Despite what critics say, the DoE’s guaranteed loan program is a successful program and government investment to further develop clean energy is the right thing to do.
Let’s start by definitively debunking the Solyndra critique: The company's loans process began under the Bush Administration, it raised $1 billion dollars in private capital, and was named the top cleantech company in 2010 by the Wall Street Journal. Yes, it defaulted and went bankrupt, but the default rate for the entire loan portfolio is less than four percent. By comparison, the default rate for the popular Small Business Administration loan program is three times as high. Solyndra’s failure is not representative of the industry or government investment.
And, the idea that government shouldn’t be in the business of “picking winners and losers” is both misguided and disingenuous. Our current energy policy “picks” fossil fuels. Among the many tax breaks and incentives provided to the oil and gas industry, the Energy Policy Act of 2005 allows for reduced royalty payments and royalty-in-kind payments, instead of cash royalties, which leaves uncertainty as to whether fair payment is received. The royalty waiver program is estimated to cost billions of dollars in lost revenue over the life of the leases.
The Act also provides for direct investment of billions of dollars of taxpayer money in fossil fuel industries. Title IX, Subtitle J of the Act provides for direct payments to oil and natural gas corporations to drill in deepwater wells and Section 962 allots $1.137 billion of taxpayer money to make coal power a cost-competitive source of power generation. This is all money given to industries that don’t need it. Big oil companies made over $32 billion in profits just in the third quarter.
In fact, if anything, the renewable energy sector has shown its potential for market viability by posting record production levels, despite receiving far less government support. This year, the renewable energy sector produced 18 percent more energy than nuclear power. The U.S. is set to break its record on solar panel installations this year alone. Employment growth in the solar industry was 10 times higher than the national average and is expected to increase an additional 24 percent by 2012. Over 2.7 million people currently work in green jobs.
A recent report issued by Bill Gates, GE’s Jeff Immelt, and other top CEOs lays out several arguments for why the government must play an integral role in clean energy development. The report points out government's long and successful history of investing in research and development projects that spur new technologies — the internet, anyone? — and makes an economic argument often ignored: There is no private market for certain benefits, like public health or protecting the environment. Therefore, advancements in these areas must necessarily come from public funding.
Without substantial government support, offshore drilling would never reach the scale it has today. There is no reason why we should stop investing in renewables and continue to advance towards cleaner and better energy sources. Renewable energy has proven its strong market potential, and reaching parity in government support with fossil fuels will show its true market strength.
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