Full FY 2026 Budget Reorients DOE Around Nuclear and Hard Infrastructure

The U.S. Office of Management and Budget (OMB) and various federal agencies on May 30, 2025, posted additional information on the Trump Administration's Fiscal Year (FY) 2026 budget request, including a detailed appendix outlining proposed spending across federal agencies. The appendix and U.S. Department of Energy's (DOE) formal justification reveal significant shifts in funding priorities that build on the administration's earlier "skinny budget." (See Holland & Knight's previous blog post, "Trump Administration's FY 2026 'Skinny Budget' Signals Shift in Energy Priorities," May 6, 2025.)

The proposal signals a broader realignment of DOE's role: one that re-centers baseload power, reduces U.S. reliance on China and leverages federal financing tools to de-risk high capital expenditures (CapEx) industrial projects.

DOE Energy Programs: Realigned for National Priorities

The FY 2026 budget requests $46.3 billion in discretionary funding for DOE, including a nearly 26 percent cut to non-defense energy programs. The deepest reductions target renewable energy, decarbonization and commercialization efforts, with several offices eliminated entirely and others pared back to core research and development (R&D) or administrative functions. At the same time, the proposal shifts resources toward baseload power, domestic supply chains and federal lending tools that support industrial-scale energy infrastructure.

• Office of Energy Efficiency and Renewable Energy (EERE): Funded at $888 million (a 74 percent cut compared to FY 2025 levels), the request narrows EERE's focus to early-stage R&D in geothermal, hydropower, biofuels, industrial efficiency and critical minerals; programs such as solar, wind and hydrogen are zeroed out; the request also includes $183 million for program direction and core operations at the National Renewable Energy Laboratory (NREL)
• Office of Manufacturing and Energy Supply Chains (MESC): Funded at $15 million with a mandate to eliminate vulnerabilities in U.S. energy supply chains, expand domestic energy production, revitalize the industrial workforce and support data-informed investment and policy decisions
• Office of Science: Funded at $7.1 billion (a 14 percent cut), the Office of Science remains the largest federal sponsor of basic research in the physical sciences, supporting more than 22,000 researchers across 300 institutions and 17 national labs; the request emphasizes artificial intelligence (AI), quantum information science, fusion and critical minerals R&D while continuing to operate 27 user facilities serving more than 39,000 researchers nationwide
• ARPA-E (Advanced Research Projects Agency–Energy): Funded at $200 million (a 57 percent cut), ARPA-E will continue supporting early-stage, high-risk energy technologies, with a focus on firm, reliable power and American energy dominance; the agency aims to scale the most promising innovations nearing commercial readiness, with targeted funding opportunities aligned with U.S. competitiveness, energy abundance and small business support
• Fossil Energy (formerly Fossil Energy and Carbon Management): Funded at $595 million (a 31 percent cut), the office's mission is reoriented toward advancing domestic oil, gas, coal and critical minerals, with a renewed focus on energy security, affordability and supply chain resilience; the proposal drops "Carbon Management" from the office's title and shifts carbon capture activities toward enhanced oil and gas recovery; priorities include advanced energy systems, natural gas infrastructure, blue hydrogen and mineral production from unconventional sources; the request also includes $145 million for National Energy Technology Laboratory (NETL) operations and infrastructure
• Office of Cybersecurity, Energy Security and Emergency Response (CESER): Funded at $150 million (a 25 percent cut), CESER remains DOE's lead for securing energy infrastructure against cyber and physical threats; the budget supports expanded threat-informed R&D, emergency response coordination and cybersecurity-by-design initiatives; key priorities include situational awareness, risk analysis, regional response capacity and tools for hardening energy systems against all-hazards events
• Office of Electricity (OE): Funded at $193 million (a 31 percent cut), OE leads DOE's efforts to modernize and secure the power grid; the FY 2026 request supports R&D for transmission reliability, advanced grid controls, next-generation components and the North American Energy Resilience Model; funding also enables strategic grid deployment projects in coordination with CESER, with a continued emphasis on end-to-end reliability, bidirectional flows and grid-edge resilience
• Grid Deployment Office (GDO): Funded at $15 million (a 75 percent cut) to support OE programs and projects in close coordination with CESER that increase generation and transmission capacity and strengthen grid security; the office will rely on unobligated balances from prior years to continue select project activities under its Energy Assurance and Resource Adequacy initiative
• Office of Clean Energy Demonstrations (OCED): The budget proposes to wind down OCED, rescinding $3.7 billion in previously obligated funding; Energy Secretary Chris Wright announced on May 30, 2025, the termination of 24 OCED projects totaling more than $3.7 billion in financial assistance, citing a lack of economic viability and misalignment with the administration's priorities; the request provides no new discretionary funding, though $1.4 billion in remaining IIJA balances would remain; full-time staffing is reduced from more than 200 employees to 10 employees
• Office of Technology Transitions: The stand-alone account for the Office of Technology Commercialization (formerly the Office of Technology Transitions) is eliminated; its mission – to expand the commercial and public impact of DOE's research investments – will continue under the Departmental Administration account

Taken together, the FY 2026 budget reflects a strategic realignment of DOE's energy programs, shifting away from grant-based deployment toward a focus on supply chain security, industrial competitiveness and critical infrastructure modernization.

