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Dozens of large-scale clean energy projects could be derailed if a measure to defund a federal loan guarantee program becomes part of a final Congressional budget deal.

The loan program was established in energy legislation written by Republicans and signed into law in 2005 by President George W. Bush. So far, it has provided loan guarantees or made preliminary commitments of more than $18 billion for 20 projects, according to the Department of Energy. Another 25 projects are nearly finished with the application process and would be expected to receive guarantees, the agency said recently.

A short-term spending bill passed by the Republican-controlled House in February proposed sweeping cuts for the program, however, raising the specter that those loan guarantee applications that are near completion but have not yet been finalized would be canceled. The program’s fate remained up in the air as leaders in Congress hammered out the final language for the spending bill, which could come to a vote as soon as Thursday.

Last week a group of 12 senators, led by Maria Cantwell, Democrat of Washington, called on leaders of both parties to save the program.

“The House proposal will cost us tens of thousands of clean energy jobs today and threaten our energy future,” Senator Cantwell said in a statement. “We need to tackle our budget deficit, but killing American clean energy jobs and worldwide market opportunities will only set our recovery back.”

The program has provided guarantees and commitments to a wide spectrum of energy projects, from clean coal to biodiesel refining and large-scale solar power. The loan guarantees have leveraged private-sector dollars into a total investment of more than $40 billion, Senator Cantwell said.

She further noted that energy companies that have secured loan guarantee commitments have already incurred hundreds of millions of dollars in engineering and project management costs, money that could be lost if the projects are unable to secure financing.

Rescinding the loan guarantees “would result in a waste of private capital and erode domestic and international confidence in U.S. energy markets,” she said.

The loan program has faced a recent spate of internal and external criticism, however, providing ammunition to critics. In March, a report by the Energy Department’s inspector general said that shoddy record-keeping on several loan guarantee applications “leaves the department open to criticism that it may have exposed the taxpayers to unacceptable risks associated with these borrowers.”

report last week by ABC News and the Center for Public Integrity, meanwhile, found that several large loan guarantees had gone to major contributors to President Obama’s 2008 electoral campaign, raising questions of possible favoritism within the program.

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