White House Doubles Down on Green-Tech Loan Program

Energy Secretary and hair fashion pioneer Edward Moniz.
National Journal
April 2, 2014, 2:43 p.m.

Solyn­dra be damned.

The Obama ad­min­is­tra­tion is de­fi­antly re­viv­ing a green-tech­no­logy loan pro­gram that be­came a mag­net for GOP polit­ic­al at­tacks.

It’s ba­sic­ally the same pro­gram that fin­anced the in­fam­ous sol­ar-pan­el com­pany Solyn­dra, which fell apart in 2011, tak­ing a half-bil­lion dol­lars in fed­er­al loans along with it.

Solyn­dra was among a num­ber of Obama-backed green-en­ergy or auto com­pan­ies that either col­lapsed or struggled badly, turn­ing the pro­gram in­to a punch­ing bag for Re­pub­lic­ans and spark­ing GOP-led con­gres­sion­al probes.

But the White House and its al­lies have long said the pro­gram has been a big suc­cess in the main des­pite some flops.

En­ergy Sec­ret­ary Ern­est Mon­iz, on the job since mid-2013, has been a staunch de­fend­er of fed­er­al green-tech loan pro­grams. And now his plan to re­vive them seems to be pick­ing up speed.

On Wed­nes­day Mon­iz said that the de­part­ment would prob­ably throw open the door to new ap­plic­a­tions for re­new­able-en­ergy pro­ject loan guar­an­tees dur­ing the second quarter of this year, a some­what more pre­cise fore­cast than his pre­vi­ous es­tim­ate of “re­l­at­ively soon.”

Also Wed­nes­day, the En­ergy De­part­ment said it’s re­boot­ing the sep­ar­ate Ad­vanced Tech­no­logy Vehicles Man­u­fac­tur­ing (ATVM) loan pro­gram in pre­par­a­tion for of­fer­ing the first new loans in years.

That pro­gram has pre­vi­ously sup­por­ted Ford, Nis­san, and the elec­tric-vehicle com­pan­ies Tesla, which re­paid its loan ahead of sched­ule, and Fisker, which fell apart after draw­ing nearly $200 mil­lion in fed­er­al loans (DOE re­covered $53 mil­lion, and the com­pany is now un­der new own­er­ship).

DOE’s loan-pro­grams of­fice, in a let­ter today to auto equip­ment makers, an­nounced that pro­jects to man­u­fac­ture a “broad range” of com­pon­ent tech­no­lo­gies are eli­gible for loans.

The ATVM pro­gram, which ac­cord­ing to the de­part­ment can provide an­oth­er $16 bil­lion worth of new loans, also said it has taken steps to make the ap­plic­a­tion pro­cess faster and more re­spons­ive.

“Mo­tor vehicle parts man­u­fac­tur­ers play a sig­ni­fic­ant role in the de­vel­op­ment and de­ploy­ment of new tech­no­lo­gies to meet the de­mand for fuel-ef­fi­cient vehicles and we be­lieve the ATVM Loan Pro­gram can play an im­port­ant fin­an­cing role as the in­dustry es­tab­lishes the next gen­er­a­tion of man­u­fac­tur­ing fa­cil­it­ies in the United States,” Mon­iz said in a state­ment.

The loan pro­grams for low-emis­sions tech­no­logy pro­jects and green-car man­u­fac­tur­ing were first au­thor­ized in bi­par­tis­an 2005 and 2007 en­ergy laws. But loans for re­new­able-en­ergy pro­jects, aided by the 2009 stim­u­lus law, didn’t be­gin un­til Obama was in of­fice. Nor did the ATVM loans.

In 2009-11, the two pro­grams sup­por­ted auto­makers and an ar­ray of sol­ar and wind-power pro­jects, a few sol­ar-equip­ment makers (in­clud­ing Solyn­dra), and oth­er ven­tures.

The de­part­ment re­cently fi­nal­ized a loan guar­an­tee for a nuc­le­ar power pro­ject in Geor­gia, and it’s tak­ing ap­plic­a­tions for pet­ro­leum- and coal-re­lated pro­jects that trap car­bon emis­sions.

For the next wave of loan guar­an­tees, however, the de­part­ment won’t have as much money to work with as it did sev­er­al years ago, when it backed big pro­jects like the massive Ivan­pah sol­ar sta­tion in Cali­for­nia.

Peter Dav­id­son, the head the DOE loan pro­gram, re­cently sug­ges­ted that a fo­cus of the re­vived pro­gram would be ini­ti­at­ives that help in­teg­rate re­new­able power onto the grid, as op­posed to big power-gen­er­a­tion pro­jects.

While polit­ic­al at­tacks against the loan pro­gram have died down, they haven’t gone away en­tirely, as Re­pub­lic­ans con­tin­ue to ar­gue that the green-tech loan pro­grams have been waste­ful, un­needed, and poorly run.

In­deed, the House Re­pub­lic­ans’ budget plan un­veiled this week would block fu­ture loans. But the pro­pos­al is only a sym­bol­ic state­ment of party prin­ciples; the top­ic is no longer front-and-cen­ter for the House GOP, at least for now.

And while the pro­gram has taken its lumps, Re­pub­lic­ans who used two House com­mit­tees to probe it nev­er un­covered evid­ence to sup­port their most sa­la­cious claims.

In par­tic­u­lar, a lengthy En­ergy and Com­merce Com­mit­tee probe com­pleted in Au­gust 2012 didn’t back up ac­cus­a­tions — echoed of­ten by Re­pub­lic­ans and their al­lies on the 2012 cam­paign trail — that fed­er­al loans to Solyn­dra and oth­er pro­jects were re­wards for polit­ic­al dona­tions.

The in­vest­ig­a­tions did un­earth rev­el­a­tions and in­tern­al doc­u­ments that were em­bar­rass­ing and polit­ic­ally dam­aging for the Obama ad­min­is­tra­tion, such as emails show­ing pres­sure to fi­nal­ize the Solyn­dra deal des­pite in­tern­al con­cerns.

Mon­iz, however, is seek­ing to play of­fense in sup­port of the loan pro­gram. He’s happy to make the case that the over­all loan port­fo­lio is per­form­ing strongly.

“We have been tak­ing the po­s­i­tion quite con­sist­ently — and we’re happy to dis­cuss it any place, any time — that the pro­gram as a port­fo­lio has done ex­tremely well,” Mon­iz told re­port­ers after testi­fy­ing on Wed­nes­day be­fore the GOP-led House Ap­pro­pri­ations Com­mit­tee in a two-hour-plus hear­ing that was free of at­tacks on the pro­gram.

The $30 bil­lion-plus port­fo­lio’s losses have been about 2.5 per­cent, ac­cord­ing to the En­ergy De­part­ment. Mon­iz noted that the pro­gram has used only a small amount of the “loan loss re­serve” that Con­gress provided.

He even saw room for some loan-pro­gram hu­mor.

“Maybe I’m wor­ried that the ar­gu­ments will change,” Mon­iz told re­port­ers. “That we’re not tak­ing enough risk.”

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