Pro oil-and-gas constituencies are smelling blood in the water over Solyndra’s bankruptcy, and the vaporized $535 million federal loan guarantee from the Obama Dept. of Energy. Here are three well-written articles that articulate the boundaries of what we’ll be hearing over the coming months.
“Solyndra is not the first solar company to bow to Chinese competition. Evergreen Solar in Massachusetts closed its facility in the Bay State and planned to relocate to China, despite receiving $58 million in aid from the state of Massachusetts. But Evergreen Solar filed for bankruptcy on August 15. The truth is China will always be able to make solar panels (and wind turbines) more cheaply than U.S. manufacturers for the same reason they make iPods and iPads more cheaply than we can: low-cost labor and more access to raw materials. U.S. manufacturers can never hope to compete with these factors, or we’d still be making TVs.
“The shame of it is that the Obama administration could point to more promising initiatives in energy if it had the wit, especially the ARPA-E (Advanced Research Projects Agency-Energy, modeled after the Pentagon’s legendary Defense Advanced Research Projects Agency) unit of the Department of Energy. ARPA-E is intended to conduct research into ways of overcoming the formidable technical barriers necessary to make alternative energy sources from batteries to biofuels scalable at a reasonable price. Like DARPA, ARPA-E is exempt from the usual civil service bureaucracy (and things like Davis-Bacon rules) to allow it to be nimble in ways that are exceedingly rare in the federal government. ARPA-E was set up by legislation passed in 2007, but wasn’t funded until 2009. ARPA-E’s total budget was only $400 million in its first year—less than the Solyndra loan. But the thing to note is that research efforts like ARPA-E aren’t about creating jobs, green or otherwise, which is why the agency has been of little interest to the White House. It is meant to expand our base of technical knowledge, leading to new and better options in the future.
“But since that future is open-ended and unpredictable, it won’t arrive before the next election cycle, and it doesn’t offer rewards for political supporters. American energy policy ought to be about generating the amount of energy we need and the kinds of energy we want, rather than being treated as a jobs program. By thinking themselves able to force the market, Obama and his liberal cheerleaders are achieving neither objective. Taxpayers are likely to be out nearly the entire $535 million of the loan, but private investors may lose close to $700 million — money that might have created real jobs had they resisted the green-jobs siren song emanating from Washington.”
“The proximate goal here is to bloody the Obama administration, so most of the rhetoric has focused on vague allegations of impropriety by the administration. Once they establish that this is a scandal, the step after that will be to try to kill the loan guarantee program for renewable energy. The House Republican leadership is now trying to cut the program in exchange for Tea Party votes for a bill to avoid a government shutdown.
“There are some Republicans, though, who recognize that this is a smart program. Of all people, [Rep.] Joe Barton yesterday said that Solyndra was not reason enough alone to kill the loan guarantee program. I don’t think a freestanding effort to kill this program in particular has the votes to pass the House. And even if it did, it would die in the Senate.”
“Meanwhile, the Department of Energy brought in independent consultants to analyze the company’s technical, financial and market assumptions, and ultimately concluded it did have a potentially viable business. The new factory was on time and on budget. Sales were increasing steadily. And even if Solyndra failed, it would be much more valuable with a completed high-tech plant than with an empty box in Fremont, California.
“We were already in deep,” one official recalls. “We looked at every relevant scenario to maximize the recovery for the taxpayer. We did due diligence as if this were a brand new transaction…The takeaway is, at every juncture we did whatever we could to ensure the best possible outcome for the taxpayer. I think we structured a pretty impressive deal.”
“In other words: The operation was successful, but the patient died. Politically, it’s probably an impossible case to make. But that doesn’t mean it’s wrong.
“The Obama administration has made bets on hundreds of clean-energy companies in dozens of clean-energy sectors; some of those bets in its portfolio are bound to go bad, just as Richard Branson picks an occasional lemon. It’s legitimate to question whether the government should have made this particular bet, or whether it overplayed a weak hand, or whether it should be making bets in the first place. But if we’re going to have a clean energy industry in this country, this kind of thing is going to happen. It doesn’t mean anyone cheated.”