by Rona Fried
How Obama’s Green Energy Agenda is Killing Jobs is the title of Darrell Issa’s (R-CA) Congressional oversight hearing, taking place today.
Issa is Chief of Investigations for the House GOP and the lead investigator of what’s turning into the Solyndra scandal, named after the young solar company that had the nerve to go bankrupt after receiving a federal loan guarantee under the American Recovery Act (Stimulus Bill).
Solyndra filed bankruptcy on Sept. 6 after receiving $535 million in US loan guarantees since 2009.
Republicans pounced on the bankruptcy, says the Hill, arguing the Obama administration rushed to approve the loan guarantee without subjecting it to adequate oversight.
The Dept of Energy (DOE) points out that although it’s inevitable that some companies that receive government support will fail, the reality is that out of the $2 billion the agency’s handed out, Solyndra is the only company to do so.
What happened to Solyndra?
Solyndra’s solar panels are installed at over 1000 facilities worldwide. It was widely lauded for its unique, cylindrically shaped CIGS solar modules designed for large commercial rooftop installations. Sales revenue rose 2000% in three years and venture capital firms invested $1 billion.
Young solar companies are having a very difficult time gaining traction because of crushing price competition from China. Established, profitable firms are also having a hard time, but it’s especially difficult for vulnerable companies – Evergreen Solar and SpectraWatt also announced they would close this month.
Solyndra was forced to sell its panels at half the cost in an attempt to compete on price, so it’s not surprising they couldn’t hang on.
Prices for solar panels have plummeted 42% over the past year because of intense pressure from Chinese producers. While that’s great for consumers, it’s very hard on manufacturers.
They were also hurt by the global credit crunch, which makes it hard for customers to finance solar projects.
By the end of last year, DOE restructured the terms of its deal with Solyndra after recognizing its financial difficulties. DOE tried to reduce the chance that taxpayer money would be lost.
Behind Issa’s Investigation
The Solyndra investigation is just another Climate-Gate – an opportunity for the GOP to undermine efforts to transition away from fossil fuels to a green economy.
David Roberts puts it well in his blog:
For a mix of financial and ideological reasons, the U.S. conservative movement hates clean energy. They don’t believe in climate change, they love fossil fuels and fossil-fuel campaign donations, and they think, or want the U.S. public to think, that clean energy is weak, unreliable, marginal, and dependent on government subsidies. They have been trying to make that case for a long while.
What Solyndra gives them is a symbol, something to use as a stand-in to discredit not just the DOE loan program, but all government support for clean energy and indeed clean energy itself.
Watching this unfold, I keep thinking back to "Climategate." When it first broke in 2009, Dem lawmakers just ignored it, because it was obviously dumb. This left the field entirely open to a massive attack from the right, coordinated among ideological media, staffers, and lobbyists. By the time five separate investigations cleared the scientists of all wrongdoing, the damage was done. Now we’re seeing the same script play out again. The side that wins is the side that plays to its audience’s existing preconceptions with a simple message repeated over and over and over again in multiple venues.
Issa Not So Innocent
Indeed, Issa sent a letter to DOE Sec’t Chu personally asking the agency to give a loan for a California electric car maker in his home district.
He signed another letter to Chu promoting a loan for a battery maker based in California. It said, "An Energy Department clean energy grant could create over 2,300 jobs nationwide" … and the "grant program is a "huge step forward" to improving the environment, eliminating dependence on foreign oil and creating a modern "green collar" U.S. workforce," reports Bloomberg.
Yet, Issa’s purpose in holding the hearing is to investigate whether the DOE approved Solyndra and other clean energy loans based on "corruption" – special treatment associated with political or financial influence.
In fact, the DOE did work as quickly as possible to select companies to receive loans under the Stimulus Bill, because it was criticized for being too slow and for having too much red tape.
Legislation Proposed to Hamstring Renewables
Sen. David Vitter (R-LA) is proposing legislation, the "Federal Accountability of Renewable Energy Act," requiring federal agencies to conduct a full audit of any renewable energy projects that received taxpayer money in fiscal years 2009-2011 – the years during which Stimulus Bill support was handed out.
The audit would determine how successful the project is, how many jobs it’s created, its profits, and which venture capital firms helped finance it.
Companies that declare bankruptcy or fail to meet the objectives required by the federal government would be subject to an inspector general investigation under the legislation, reports the Hill.
What’s Really Happening
"House Republicans are using the failure of Solyndra to launch a political broadside, attacking President Obama and his visionary program to promote energy efficiency, renewable energy and American jobs," says Bob Dean, Natural Resources Defense Council (NRCD).
In fact, green jobs, and solar jobs in particular, are a bright spot in this sour economy.
In 2009, there were 2.2 million green jobs in America, according to the U.S. Bureau of Labor Statistics. By July, 2011, there were 2.7 million, according to the Brookings Institution. Over 100,000 Americans work in the solar industry, employed by over 5,000 companies.
"Last year alone, the US, China, Germany and 17 other of the world’s top economic powers invested $243 billion in clean energy technologies, up 30% from the year before. If the global green economy were a country, it would be the 34th-richest in the world, just ahead of Finland," says Dean.
Read his blog, which elaborates on green building, wind and other green jobs.
But Congressional Republicans have signaled they’re prepared to start a huge political fight with the White House over renewable energy investments in general, says the Hill.
This fight is likely to compound an already dismal outlook for federal investments in solar and wind because of Republican rancor, despite the fact the US needs to act quickly to compete with China and other countries, which have overtaken the lead on those technologies.
Impact on Solar Industry
Even with the explosive negative press, Ardour Capital notes that core political support and the most critical subsidies aren’t vulnerable. The solar industry depends much less on subsidies today because of advances in manufacturing costs which have reduced the price of panels by 70% since 2008. Furthermore, they say, current subsidy structures and the legislative calendar make any near-term subsidy reductions unlikely.
The most critical federal subsidy, the Investment Tax Credit (ITC), appears safe for now. Investors receive a 30% tax credit, currently guaranteed through 2016. There have yet to be serious discussions about reducing or repealing it. As part of the Stimulus Bill, investors have been able to get cash instead of a tax credit. The industry is prepared for that to end at the end of this year.
Yes, the DOE loan guarantee program will be under scrutiny, but it may be too late to rescind funds. Most of the funds, $17.7 billion, have already been allocated through closings and conditional commitments. 97% of the $10.3 billion in conditional commitments are for relatively low risk renewable electricity generation projects, notes Ardour.
If Congress wants to rescind those funds, the logical opportunity would be in late November when the Joint Select Committee on Deficit Reduction must reach an agreement on $1.6 trillion in cuts. But by the time Congress votes in December, most of the conditional commitments will be closed.
Despite the recent bankruptcies, solar remains on track for record growth in 2011. While uncompetitive companies like Solyndra, Evergreen solar and Spectrawatt are gone, industry leaders are becoming more mature and mainstream as evidenced by Total’s acquisition of controlling interest in Sunpower. The larger picture shows the solar industry is growing rapidly – and creating lots of jobs.
In conclusion, Solyndra’s loan represents a tiny fraction of DOE’s stimulus program, which is designed to finally jump start renewable energy in the US. And support for renewable energy is dwarfed by that for fossil fuel and nuclear companies. There’s nothing unusual about government support for emerging, innovative technologies, and it’s not unusual that some of them fail. Since Solyndra is the only recipient that’s failed so far, we could just as easily say the program a great success.
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Read our coverage of the growth of the US solar industry.
Rona Fried, Ph.D. is CEO of SustainableBusiness.com, providing daily news and green jobs online since 1996.
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