Clean Energy Failure
by Jeffrey Folks
Issue 207 – July 11, 2012
Green energy companies promoted and subsidized by the Obama administration are falling like flies.
Just last month Solar Trust, a solar energy company heralded by Interior Secretary Ken Salazar filed for bankruptcy. At the groundbreaking ceremony for Solar Trust’s giant Blythe Solar Power Project, Salazar called the project a “historic moment in America’s new energy frontier.” The solar plant, he promised, would “create good jobs” and “contribute to our nation’s energy security.” That was nine months ago. It’s hard to locate any of those promised jobs or cheap energy today.
At the same ceremony Salazar boasted that the Obama administration was pressing ahead with “19 additional priority renewable energy projects.” How many of those additional projects have proven to be successful? None, so far as I know.
Still, taxpayers were lucky on Solar Trust. That company received a total of $2.1 billion in conditional loan guarantees but failed to meet deadlines for qualification. Taxpayers weren’t so lucky in scores of other cases. Beacon Power has followed Solyndra into bankruptcy, while Abound Solar, which has received $400 million in loan guarantees, is reportedly laying off 70% of its workers. Back in 2010 Obama promised that Abound would create 1,500 good jobs—now, according to reports, there are just over 100. Then there’s Fisker Automotive, maker of the luxury plug-in Fisker Karma, which received $528 million in loan guarantees and reportedly may be in some difficulty as well. Even the Chevy Volt and Nissan Leaf are behind on sales targets. The list goes on and on.
No worries. The Energy Department, which has extended subsidies to 32 green energy companies, now reports that it expected a number of loan recipients to fail. That fact was never mentioned when Congress approved the loan program as part of the administration’s ill-fated $878 billion stimulus bill back in 2009. In fact, as late as May 2010, the President was still claiming that Solyndra was a great investment—and he was urging the Energy Department to hand over more taxpayer money to the failing company.
“Give us money so we can loan it to green energy start-ups that we expect to fail” is not much of a business plan, even for Washington. That’s why Obama did not mention just how risky his green energy loan program was when he was campaigning for passage of his stimulus bill in 2009. Instead, he told the American people that the loan program would create 4 million sustainable jobs. It now appears that it created some 57,000 temporary jobs that are in danger of being cut. With a total of $80 billion having been spent on green energy by this administration ($8.3 billion in the form of green energy loans), and assuming that a third of those 57,000 jobs actually survive, that works out to $4,255,000 per job.
That is not a very good deal for the American taxpayer. Given the implausibility of actually spending that much on a single job, it raises the question of what happened to the rest of the taxpayers’ money. How much of it went into the pockets of Obama’s billionaire green energy supporters? And how much of it was recycled back to the administration in the form of campaign contributions?
As summarized in the Wall Street Journal, the White House was not at all surprised “to see some setbacks because Congress designed the program to back high-risk projects.” Congress designed the program? I thought the green energy loan program was the brainchild of Stephen Chu, the Energy Secretary who reports directly to the President.
These are projects, the administration stresses, that “generally have trouble obtaining private-sector funding.” That statement alone reveals a great deal about Obama’s energy policy and about his contempt for the private sector generally. Private-sector investors spend their time assessing the strengths and weaknesses of companies such as Solyndra and Beacon Power. When no private sector investor steps forward to invest in an enterprise such as Solyndra absent generous taxpayer subsidies, it means that, after thorough analysis and investigation, the private investor has serious doubts about the viability of the company. In other words, the private investor suspects from the start that the company is likely to fail.
Taxpayers have a right to expect that their hard-earned money is invested with at least the level of care and prudence that the private investor brings to the market. (Actually, I believe, taxpayers have a right not to have any of their dollars “invested” by government at all, but leave this for now.) Instead, this administration has gone out of its way to select just those companies that are so weak that they cannot find funding in the private market. Since these are projects that “have trouble obtaining private-sector funding,” review of these companies by private investors has already brought to light significant flaws in their business plans, management, or ability to execute. Yet, it is because they are not viable that Obama has selected them as recipients of billions of dollars of taxpayer money.
The result of this twisted logic is predictable: weak economic performance. That is exactly what we’ve seen in the last 3 1/2 years. No post-recession recovery has ever been as weak as what we have experienced under this President. Not since the Great Depression has the unemployment rate remained above 8% for four consecutive years. And never have future prospects for GDP growth looked so anemic.
Obama’s failed green energy investments are an indication of what lies ahead if he wins a second term. Just about any CEO in the private sector, having seen his initial investment in alternative energy fail, would pull back on future investments. Yet every week on the campaign trail, Obama urges more investment in green energy. Obama will never be anything but hostile toward capitalism. That is the problem that must be remedied in November.
Jeffrey Folks is the author of many books on American culture, including Heartland of the Imagination (2011).