Obama’s Green Energy Loans Are Still On Track To Lose Money
Former Energy Department (DOE) officials are in the media trying to save the agency’s green energy loan program from being eliminated by President-elect Donald Trump and a Republican-controlled Congress.
DOE supporters gave a misleading picture about the success of the loan program that gave $535 million to the solar company Solyndra before it went bankrupt, according to an economist.
“The fundamental economics are the same today as they were before,” Donald Marron, an economist at the Urban-Brookings Tax Policy Center, told The Daily Caller News Foundation.
“Whatever their environmental and economic benefits, DOE’s loan programs are not profitable for the government,” said Marron, a former White House economic adviser who first pointed out DOE’s misleading claims in a 2014 blog post.
That year, DOE released a report claiming their $30 billion green loan program was on track to make $5 billion. The report said the $810 million in interest payments from taxpayer-backed companies more than covered its $780 million in losses.
Sympathetic media outlets ran headlines claiming DOE loans were turning a profit, but that was not true. The Government Accountability Office (GAO) issued a report in 2015 detailing how DOE was on track to lose taxpayers $2.21 billion.
The “credit subsidy cost of the loans and loan guarantees in its portfolio” is expected “to be $2.21 billion, including $807 million for loans that have defaulted,” GAO reported.
“The fees DOE has collected have not been sufficient to cover all of its administrative expenses for the program” because the “fees on the current loan guarantees were too low to cover ongoing monitoring costs,” GAO found.
But now former DOE officials are back in the news touting their loan program’s supposed success.
“It’s hard to know what not to like,” former DOE loan head Jonathan Silver told Bloomberg. “The program is intended to provide a funding source of last resort for innovative high-growth technologies in the fast-growing industry in the world.”
Peter Davidson, who headed the program after Silver left, said DOE’s loan portfolio outperformed most banks. The loan program’s current head, Mark McCall, told Bloomberg they’ve “approved 30 guarantees and has a loss ratio of about 2.3 percent.”
Sounds nice, but DOE still can’t say its loan program will actually make taxpayers any money.
“They weren’t when DOE issued that report, and they aren’t today,” Marron said. “And it’s not just me saying that.”
“The Office of Management and Budget and the Government Accountability Office agree. Last year, for example, GAO reported that the loan programs would cost taxpayers about $2 billion over their lifetimes,” he added.
The DOE’s loan program was created by Congress during President George W. Bush’s tenure to boost green energy and alternative vehicles, but got billions in funding from the 2009 stimulus program under President Barack Obama.
So far, DOE has spent $30 billion on 34 projects — the most infamous one being a $535 million loan guarantee to solar panel-maker Solyndra before it declared bankruptcy in 2011. Solyndra’s failure sparked backlash against DOE loans to green energy companies and a halt to lending.
DOE also lost $70 million to the failed solar company Abound, and $139 million when Fisker Automotive, a luxury electric car maker, went bankrupt.
“LPO expects to receive about $5 billion in interest payments, which is a reflection of its good stewardship of taxpayer interests as well as an important differentiator between a loan program and a grant program that does not get paid back,” DOE spokeswoman Joshunda Sanders told TheDCNF.
“LPO also collects fees to help offset its administrative costs,” Sanders said.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact email@example.com.