Energy Department Revs Up Controversial Loan Program

By Charles S. Clark

September 20, 2013

This story has been updated. 

Energy Department officials announced they’re giving a new jolt to the controversial loan guarantee program that became a political football following the 2011 bankruptcy of one of its beneficiaries, the Solyndra solar panel maker.

As one of an array of green initiatives under new Secretary Ernest Moniz, Energy is reviving the program -- launched in 2005 but expired since coming under attack by congressional Republicans -- with a broadened focus to help the oil and gas industries producer cleaner energy. As reported first by The New York Times, Peter Davidson, executive director of Energy’s loan department, said, “We have a real problem, and that’s ‘How do we get new technology to market?’ We partner with industry developers and entrepreneurs to demonstrate a new technology at the industrial scale or utility scale,” before handing the funding over to private investors, he said.

Energy is earmarking $8 billion from $50 billion in appropriated funds it still controls. Officials have emphasized that the losses from the loan program amount to only 3 percent of the loan guarantee portfolio, but lawmakers continue their skepticism, citing the $535 million Solyndra was given and $168 million given to the unsuccessful electric car company Fisker Automotive, whose loan the department auctioned this week.

“The Obama administration has gotten into the business of picking winners and losers at a significant cost to taxpayers,” said Sen. John Thune, R-S.D., in a statement calling for an end to Energy’s related Advanced Technology Vehicles Manufacturing loan program. “From Fisker and Vehicle Production Group, to the Chinese-owned A123 [green battery manufacturer], this administration should not be making questionable investments with the American people’s hard-earned money.”

Senate Energy and Natural Resources Committee Press Secretary Charlotte Baker said in a statement, "the committee is continuing to monitor DoE's loan guarantee program to ensure taxpayer dollars are not wasted. The DoE loan guarantee program's history of mismanagement, bankruptcies and failure to deliver the jobs promised raises significant concerns about risking billions in additional taxpayer dollars under this program, particularly at a time when we are nearly $17 trillion in debt. We are supportive of efforts to encourage the development of advanced fossil fuel technologies, but we are skeptical that federal loan guarantees are the best way to bring this technology to commercialization." 

Robert Dillon, a Republican spokesman for the committee, said, “there is not a demand nor a need for this program -- the government has gone out and sought companies.” He referred Government Executive to a report released in February by the committee’s ranking member, Sen. Lisa Murkowski, R-Alaska, that recommends an end to some of the loan programs and a broadening of another to “allow a wider range of vehicle technologies and projects to qualify.”

Tyson Slocum, director of Public Citizen’s energy program, called the revival of the loan program “a dubious government action." It appears that the new program is “not talking about renewable energy investments but carbon capture and storage," he said. "That’s extraordinarily risky. It’s a new and unproven technology for which the two existing projects are over-budget and behind schedule.” 

Also on Thursday, Energy announced 33 “breakthrough energy projects” will receive $66 million from the Advanced Research Projects Agency-Energy under two new programs to help green manufacturing that provides options for a “more sustainable and secure American future.” 


By Charles S. Clark

September 20, 2013

http://www.govexec.com/management/2013/09/energy-department-revs-controversial-loan-program/70626/