President Obama didn't request any new loan authority for the Department of Energy's troubled clean energy loan guarantee program in the fiscal 2013 budget request he sent to Congress yesterday -- and the only new funding he is seeking for the effort is $38 million to cover ongoing administrative expenses.
But Republicans on Capitol Hill said yesterday that they were skeptical of putting any additional dollars toward a program that has become synonymous with the failed Solyndra solar energy company.
DOE noted in its budget submission yesterday that the reason it does not require any new loan authority or credit subsidy in fiscal 2013 is because the agency plans to focus its energy on deploying the significant amount of remaining resources that had already been appropriated in prior years.
DOE spokesman Damien LaVera said yesterday that DOE's Section 1703 loan guarantee program currently has $34 billion in loan authority and that an additional $170 million in appropriated credit subsidy continues to be carried over from previous years. And that total does not include the $16 billion in available lending for the Advanced Technology Vehicles Manufacturing loan program, which falls within the same DOE Loan Programs Office.
But yesterday, Rep. Cliff Stearns (R-Fla.), who has been leading the House Energy and Commerce Committee investigation into Solyndra, said that he was uncomfortable with granting the loan program another dime.
"Although the President's budget does not request any new spending authority for the Department of Energy (DOE) loan guarantee program, sparing taxpayers further loses in this troubled program, I remain concerned with DOE's ability to manage and provide oversight of the existing loans," Stearns said in a statement.
Stearns' comments come just days after the White House released a much-anticipated report by former Treasury official Herb Allison that offered suggestions for how DOE could improve its efforts to monitor the loan program and stay on top of its existing portfolio to ensure other loans don't go the way of Solyndra (E&ENews PM, Feb. 10).
One of the most important things DOE and the White House can do, Allison wrote in his report, is to ensure the long-term funding for the effective management and oversight of the portfolio.
"Compared to the potential for greater losses if the Portfolio is not managed closely and competently, the cost of adequate management and oversight will be small," Allison wrote.
But two analysts at the conservative think tank the Heritage Foundation released a response to that report yesterday in which they argued that it would make better financial sense to simply shut the entire program down.
"More stringent oversight and risk assessment may marginally improve the protection of the taxpayers' money, but the best option is to get rid of the loan program altogether and allow free-market competition to drive energy investment," Heritage's Jack Spencer and Nicolas Loris wrote yesterday. "This protects taxpayer money and will ensure that only the most promising new energy technologies move forward. The market system will work for new energy technologies if Washington could just get out of the way."
Despite the outcry that has erupted since Solyndra -- which received more than half-a-billion dollars in loan guarantees before it went bankrupt -- the loan program still has plenty of influential supporters on Capitol Hill.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said last night that he would be in favor of providing new funding and spending authorities to DOE for additional loan guarantee projects in the future.
"When we legislated the loan program into effect in 2005 I thought it was a very good tool for the government to use to help develop these technologies and encourage deployment of these technologies," Bingaman said. "I think if we're going to be a participant in the worldwide development of renewable energy technology and renewable energy projects we're going to have support programs in place."
Walter Howes, who ran DOE's loan program under former President George W. Bush, said yesterday that the loan guarantee program is certainly a tool that can be used again in the future but that it is not a conversation that the Obama administration wants to have as part of the fiscal 2013 budget debate. Coming off the controversy over Solyndra, Howes said that 2012 will be a time for DOE to keep its head down when it comes to the loan program and concentrate on managing its current portfolio as best it can.
It is highly unlikely that the government is going to reload the bank account within DOE to allow for large new loan program spending until after the election, he said.
"I'm a fan of this tool correctly managed and judiciously applied. But I wouldn't write a check for new funding right now either because I don't think the condition of the soil is appropriate to plant new seeds today," he said.
Howes said that there is no need to draw any more fire from the loan guarantee program's critics right now.
"There are three main tasks for the loan program right now, firstly, carefully monitoring the current portfolio, secondly carefully monitor the portfolio, and thirdly -- to prepare for its next life," he said. "They are laying the groundwork to, sometime after the election, take it out of DOE and either stand it up as its own quasi-federal agency [such as the Oversees Private Investment Corporation or the Export-Import Bank of the United States] or put it into one of these two."
"Much will depend on the performance of the portfolio between now and 2014," he added.