Less than two years after Solyndra went bankrupt despite a $535 million federal loan guarantee, Energy Secretary Ernest Moniz announced Tuesday that he's pushing ahead with a similar loan program as part of President Obama's new plan to combat climate change.
But this time around, the administration is using $8 billion of loan guarantees to develop cleaner fossil-fuel projects that Republicans should, in theory, support.
“If the administration is trying to ameliorate the negative impacts of the regulatory regime, that’s always good,” said Rep. Bill Cassidy, R-La., in an interview with National Journal Daily on Tuesday. Cassidy, a member of the House Energy and Commerce Committee and the lead GOP challenger to Sen. Mary Landrieu, D-La., in the 2014 election cycle, was referring to the Environmental Protection Agency rules Obama announced last week would control greenhouse-gas emissions from power plants.
When National Journal Daily noted that Solyndra was awarded its half-million loan guarantee under a similar Energy Department program, Cassidy said he could not comment further because he had not heard about Tuesday’s announcement until this interview.
In the wake of Solyndra’s bankruptcy in the fall of 2011, Cassidy was part of the universal GOP chorus criticizing the Obama administration.
“What everyone’s concerns are is that instead of good business-based analysis driving policy, it was policy and politics and desired outcome driving an analysis,” Cassidy said on Fox News in October 2011.
Cassidy’s newfound—albeit cautious—support for the Energy Department’s loan-guarantee program suggests a politically smart move by the administration: Announce new loan guarantees for only fossil fuels, which Republicans universally support, and move ahead via the Interior Department to develop on public lands more renewable energy, which many Republicans continue to criticize.
Cassidy is sponsoring a bill the Energy and Commerce Committee is expected to mark up next week that would ban EPA from finalizing energy-related regulations that are expected to cost more than $1 billion if the Energy Department determines that the rule would cause “significant adverse effects to the economy.” The EPA rules Obama announced last week would likely fall under that category, Cassidy said.
Republicans’ response to Tuesday’s announcement on loan guarantees for fossil-fuel projects was especially muted, even for a congressional recess week when members are back in their districts. A spokeswoman for House Energy and Commerce Chairman Fred Upton, R-Mich., indicated Upton and other GOP leaders on the panel were not planning to issue statements.
The spokeswoman did indicate that the committee was cautious about supporting the loan program no matter what: "The DOE loan guarantee program's history of mismanagement, bankruptcies, and failure to deliver the jobs promised raises significant concerns about whether risking an additional $8 billion under this program is the best use of taxpayer dollars at a time when we are $16 trillion in debt."
How much the administration can actually do with the $8 billion in loan-guarantee authority is a big open question. The program itself was created eight years ago during the George W. Bush administration, and it has not yet finalized one loan guarantee.
The $8 billion in loan-guarantee authority announced Tuesday was actually first made available to the fossil-fuel industry in 2009. DOE officials said on a conference call Tuesday that they’re expanding the solicitation in hopes of attracting a wider net of cleaner fossil-fuel technologies, such as hydraulic fracturing that doesn’t use water, as well as carbon capture and sequestration, an expensive technology to burn coal with far fewer carbon emissions that’s been proven in only a few cases throughout the world.
Since its creation in 2005, the loan program has conditionally approved just two projects. Both are nuclear-energy-related and received the conditional support mere months apart in 2010. It’s unclear when or whether the government will finalize those loan deals, including one worth $8.3 billion conditionally awarded to Southern Company to build the first nuclear reactor in 30 years.
Some lobbyists speculate that Tuesday’s announcement could collect dust similar to Obama’s initial call for nuclear-power loan guarantees in 2010.
“I think it’s going to be a lot like the nuclear loan guarantees, where nobody is ever going to access them,” said one Republican energy lobbyist who would speak on the condition of anonymity only. “No one is ever going to wind up signing them.”
It’s also unclear whether there is even a market to match the Energy Department’s solicitation for loan-guarantee applications, especially within the coal industry. Major utilities are shifting more and more to natural gas because of the low prices of that fuel and also tighter environmental rules on coal plants, including the EPA carbon regulations Obama announced last week.
“We certainly don’t have any plans for a coal plant, that’s for sure,” said Tom Williams, spokesman for Duke Energy, the largest electric utility in the country.