If you thought the stunning failure of Solyndra, a solar-panel manufacturer and recipient of more than half a billion dollars in taxpayer-guaranteed loans, would set back the Obama administration’s pursuit of its “green jobs” agenda, you’d be wrong. Indeed, the president has shown few signs that he even considers the bankruptcy of a company he once called “a testament to American ingenuity and dynamism” much of a setback at all.
The company’s failure was predictable. A 2008 report from the Government Accountability Office warned that the Department of Energy’s loan program was insufficiently protected from the risk that green companies would not succeed, but the Obama administration pushed ahead anyway. The president even visited and gave a major speech at a Solyndra plant just weeks after a PricewaterhouseCoopers audit questioned the company’s “ability to continue.”
And now that Solyndra’s demise is a reality, a number of reports have indicated that Obama will propose additional “investments” in “clean energy” technology (“green” is so 2008) in his jobs speech today. Speaking at the Clean Energy Summit in Las Vegas on August 30, one day before Solyndra shut its doors, Senate Majority Leader Harry Reid (D., Nev.) said he was “sure” the president would do so. Obama even touted his administration’s investment in green technology as a success story in his Labor Day address in Detroit.
Some speculate that Obama’s new proposals will come in the form of tax cuts or credits, while others predict they will be based on the Clean Energy Deployment Administration (CEDA), or “green energy bank,” a new loan initiative recently passed out of the Senate Energy and Natural Resources Committee that would expand on the Department of Energy’s Loan Programs Office, which oversaw the ill-advised loans to Solyndra.
In a committee summary outlining the need for CEDA, Senate Democrats claim that there is “underinvestment” because of the high “perceived” risks associated with “new and unfamiliar technologies.” According to the summary, CEDA’s mission is “to encourage deployment of technologies that are perceived as too risky by commercial lenders.” In fact, the agency is “encouraged to back riskier technologies.” Which is bad enough on its own terms — and becomes worse when one remembers that the administration did not consider Solyndra to be a “risky” investment. On the contrary, Obama praised it as an example of “the true engine of economic growth.” Its failure, no doubt, was “unexpected.”
Apparently undeterred by Solyndra’s failure and the expense it has imposed on American taxpayers, the administration continues to put up billions in taxpayer money to guarantee loans to similar companies. Just days before Solyndra collapsed, U.S. Energy Secretary Steven Chu announced a partial guarantee for an $852 million loan in support of the Genesis Solar Project in Riverside, Calif. NextEra Energy Resources, the project sponsor, estimated that the investment will create approximately 847 new jobs (at a rate of just over $1 million per).
Shortly thereafter, First Solar Inc. received $456 million in loan guarantees from the U.S. Export-Import Bank, to finance the construction of two solar power plants — in Canada. It is the largest guarantee the Ex-Im Bank has ever approved for U.S. solar products shipped abroad. James Brown, president of First Solar’s utility systems business group, told Bloomberg that his company never would have gotten the financing without the federal government’s help. Why are private lenders so wary, if the investment is truly sound? “Banks just don’t understand the technology.”
As Rich Lowry points out, if companies like Solyndra actually embodied “the true engine of economic growth,” they wouldn’t need government assistance in the first place.
Interestingly, one of CEDA’s primary selling points is that it would be modeled after “successful examples” like the Ex-Im Bank, which famously dished out hundreds of millions of dollars in taxpayer-backed loans to overseas companies owned by Enron, which then used that money to purchase energy from Enron itself.
But while the administration charges ahead with its agenda, even former Obama and green-energy champions such as David Brooks are beginning wising up the phony promise of the “Green Economy”:
With the economy stagnating and unemployment high, where are the jobs of the future going to come from? A few years ago, it seemed as though the Green Economy could be a big part of the answer.
New clean-energy sources could address environmental, economic and national security problems all at once. In his 2008 convention speech, Barack Obama promised to create five million green economy jobs. The U.S. Conference of Mayors estimated in April 2009 that green jobs could account for 10 percent of new job growth over the next 30 years.
Alas, it was not to be. The gigantic public investments in green energy may be stimulating innovation and helping the environment. But they are not evidence that the government knows how to create private-sector jobs.
Speaking at the Solyndra plant in Freemont, Calif., in May 2010, President Obama expounded on the federal government’s role in the company’s success: “Less than a year ago, we were standing on what was an empty lot. But through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans.” That loan was for $535 million, and was guaranteed by the federal government. A year later, the factory is empty, and 1,100 workers are out of a job.
Maybe these other companies won’t share Solyndra’s fate. Would you put money on it? Too late, you already did.
— Andrew Stiles is the Franklin Center’s 2011 Thomas L. Rhodes Journalism Fellow.