Want to finance clean energy? The DOE can help

In another show of crony capitalism for the Obama administration, the Department of Energy announced last Thursday that it is accepting applications for its renewable energy loan program again, with a plan to provide $4 billion in loan guarantees to companies that engage in clean-technology projects.

The controversial federal program was already proven to be a failure the first time it was enacted. In 2011, the DOE provided a $535 million loan guarantee to solar panel-maker Solyndra, a company which then went bankrupt, defaulting on its loan and losing millions in taxpayer-funded investments. Also in 2011, the energy-storage company Beacon Power Corp. went bankrupt after the DOE had backed it with a $43 million loan.

What’s more, the DOE’s clean energy program had willfully ignored indications the loans were an unsafe bet, putting politics before taxpayer money and proper risk assessment. According to Forbes, before DOE even made a loan guarantee to Solyndra, Fitch Ratings warned the agency that Solyndra’s survival would be threatened by emerging competition in the solar panel market. According to Fred Upton, chairman of the Energy Committee, the Obama Administration also ignored other “red flags” that cast doubt on the company’s prospects, including a model that showed that “a Solyndra project financed by the loan guarantee would run out of money by September 2011.”

Raising more eyebrows is the fact that Solyndra’s biggest investor, George Kaiser, was also a “billionaire campaign fundraiser” for Obama, prompting allegations that the Obama administration rushed the DOE’s financial support of the companyAccording to the Government Accountability Office, the DOE’s loan guarantee program lacks transparency and treats applicants “inconsistently in the application review process, favoring some applicants and disadvantaging others.”

In his book on cronyism, Hoover institution’s research fellow Peter Schweizer stated that “$16.4 billion of $20.5 billion granted in loans…went to companies either run by or primarily owned by Obama financial backers.”

The Department of Energy’s loan guarantee program distorts the market and squanders taxpayer funds, claiming to support clean energy projects while at the same time rewarding political allies. Despite past failed investments and the resulting loss in taxpayer dollars, the DOE is once more renewing this politically motivated program. Not only will a revival put taxpayers at unnecessary risk, it will also provide an unfair advantage for risky green energy technology over traditional, efficient energy sources. The DOE should learn from the consequences of meddling in the market the first time they offered these loan guarantees, and this program should be retired for good.

TAGS: Spending, Business, issues

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