In 1961, President Dwight D. Eisenhower warned the country of what he called the “military-industrial complex,” a reference to the growing relationship between the military industry in the private sector and the federal government. Today, there is another industrial complex taking shape. Only this time, the president is not warning anyone about it – he’s actually directly involved in its growth.
One may call it the “green industrial complex.”
Enter John Doerr, a billionaire venture capitalist at the Silicon Valley firm Kleiner, Perkins, Caufield and Byers (KPCB). There, Doerr has been responsible for the firm’s successful investments in companies like Compaq, Intuit, AOL, Amazon, Netscape and Google.
No one would argue that Doerr hasn’t earned his spot on Forbes magazine’s annual richest people in the world list. However, in recent years, Doerr has redirected his talent from picking out successful start-up companies to successfully lobbying the Obama administration into supporting “green” initiatives.
While Doerr considers himself “a raging capitalist,” what he has been doing the last few years may be more akin to crony capitalism. With his lobbying, political advising and picky investing, Doerr has been one of the main movers behind green policy initiatives in Washington D.C, creating a web of players within a new industrial complex of green initiatives and renewable energy. He’s also been one of the biggest profiteers from it.
Since 2000, Doerr and his wife Anne have donated approximately $800,000 to Democrats. Moreover, KPCB has donated more than a million dollars to Democrats since 2005. Doerr has since been rewarded by being given at least some input in shaping the administration’s economic policy. In February 2009, President Obama named Doerr to the President’s Economic Recovery Advisory Board (PERAB).
“I think Doerr, like most, supports people he knows will support him,” Chris Horner, senior fellow at the Competitive Enterprise Institute, told The Daily Caller.
“He [Doerr] is invaluable to them as a committee hearing witness. And, because they [politicians] are promoting the coercive transfer of wealth to ‘investments’ of his – investments that he made on the cheap because they’re uneconomic, but can reap tremendous ‘rents’ if their agenda of taking effective control of the energy sector is affected – they are invaluable to him,” said Horner.
He added, “I don’t know if he has been trading tit for tat, but it is clearly a mutual benefits society.”
In the stimulus bill that passed Congress, $86 billion was earmarked for “green initiatives,” something that was heavily lobbied for by Doerr. The Department of Energy (DOE) was then put in charge of choosing which companies to award grants to.
However, close examination of those companies who have so far received grants reveals that KPCB venture companies – businesses in which Doerr has a vested financial interest – have received a large portion of the DOE’s fund.
Fisker Automotive is one example. In 2008, KPCB added Fisker to its portfolio of investment ventures. And last September, the automaker received a $529 million grant to manufacture a hybrid sports car called the Fisker Karma.
Another recipient of DOE funds is the Cambridge, Massachusetts-based ethanol start-up Mascoma. In 2008, the company, which is also part of the KPCB portfolio, snagged $26 million from the DOE.
Smart-grid technology provider and KPCB-backed company Silver Springs Network received a large influx of stimulus dollars as well. In 2008, KPCB invested $75 million in Silver Springs. In August 2009, close to 60 percent of Silver Springs’ customers received grant awards from the DOE.
“The most frustrating thing is that there’s no accountability,” Tom Borelli, senior fellow at the National Center for Public Policy Research and director of the Free Enterprise Project, told TheDC. “It’s crony capitalism. It’s essentially elites dictating energy policy. And we the people get left out.”
And then there are companies like Amyris Biotechnologies, a company that would probably have little chance of surviving on its own if the government didn’t subsidize it with stimulus money.
Just last May, Amyris’ filings revealed that it had received $24.3 million in federal grants. However, the company, which is working to produce next generation biofuels on a commercial level, is hemorrhaging money. The KPCB-backed start-up’s net losses now total $136.6 million. In fact, the company has never turned a quarterly or annual profit in its seven-year history.
Then there’s ZBB Energy – a battery plant in Menomonee Falls, Wisconsin that President Obama visited just a couple weeks ago. But as a recent Wall Street Journal editorial pointed out, the company has been continuously losing money. Just in the first nine months of the current fiscal year, ZBB lost $6.9 million. Despite that, the company was recently given $14 million by the DOE.
LG Chem, another battery company and a subsidiary of Compact Power Inc, received $151 million in federal stimulus money to build a battery plant in Holland, Michigan. President Obama was there for the groundbreaking in July. Around that same time, it was also announced that LG Chem would be contracted to build batteries for the Chevrolet Volt and the electric version of the Ford Focus.
When it comes to these battery plants, they may not be KPCB-backed, but those batteries are needed to operate things like the Fisker Karma, the Focus, and the Volt – electric cars that KPCB does have a financial interest in.
Yet now these financially unsound companies have the use of millions of dollars of taxpayer money to try to produce a product for a marketplace that, for all intents and purposes, does not even exist yet.
“There is not a real market yet because if people are given a choice, they won’t pay extra for electricity,” Dan Kish, senior vice president at the Institute for Energy Research, told TheDC. According to Kish, the only reason there is even a fledgling market for green energy products now, is because the federal government is forcing it.
“But anytime the government artificially stimulates the consumption of something that doesn’t make economic sense,” said Kish, “when the market finally corrects itself, people will get hurt.”
Kish continued by explaining how this is the “Tanya Harding approach to energy.”
“The president wants to make green energy be profitable,” he said. “The only way to do that is break the leg of other types.”
But that will only create a “green-energy bubble,” said Kish. “When the government money dries up, the product will dry up.” In the meantime, he added, the government subsidies will cause the price of electricity to skyrocket.
“Every recession has been preceded by a spike in energy costs,” he said.
But examples of stimulus money being directed to companies that will ultimately effect KPCB’s bottom line doesn’t end with electric car companies or battery plants. Other KPCB companies that can be added to the list are AltaRock Energy, which received $25 million in grant money; Bloom Energy, which reportedly received $5 million to develop its “Bloom Box” in addition to a government contract to order the box; and MiaSole, Thin-Film Solar, which received more than $100 million in tax credits.
But none of those benefits would be possible for these so-called “green” companies if it weren’t for the prime individual movers in the green movement. People like KPCB partners Al Gore, Ellen Pao (who also sits on the board of the left-leaning “green” think tank Apollo Alliance), Ray Lane, and KCPB “in-house advisor” Colin Powell, to name a few, consistently lobby the Obama administration to end the use of fossil fuels, pass carbon taxes, and provide government support to things like wind turbines and electric cars.
What is never mentioned is that once these policies are passed, their supporters often personally profit.
“To be sure it is as crony as any other form of faux-capitalism, but the nuance is important,” said Horner. “It isn’t so much ‘I’ll underwrite your campaign if you’ll underwrite my investments.’ It’s ‘I’ll underwrite your campaign because I know you’ll underwrite my investments.’ They are co-dependent, and loving it.”
As a result, the government is using taxpayer money to invest in “green” initiatives – a victory for KPCB-types and environmental groups.
“The left has won the policy battle through the corporate door,” said Borelli. He also said it is an example of how the left can be just as much in bed with “Big Business” as the right can.
“If you get corporations to lobby, you win. End of story,” he said. “The strategy of the left here is brilliant. They have turned an adversary into a lobbyist…They lobby for huge budgets, then feed off them like parasites.”
When asked about the criteria used to pick companies to award government grants to, a spokesperson for the DOE referred TheDC to the American Reinvestment and Recovery Act page on the DOE’s website.