Friday, July 13, 2012

No More Solyndras Act Would End DOE Loan Guarantees

Jul 12: The House Energy and Commerce Subcommittees on Energy and Power and Oversight and Investigations held a joint hearing to discuss a draft of the "No More Solyndras Act." [See WIMS 7/11/12]. Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) co-authored the legislation which they say will "ensure taxpayers will never again be left on the hook for the administration's risky bets." The bill would effectively terminate the administration's loan guarantee program under Section 1705, which has awarded over $16 billion in loan guarantees for clean and renewable energy projects.
    Witnesses testifying at the hearing included: David Frantz, Acting Executive Director of the U.S. Department of Energy (DOE) Loan Program Office; Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency for DOE's Office of Energy Efficiency and Renewable Energy (EERE); and representatives from Coalition for Green Capital; The Heritage Foundation; Manhattan Institute for Policy Research; Energy and Campus Development University of New Hampshire; Saint-Gobain Corporation on behalf of Industrial Energy Consumers of America; Schneider Electric on behalf of National Electrical Manufacturers Association (NEMA) and NEMA's Industrial Energy Efficiency Coalition; American Council for an Energy-Efficient Economy; and Alliance to Save Energy.
    Full Committee Chairman Fred Upton (R-MI) said in an opening statement, "What the critics fail to comprehend is that this has never been about the merits of one energy source over another, but rather it is a debate focused on the incompetence and gross mismanagement of the Obama administration. Our aggressive oversight uncovered the problem, and now we must fix it. The Solyndra loan guarantee was a massive failure every way you look at it. Just consider that the California solar panel maker's business model was so flawed that a $535 million dollar government handout was not enough to stop it from going bankrupt. . .
    "Of course, one bad loan does not make a trend, but other recipients of loan guarantees and other stimulus programs have joined Solyndra in bankruptcy, and the ultimate cost to taxpayers could reach into the billions. And even those recipients that remain solvent have achieved few worthwhile advances toward meeting the nation's energy needs. . . I still believe there is a legitimate role for the federal government in funding basic research. But sadly, the Obama administration's gross mismanagement of the loan guarantee program necessitates the phase out of the Title XVII loan guarantee program. With the bankruptcies starting to pile up, our message to American taxpayers is clear: There will be No More Solyndras."
    Full Committee Ranking Member Henry Waxman (D-CA) said in an opening statement, "This is a hearing for politics. That's all it is. . . We need to act to reduce carbon pollution, and there are a range of options for doing that. . . House Republicans oppose every potential solution. They say "no" to market-based solutions like cap-and-trade. "No" to cost-effective regulations. "No" to loan guarantees or financial incentives for clean energy – even if they would improve our nation's global competitiveness. They even say "no" to simply understanding the problem. . . I'm sorry Solyndra happened. We lost $500 million dollars. That's a shame, but that's why loan guarantees are provided, because these are risky enterprises and not all of them are going to succeed. But there has been no showing of wrong-doing by anybody in this Administration due to the Solyndra loan loss. . .
    "So what are they proposing? Legislation that would, they say, end this loan guarantee program, but would instead provide billions of dollars still to be used. But they do it in a way that would ignore the best possible technologies. They create a winner's list of about 50 projects that are eligible, and if any new idea comes up in this year or next, it wouldn't even be eligible to seek a loan guarantee. Even the technologies that Republicans claim to support are abandoned. If an application for a small modular nuclear reactor or a next-generation nuclear plant is submitted, DOE is required to reject it. . ." 
    DOE testified that the Loan Programs Office (LPO) administers two federal loan guarantee programs -- Section 1703 and 1705 -- for energy technology projects authorized by Title XVII of the Energy Policy Act (EPAct) as amended. It also administers direct loans for the Advanced Technology Vehicles Manufacturing (ATVM) program as authorized under Section 136 of the Energy Independence and Security Act of 2007 (EISA). DOE said the "loan programs are a critical part of our nation's commitment to clean energy."
    Section 1703, was established to support the U.S. deployment of new, innovative technology projects that avoid, reduce, or sequester greenhouse gas emissions. Currently, the program has $18.5 billion in loan guarantee authority for nuclear power projects, $1.5 billion in authority for energy efficiency and renewable energy projects, $8 billion in authority for advanced fossil projects, $4 billion of authority allocated for front-end nuclear projects, and $2 billion of authority that is not allocated to a specific technology sector.
    The Section 1705 program was created as part of the American Recovery and Reinvestment Act of 2009 (ARRA, stimulus act) to jump-start the country's clean energy sector by supporting various renewable energy projects that had difficulty securing financing in a tight credit market. The ATVM Program was established to expand U.S. business opportunities for advanced automotive technologies that contribute to energy independence and security. Section 136 of EISA 2007 authorizes DOE to finance U.S.-based businesses for manufacturing advanced technology vehicles or vehicle components and for engineering integration facilities. The FY 2009 Continuing Resolution provided up to $25 billion in direct loan authority for the ATVM program, with $7.5 billion in appropriated credit subsidy.
    DOE indicated that the LPO has committed or closed $35 billion in direct loans and loan guarantees, which finance nearly three dozen projects, with total project costs greater than $55 billion. When the Section 1705 program ended on September 30, 2011, it included a portfolio of over $16 billion in loan guarantees for 28 renewable energy projects. Collectively, LPO projects are expected to support nearly 60,000 jobs and deploy alternative energy that will save nearly 300 million gallons of gasoline per year. Of LPO's 19 generation projects, six are already complete and nine are sending power to the electricity grid.
    DOE concluded, "Securing America's economic leadership in the future requires that we support innovation and deployment today. The troubles of some segments in the solar manufacturing market should not overshadow the great work that the Department's loan programs have done to date, or the need to continue to find ways to support clean energy deployment in this country. That said, developing a robust clean energy manufacturing sector in the United States is crucial to our long-term national interests, and would help enable American companies and workers to attain the tools needed to succeed in this competitive space. And one of the most important tools -- as our global competitors have learned -- is financing on reasonable terms, wisely targeted and responsibly deployed. The question is whether we are willing to take on this challenge, or whether we will simply cede leadership in clean energy to other nations and watch as tens of thousands of jobs are created overseas. We were once the leaders in this field, and we can be again."
    Access the Republican website for the hearing including statements, testimony, background, draft bills and webcasts (click here). Access the Democratic website for the hearing including statements, testimony and webcasts (click here). Access a Republican release for the hearing (click here). [#Energy/Renewable, #Energy/Clean]
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