The most visible and lauded recipient of “green stimulus” money under the Obama administration has gone bankrupt, creating a full-fledged Washington scandal after leaving taxpayers on the hook for $535 million in loan guarantees.
Green Poster Child
Endowed with the blessings of the Obama administration and a more than half-billion dollar loan guarantee from the Energy Department, Solyndra LLC of Fremont, California has gone from the poster child of green energy to an orphan shunned by its former supporters. Instead of becoming a Mecca for green jobs and employing thousands of workers as promised, Solyndra has shuttered its factory and let go all 1,100 of its employees.
The company’s demise, with taxpayers left holding the bag, led to FBI raids on Solyndra’s headquarters and the homes of its top officials, as well as congressional hearings and investigations.
Buffeted by criticism from all sides, the Obama White House has struggled to explain the sequence of events surrounding Solyndra’s rise and fall.
Longstanding Red Flags
Formed in 2005, Solyndra came into being at a time when renewable energy was being promoted in Washington, DC and in many states as a viable alternative to fossil fuels. The Energy Policy Act of 2005, signed into law by President George W. Bush, created, among other things, an Energy Department loan program designed to promote alternative fuels.
Solyndra applied for a guaranteed loan in December 2006, but the outgoing Bush administration put the loan on hold on Jan. 9, 2009 because of fears the company might not be a good credit risk. By this time, China was manufacturing solar panels for export much more cheaply than U.S. or European companies could manufacture them.
Brushing aside such misgivings, Obama administration Energy Secretary Stephen Chu in March 2009 announced the $535 million loan guarantee to Solyndra. The Solyndra guarantee was the first awarded by the Obama administration and was prominently touted in the president’s stimulus package.
As recently released e-mails show, however, doubts about the advisability of the loan guarantee remained within the bowels of the federal bureaucracy. In one heavily redacted e-mail, for example, concerns were raised that even with the infusion of $535 million in taxpayer cash, the company would run out of money by September 2011. That proved correct as Solyndra declared bankruptcy on August 29 of this year.
Obama Ignored Warnings
Eager to tout the virtues of renewable energy and the green jobs it would supposedly create, the White House scheduled a high-profile event to celebrate the groundbreaking for the Solyndra plant in September 2009. The scheduling of the ceremony relied heavily on officials at the Energy Department and the White House Office of Management and Budget (OMB) making a quick, final decision on the loan.
One unnamed senior OMB official was so concerned that he e-mailed Vice President Biden’s office observing, “We have ended up with a situation of having to do rushed approvals on a couple of occasions.… [W]e would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement, rather than the other way around.”
The official’s concerns notwithstanding, the loan guarantee was approved on September 1. Three day later, Vice President Biden addressed attendees at the groundbreaking via satellite.
“And out there at Solyndra, you guys figured it out,” he said. “You figured how to harness the sun’s power for a better, more efficient, more prosperous future for all Americans, and you’re creating more jobs.”
Touring the facility in 2010, President Obama was equally effusive in his praise for Solyndra.
“It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” said Obama.
Obama Donor Protected
By early this year, however, clouds were gathering. In February the Obama administration helped the company refinance the federal loan, allowing the government to release another $67 million to Solyndra. The refinancing deal stipulated that in the event of a default, the first $75 million to be repaid would go to the company’s investors, not to the taxpayers.
One of those investors is George Kaiser, a Tulsa, Oklahoma-based bundler who raised millions of dollars for Obama’s 2008 presidential campaign.
The strange sequence of events and the half-billion-dollar loss to taxpayers, have provided grist for two contentious Capitol Hill hearings, with more to come.
The collapse of Solyndra underscores the problems plaguing the Obama administration’s push for “green jobs.” Solyndra is part of a $38.6 billion loan guarantee program the administration said would create 65,000 jobs. According to the Sep. 15 Washington Post, however, the program thus far has directly created only 3,545 jobs, with almost half the money already disbursed. That comes to more than $5 million per job thus far.
Blocking, Outsourcing Energy Jobs
Marita Noon, executive director of the Citizens’ Alliance for Responsible Energy, points to a little-noticed advantage the Chinese have in producing solar panels.
“One of the least appreciated elements of Solyndra’s demise is the shortage of raw materials in the United States, especially rare earths. China holds the lock on the rare earth market, even though the United States has them in abundance. The same people who extoll the virtues of green energy are the ones blocking our access to rare earths and other valuable resources through their endless litigation,” Noon said.
Bonner R. Cohen, Ph. D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.