Report: Obama administration mishandled CO2 sequestration funds

Michael Bastasch | Contributor

An audit by the Energy Department’s inspector general found that the government mishandled hundreds of millions of dollars for carbon capture and storage technologies.

“We found that the Department had not always effectively managed the Carbon Program and the use of Recovery Act funds,” reads the audit of the $1.5 billion dollar program to promote carbon capture technology.

 “The issues we identified occurred, in part, because program officials had not always provided effective monitoring and oversight of recipient activities,” the audit continues. “Specifically, the Department had not implemented certain performance monitoring controls that would have allowed for more thorough reviews of costs prior to reimbursement.”

Auditors found that the officials had not “adequately documented the approval and rationale” for $575 million to “accelerate existing projects rather than proceeding with new awards,” which is required by federal law and department policies.

The DOE also reimbursed recipients for approximately $16.8 million without receiving or reviewing the proper documentation. Furthermore, more than $90 million in stimulus funds were awarded to three recipients with significant financial or technical issues.

The audit notes that, “the Department awarded more than $48 million to one recipient whose financial condition precluded it from obtaining a satisfactory merit review score.” However, the DOE simply increased the taxpayers risk while lowering the recipient’s required cost share amount — which the audit notes that the recipient was still unable to raise enough funds even with the reduced cost share requirement.

“We noted that 2 years after award, the three recipients had only spent about $7 million and experienced delays finalizing agreements due to problems meeting financial commitments and overcoming technical issues impacting the scope of work for the projects,” according to the audit. “The challenges precisely paralleled the initial concerns raised during the merit review process.”

The audit also found that the Energy Department did not review more than $4.1 million in contracting actions to make sure there no conflicts of interest. One recipient of taxpayers funding contracted with an affiliated company that had representation on its own Board of Directors.

“Finally, despite Federal and Department policies requiring that significant decisions be documented, program officials had not maintained records related to decisions to allocate funds to accelerate existing projects,” the audit reads.

The 2009 stimulus package allocated $90 billion for green-energy programs, some of which have been criticized for excessive risk and high profile failures. There have even been allegations of cronyism.

Energy loan programs came under fire after Solyndra — which received a $535 million loan guarantee — filed for bankruptcy in August 2011. Abound Solar, another high-profile failure, got a $400 million loan guarantee, drew down $70 million of the loan, and then had to file for bankruptcy. A Daily Caller News Foundation investigation later revealed that Abound was selling underperforming solar panels.

“The green energy loan program was essentially a recycling program designed to send taxpayer dollars to the administrations financial supporters,” said Peter Schweizer, author and Hoover Institution research fellow.

However, the Obama administration has maintained that politics played no role in issuing $34.5 billion in government-backed loan guarantees.

“I am aware of no communication from White House to Department of Energy saying to make the loan or to restructure,” former Energy Secretary Chu testified before Congress.

According to the audit, only about $623 million — less than 42 percent — of the carbon capture technology funds had been spent.

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