administration has made securing critical minerals a focal point of its energy strategy, investing $1.6 billion into Oklahoma-based USA Rare Earth. This includes a $1.3 billion loan and $277 million in funding from the CHIPS and Science Act, in exchange for a 10% equity stake. Previous investments have targeted companies like Atlantic Alumina and MP Materials, reflecting a broader effort to strengthen domestic supply chains for rare earth materials.
In support of this, bipartisan lawmakers introduced the DOMINANCE Act, which seeks to bolster the United States’ access to critical minerals essential for energy technologies. Proposals include the creation of an Office of Energy Security Compacts and codification of the Mineral Security Partnership, an initiative first launched under the Biden administration. The bill also aims to enhance mining education through programs modeled on the Fulbright scholarship.
While there is momentum around domestic energy priorities, challenges persist. A federal court recently ruled against the Trump administration in a case involving terminated clean energy grants. The judge found that the Department of Energy’s cancellation of seven grant awards, totaling $27.6 million, violated the Fifth Amendment’s equal protection guarantee. Additionally, legal disputes over offshore wind projects, including Empire Wind I and Vineyard Wind, have resulted in rulings that allow construction to proceed despite objections from the administration.
Meanwhile, DOE’s Energy Dominance Financing Office is reviewing $83.6 billion in loans and conditional financings issued during the Biden administration. This includes restructuring loans for renewable energy projects, with a shift in focus toward nuclear energy and natural gas.
As electricity demand continues to rise, reflected in the Energy Information Administration’s projection of a 1% growth in 2026 electricity consumption, the FY2026 appropriations bill sets the stage for the DOE to address these needs. The bill’s significant investments in grid modernization, clean energy technology, and critical minerals development will play a pivotal role in shaping the future of the U.S. energy landscape. Whether through expanding domestic production of key materials or advancing next-generation nuclear reactors, the legislation underscores the nation’s commitment to energy security and innovation.
