Part 2 in a 2-part series on credit subsidy and LPO.
November 19, 2024
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This is part two of a two-part series on credit subsidy. For context, see Understanding Credit Subsidy.
LPO’s explanation of available loan authority and/or available loan guarantee authority for a program is, depending on the program, the estimated or actual maximum dollar amount that the office could lend through its loan programs. A program’s loan authority and/or loan guarantee authority can be limited by: (1) available appropriations from Congress to cover credit subsidy costs and/or (2) statutory caps on loan authority established by Congress. The program’s structure—and in some cases, the risk associated with loans offered—determines how each lever affects a program’s ability to leverage loan authority and/or loan guarantee authority.1 Additionally, expiration dates on programs and/or appropriated funds may affect LPO’s estimate of the amount it will be able to lend through a given program.
- Lever 1 - Appropriations for Credit Subsidy Cost: Congress may appropriate funds to LPO to pay credit subsidy costs, which are calculated for each loan or loan guarantee the federal government offers based on factors related to deal risk, loan tenor, and recovery in the event of default. Credit subsidy costs are calculated using a formula from the OMB.
Borrower Pay: Under the Title 17 Clean Energy Financing program, Congress authorized borrowers to pay the credit subsidy cost when appropriated funds are exhausted.
- Lever 2 - Statutory Cap on Total Loan Authority: Through legislation, Congress can establish a ceiling on total loan amounts available under a given program. The office or program may not exceed this amount unless Congress amends the legislation.
For a breakdown of how these levers relate to loan authority across LPO programs, see the table below.
Table 1: How LPO Determines Available Loan Authority by Program
Please refer to the Monthly Application Activity Report for the resulting LPO determination of available loan authority.
Program | Borrower or Pay Allowed? | Congressionally Provided (i.e., “Statutory”) Loan Authority (Total $ Amount or Uncapped) | How LPO Determines Available Loan Authority (statutory or estimated) |
Title 17 Clean Energy Financing – Innovative Energy, Innovative Supply Chain, State Energy Financing Institution-Supported | Yes | $89 Billion$40 billion of this amount was authorized by the IRA and will expire on September 30, 2026 if uncommitted or unspent. Since the passage of the IRA, LPO has used the time-limited IRA funds. | Statutory cap less amounts obligated for Title 17 Section 1703 projects to date. |
Title 17 Clean Energy Financing – Energy Infrastructure Reinvestment | Yes | $250 billion capUnused or uncommitted authority expires September 30, 2026. | Estimated based on available credit subsidy, project pipeline and program timeline. |
Advanced Technology Vehicles Manufacturing (ATVM) | No | UncappedOriginal $25 billion cap was removed by IRA. | Estimated based on available credit subsidy and project pipeline. |
Carbon Dioxide Transportation Infrastructure Finance (CIFIA) | No | Uncapped | Estimated based on available credit subsidy and project pipeline.2 |
Tribal Energy Financing | No | $20 billion capOriginal $2 billion cap was increased by IRA. | Statutory, based on available credit subsidy, project pipeline, and statutory cap. |