The high-profile and controversial collapse of Solyndra and Beacon Power has led critics to question the integrity and merit of DOE’s loan guarantee program. Energy Secretary Steven Chu was asked to respond to these criticisms before a House Energy and Commerce subcommittee on 11/17/11. Rep. Stearns (R-FL), chairman of the subcommittee, said “it is readily apparent that senior officials in the administration put politics before the stewardship of taxpayer dollars” [NYT].
Dr. Chu denied this, arguing that a tough global market was to blame, that struggling loan recipients “got caught in a very, very bad tsunami.” He defended the value of the loan program, stating that “when it comes to the clean energy race, America faces a simple choice: compete or accept defeat.” On 11/21/11 USA Today released an analysis showing that many companies that received funding under the same program experienced strong growth.
Not every investment will bear fruit. But you need expertise on both the investment decisionmaking and on the monitoring, which must have early warning indicators and the ability to react… Read more »
The program was designed to account for failures. It was budgeted for losses to occur. The idea was making capital available to evolving technologies, that would otherwise not have been… Read more »
Loan guarantees are not necessarily the best instruments for certain energy projects. By and large, Congress encourages their use because they “score” lower than other incentives, eg 10 cents on… Read more »
No question that loan guarantees are not the best mechanism, but in the current political environment (with a laser like focus on cost to the government and potential near-term cost… Read more »
Well that’s not very high praise for the instrument!