The Department of Energy is in jeopardy of losing billions of its stimulus funding by missing the Sept. 30 deadline, a recent inspector general audit found.

The audit -- performed by the agency's inspector general -- outlines a handful of "significant challenges" that DOE must overcome in order to obligate the remaining $3.4 billion of its $32.7 billion in American Recovery and Reinvestment Act funds. Most at risk is about $1.8 billion earmarked for carbon capture and storage projects, according to the report.

"[W]e are especially concerned that delays in the award process for the Carbon Capture and Storage and Industrial Carbon Capture and Storage Applications projects could result in the expiration of funds before all awards are made," auditors wrote. "Continued monitoring and oversight, with a particular focus on significant challenges and risks, should help ensure that most Recovery Act funds are obligated on time."

With less than two months before the funds must be obligated, DOE still has negotiations to complete and awards to finalize. Some projects also are awaiting regulatory approval; if applications are denied, DOE would have little time to re-obligate the funds.

DOE employees are already scrambling to make the Sept. 30 deadline, with some working "exceptionally long hours," according to the report. Some offices have also hired contractors, college students and interns to help.

Almost 80 percent of the unobligated funds are tied to 10 of the agency's stimulus projects. The two carbon capture projects top the list, followed by the Weatherization Assistance Program and awards under the Advanced Research Projects Agency-Energy.

DOE officials called the report "fair and accurate." But the report does not take into account DOE's recent award of $1 billion in stimulus funding for a project called "FutureGen 2.0" that would retrofit a coal-fired power plant and store the carbon dioxide it produces in an Illinois storage site.

In an addendum to the report, auditors said the agency declined to provide the Office of Inspector General with the details of that award. The IG's office also had trouble gleaning information on carbon capture before the award's announcement; DOE officials refused to share details, citing concerns that doing so would jeopardize negotiations.

Click here to read the audit.