DOE won’t award $200M to battery company criticized by GOP over China links

The Energy Department has scrapped a proposed $200 million grant to a Texas-based battery company whose connections to China had drawn criticism from lawmakers — in just the latest example of how the rivalry between Washington and Beijing is complicating President Joe Biden's climate agenda.

DOE had conditionally selected Microvast last year for the grant, which would have helped fund a factory for battery technology in Clarksville, Tenn. But the department said Monday that it has ended negotiations, for reasons it did not immediately explain.

Microvast is a publicly traded U.S. company but has a subsidiary in China, a connection that Republicans have used to further their allegations that Biden's climate and clean energy spending will benefit Beijing. The money for Microvast would have come from the bipartisan 2021 infrastructure law.

Company officials have insisted that the Chinese government has no influence over its operations and that Republican attacks are purely for political points.

DOE assured lawmakers in recent months it was conducting a due diligence review before any money went to the company, as is the department’s standard procedure.

“As responsible stewards of American taxpayer dollars, the Department of Energy maintains a rigorous review process prior to the release of any awarded funds, and it is not uncommon for entities selected to participate in award negotiations under a DOE competitive funding opportunity to not ultimately receive an award,” a DOE spokesperson said Monday.

Representatives for Microvast did not respond to requests for comment.

Context: Senate Energy and Natural Resources ranking member John Barrasso (R-Wyo.) raised concerns about Microvast last year, pointing in part to a recent Securities and Exchange Commission filing in which the company outlined its China operations.

As recently as February, DOE appeared to be standing behind the selection.

The Microvast award would go toward “bolstering domestic supply chains for lithium-ion batteries and creating well paying jobs in the United States,” acting Under Secretary for Infrastructure Kathleen Hogan wrote to lawmakers that month.

Hogan noted that, as with any award, the Microvast grant was undergoing a “thorough post-selection risk-based, due-diligence review” and DOE “reserves the right to cancel the award negotiations and rescind the selection upon a determination of any failure to satisfy applicable legal, policy, or other [Funding Opportunity Announcement] requirements.”

Energy Secretary Jennifer Granholm said last month the department was still going through a standard vetting process before any money goes out the door, clarifying it was still a “selection” and not an award of the grant.

Reaction: House Science Chair Frank Lucas (R-Okla.), who had also pressed the administration over the selection, said in a statement Monday he was “pleased” with DOE’s decision to pull the plug on negotiations, but “frustrated that it took the Department six months and multiple letters from our Committee to come to such an obvious conclusion.”

“These funds are intended to strengthen America’s battery production and supply chain, not to tighten China’s stranglehold on these supplies,” Lucas said, referring to the bipartisan infrastructure law’s funding for battery materials and manufacturing.

Barrasso said in a statement that the administration should “immediately reject other applicants with similar ties.” GOP lawmakers have raised concerns about a broader group of companies selected for awards.

“It should also overhaul its grant making process and conduct due diligence before issuing press releases,” Barrasso added.

During a hearing Tuesday, House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) echoed the looming concerns about DOE's process for vetting applicants for such substantial awards.

"I'm concerned that the department may be entertaining other problematic awards, and only decided not to proceed with this after our congressional scrutiny," she said.

Top committee Democrat Frank Pallone of New Jersey countered that the cancellation of the selection was proof the department was adhering to its oversight duties.

"While we do not know the details behind this decision, it shows that the DOE is taking its stewardship of taxpayer money very seriously," he added.

Heather Vaughan, a spokesperson for House Science Republicans, said GOP lawmakers would continue to press the administration on the decision.

“I don’t have specifics on why the decision was made — what part of the internal review process [Microvast] failed, for instance,” Vaughan said in an email. “We have some follow up questions, among them — will that money go to another company? Will the rest of the previously-announced companies all get their grants still?”