Ever since California-based solar cell maker Solyndra LLC went bankrupt on September 1 after receiving a $535 million federal loan guarantee, congressional Republicans and grassroots conservatives have rushed to paint its collapse as a prime example of why tax dollars should not be allocated to support clean energy technology. Many prominent political figures including House Speaker John Boehner (R-OH) have made the repeated charge that the government should not “pick winners and losers” through its investments in energy, or any other sector of the economy. The “winners and losers” line seems to be a favorite of Republicans, who claim to prefer that the free market determine which of our myriad sources of energy in the United States win out.
But it seems as though the winners and losers rhetoric stops as soon as many of these same politicians find an energy project or industry more in line with their priorities. In fact, multiple GOP members of Congress including Boehner himself petitioned the Energy Department in 2009 and 2010 for loan guarantees similar to the one given to Solyndra in order to fund nuclear and clean coal projects in their home states and districts. Although it’s not unusual for members of Congress to engage in such lobbying, it does cast a bit of doubt on the sincerity of claims that the government shouldn’t interfere with the market’s supposedly invisible hand.
The federal government has been picking a winner in energy for a long time, and it’s called the fossil fuel industry. With billions of dollars in federal subsidies and tax breaks, the oil and gas industry has been able to maintain its superiority, and take in record profits while doing so. Perhaps without those subsidies, the Big Five oil companies (Shell, Exxon, BP, Conoco Phillips, and Chevron) might spend less time trying to unlock new reserves in hard-to-reach places (the ocean floor, Arctic Circle, and Canadian tar sands come to mind) and more time beginning to legitimately support the new energy technologies in which Big Oil’s congressional backers currently deride the government for making piecemeal investments.
As for Solyndra, this is (was) a company that was initially touted for its innovation in producing silicon-free cells for solar panels; it was only after a global drop in silicon prices that Solyndra lost its ability to compete and had to shut its doors. There also seems to be some confusion over the government’s role in all of this. The Energy Department did not simply hand Solyndra $535 million; the money was part of a loan guarantee, which essentially means that the federal government agreed to underwrite any private loans that the company was given up to the $535 million amount. Imagine you’re taking out a loan on a car or a house, and you have your friend or parents cosign. That’s basically what the government did for Solyndra. In case anyone out there is wondering if this is a new thing, there’s another prominent energy industry that wouldn’t be here without federal loan guarantees – nuclear power, which met over 11 percent of US energy needs in 2009.
We’ll continue to talk in this space about Solyndra and energy subsidies in general. For the critics, however, who would use the Solyndra controversy as an argument against the federal government supporting any renewable energy at all, consider this: solar is currently America’s fastest growing industry. In a down economy, you’d hope this would be the sort of thing we’d find a way to make work.