Signals | January 12, 2022

Jigar Shah on government’s role as a catalytic climate investor

Amy Cortese
ImpactAlpha Editor

Amy Cortese

ImpactAlpha, Jan. 12 – The loan program office of the Energy Department has made its first loan commitment under the Biden administration.

Jigar Shah, the head of the office, joined the Catalyst podcast with host Shayle Kann of Energy Impact Partners to flesh out details of the $1 billion conditional loan guarantee to Monolith Nebraska, which uses “methane pyrolysis” to convert natural gas into clean hydrogen and “black carbon” used in tires and other products. The loan will enable the decade-old company to build its first commercial-scale plant, a capital-intensive hurdle for many climate tech startups (for context, see “Deploying catalytic capital to bridge financing gaps for climate action).

“I don’t think there’s a single success story in hard tech, not one in the energy space, that didn’t involve massive government involvement,” said Shah. 

Catalytic loans

Tesla is Exhibit A. In 2010 when it was still an unproven startup, the loan program office provided Tesla with a loan of $465 million to build its first manufacturing plant. (Tesla had earlier received a $75 million from Bay Area Equity Fund, an impact fund spun out of JPMorgan backed by program-related investments from the Ford, MacArthur, Annie E. Casey and F.B. Heron foundations).

Shah also pointed to fracking, modular nuclear reactors and fusion as technologies that have benefited from government research and support. 

Loan pipeline

The loan office has been newly reinvigorated under Shah, who has $40 billion to deploy across the office’s Innovative Energy Loan Guarantee, Advanced Technology Vehicles Manufacturing Loan and Tribal Energy Loan Guarantee programs.

The loan office has received some 66 loan and loan guarantee applications valued at more than $53 billion in clean energy and advanced vehicle technology projects.

The challenge, says Shah, is “getting CEOs who are on track to gigaton-scale technologies to actually have us in mind a year before they need us.”