Loan Programs Office (LPO): Full Authority Preserved

Despite efforts through the U.S. House of Representatives reconciliation process to claw back unspent Inflation Reduction Act (IRA) funding, the FY 2026 budget maintains full lending authority for DOE's Loan Programs Office and requests new appropriations to expand its reach. (See Holland & Knight's previous blog post, "What the House Reconciliation Bill Means for DOE's Loan Programs Office," May 23, 2026.)

• Title 17 Innovative Energy Loan Guarantees: The budget requests $750 million in new credit subsidy to support loan guarantees for small modular or advanced nuclear reactors. It also proposes up to $30 billion in new loan limitation authority covering nuclear, critical minerals, grid infrastructure and firm power.
• Advanced Technology Vehicles Manufacturing (ATVM): The budget provides $9.5 million for administrative expenses and rescinds $2.29 billion in unused credit subsidy authority originally appropriated in 2009. DOE expects to issue up to $5.25 billion in loans in FY 2026 under IRA authority. The request reflects a shift away from electric vehicle (EV)-focused lending, aligning the program more closely with Executive Order (EO) 14154, "Unleashing American Energy." Funding for critical minerals projects is now primarily channeled through Title 17.
• Tribal and Transmission Loans: DOE anticipates issuing up to $1.1 billion in direct loans under the Tribal Energy Loan Guarantee Program (TELGP) and $6.1 billion in new transmission loans – both through the Federal Financing Bank and backed by unobligated authorities from the IIJA.
• Carbon Dioxide Transportation Infrastructure Finance and Innovation Act (CIFIA): The budget proposes canceling the program's remaining $2.09 billion in unobligated balance. No new obligations are requested for carbon dioxide pipeline and transport infrastructure.

In total, DOE anticipates issuing more than $50 billion in new loans across programs in FY 2026. Administrative funding for LPO operations is set at $125 million, including $35 million from fees.

This sustained level of federal credit support – particularly for nuclear – stands in stark contrast to efforts to scale back or repeal the LPO's statutory authority.

Nuclear Energy in the Spotlight

Across the budget, nuclear emerges as a cornerstone of the administration's energy strategy. From DOE's energy programs to its loan portfolio to its defense activities, nuclear receives both rhetorical and financial backing:

• Office of Nuclear Energy: Funded at $1.37 billion – a 24 percent reduction – the Office of Nuclear Energy remains central to the Trump Administration's energy strategy. The request consolidates funding around advanced reactor R&D, new fuel cycles and critical infrastructure at Idaho National Laboratory. Key priorities include the Advanced Reactor Demonstration Program (ARDP), high-assay low-enriched uranium (HALEU) fuel development and support for mission-critical facilities enabling U.S. leadership in next-generation nuclear technologies.
• National Nuclear Security Administration (NNSA): The agency receives more than $25 billion spanning its core accounts, including $20.07 billion for weapons activities and $2.35 billion for naval reactors. The budget assumes enactment of legislation providing an additional $4.8 billion in FY 2026 for NNSA under a forthcoming defense reconciliation bill.
• LPO: As noted above, the budget proposes $750 million in new Title 17 credit subsidy – explicitly earmarked to support the construction of small modular and advanced reactors.

These investments come on the heels of recent nuclear-focused EOs from President Trump aimed at expanding capacity, streamlining licensing and opening federal lands for development. The goal is to quadruple U.S. nuclear energy capacity. (See Holland & Knight's previous alert, "President Trump Signs 4 Executive Orders to Deploy New Nuclear Reactors, Strengthen Supply Chain," May 28, 2025.)

That ambition is increasingly shared by industry, particularly among tech firms and AI developers racing to meet surging data center power demand. Yet the regulatory, financing and political risks remain steep – especially as key congressional Republicans continue to scrutinize the LPO.

Conclusion: What Comes Next

The Trump Administration's FY 2026 budget proposal makes clear where it wants to take the DOE: Away from climate-era grantmaking and toward a focus on hard infrastructure, baseload power and federal financing tools that mobilize private investment. That vision includes sweeping cuts across DOE's non-defense energy offices – reducing or eliminating support for clean energy deployment, commercialization and decarbonization. Even offices aligned with the administration's priorities, such as nuclear energy, see double-digit reductions.

At the same time, the budget reinforces the administration's stated energy priorities. Nuclear energy, critical minerals and grid reliability are positioned as cornerstones of the administration's pursuit of American energy dominance.

But big questions remain. Appropriators in both chambers of Congress retain control of the purse strings, and any final FY 2026 budget will require bipartisan buy-in to clear a 60-vote threshold in the Senate. House Committee on Appropriations Chair Tom Cole (R-Okla.) has indicated his intent to begin subcommittee markups in June 2025 and July 2025, and much of the administration's vision may face resistance from both parties.

For now, the message from the White House is clear: Achieving energy dominance will require a fundamental reorientation of how DOE spends its dollars.