For the last two and half years, the Independence Institute along with other free market energy policy advocates have pounded the drum of transparency and exposed the federal government’s infamous Department of Energy (DOE) loan guarantee program that rewarded the politically well-connected while costing taxpayers billions of dollars with high profile bankruptcies such as Solyndra and Colorado’s own Abound Solar.
Without the work of the Independence Institute’s investigative reporter Todd Shepherd, the Energy Policy Center, and Michael Sandoval now with the Heritage Foundation, Abound Solar’s history is little more than a footnote in failure in the grand scheme of the DOE. We covered it. The mainstream media did not…until we shamed them into doing so.
Now the Government Accountability Office (GAO) has released a report on its audit of the DOE loan guarantee program that finds negative publicity surrounding the embattled program has left billions of taxpayer dollars untouched in the public trough.
More than $51 billion in unused loan guarantee authority and $4.4 billion in unused credit subsidies…remain available under the DOE’s Loan Guarantee Program (1703) and Advanced Technology Vehicles Manufacturing (ATVM) loan program.
According to the report,
Some applicants noted that the Solyndra default and other problems have created a negative public image and political environment for the program, which has made its future less certain and the DOE more cautious about closing on loan guarantees.
Good news for taxpayers, the DOE has not closed a loan since September 2011, the month that Solyndra shuttered its doors. The GAO conducted the performance audit beginning in June 2012 (the date Abound Solar went bankrupt) to February 2013.
Most impressive is that taxpayers are making their voices heard and companies themselves are feeling the negative public pressure of socializing risk while privatizing profit:
“Most applicants and manufacturers noted that public problems with the Solyndra default and other DOE programs have also tarnished” other programs such as ATVM. They believed the negative publicity makes the DOE more risk-averse or makes companies wary of being associated with government support.”
We would be remiss if we didn’t mention by name the excellent work of Paul Chesser of the National Legal and Policy Center exposing the DOE’s corporate welfare program for Big Green projects such as electric vehicle manufacturers to the stars Fisker and Tesla and battery maker A123 Systems.
The Independence Institute’s Todd Shepherd, along with this blog, have spent two years covering, and ultimately exposing, what is now the Abound Solar scandal. Understandably, much of the focus is now on Weld County District Attorney Ken Buck’s criminal investigation as well as a Congressional Oversight Committee inquiry into the bankrupt solar panel manufacturer.
Recently released emails on Complete Colorado indicate that, despite statements to the contrary, the White House politicized the Department of Energy (DOE) loan guarantee process for politically well-connected Abound.
But something else within those emails caught my attention reminding me of free market economist and Nobel Prize winner Milton Friedman’s famous quote, “there is no such thing as a free lunch.” In other words, even things that appear to be free have an associated cost.
This basic economic concept is lost on Colorado State Representative Max Tyler’s (D-Lakewood) who in a March 23, 2010, press release bragged about a government-dictated increase in Colorado’s renewable energy mandate:
With HB 1001 we will manufacture and install panels and turbines all over Colorado to capture free energy….The sun will always shine for free, the winds will always blow for free, and our energy production will be cleaner. Renewable energy, green jobs, and a cleaner future — what’s not to like?
At roughly the same time that Tyler publicly fantasized about “free energy,” a credit advisor for the Department of Energy (DOE) loan guarantee program James McCrea was concerned about “major issues” with Abound Solar’s marketability. In an email dated April 1, 2010, just seven days after Tyler’s press release, McCrea explained:
Another issue is the very limited supply of telluride, its potential price trajectory and other demands for it. Related to this is a question of the viability of the Abound panels as compared to other panels and whether there is sufficient benefit to allow the panels to be profitable if Te [telluride] prices really increase. If the price really rises will there be alternative uses that can afford it basically turning it into a non available input for Abound?
I don’t believe we have ever worked with an input material that is so limited. We need to think that through carefully.
Before going bankrupt this summer, Abound produced cadmium telluride (CdTe) thin-filmed photovoltaic solar panels. Cadmium and tellurium, used in the manufacturing of Abound’s panels, are two of the world’s 17 “rare earth elements” that are needed for everything from smart phones to solar panels to high tech weapons systems. My former colleague Michael Sandoval, now an investigative reporter with the Heritage Foundation, and I have written several columns on general issues with rare earth elements.
This email highlights the problem specific to Abound, and McCrea was right to be concerned. According to the December 2011 DOE Critical Materials Strategy the price of tellurium has been going up since 2007:
The price dropped in 2006, but in 2007 resumed its upward trend owing to increased production of cadmium telluride (CdTe) solar cells.
Furthermore, China controls the vast majority of rare earth elements. In August 2012, the Chinese announced an ambitious plan to increase its stranglehold on the world’s available supply of rare earths. According to China Daily the country:
launched a physical trading platform for rare earth metals as part of its efforts to regulate the sector and strengthen its pricing power for the resources.
As the world’s largest producer of rare earth metals, China now supplies more than 90 percent of the global demand for rare earth metals, although its reserves account for just 23 percent of the world’s total.
The article reiterated what Michael and I have said on numerous occasions, mining rare earths comes with a significant environmental cost that green zealots like Tyler completely ignore when claiming solar energy is free and clean:
Mining the metals greatly damages the environment. In recent years, China has come down heavily on illegal mining and smuggling, cut export quotas and imposed production caps, stricter emissions standards and higher resource taxes to control environmental damage and stave off resource depletion.
However, these measures have irked rare earth importers, who complained about rising prices and strained supplies.
But China did exactly what it said it would do in 2009. It drove up prices with reduced output as global demand increased.
China’s rare earth output fell 36 percent year on year to 40,000 tonnes in the first half of the year. Prices of major rare earth products in July remained twice as high as prices at the beginning of 2011, although down from the beginning of the year.
In July 2009, about a year before President Barack Obama announced a $400 million loan guarantee for Abound, Jack Lifton, an expert on sources and uses of rare minerals, wrote a lengthy article for Resource Investor about the availability of tellurium for First Solar, a global leader in cadmium telluride solar panel manufacturering. Lifton’s conclusion should have served as a prophetic warning for Abound and any hope of profitability:
A company such as First Solar, which is critically dependent on a secure supply of tellurium to exist and on an unsustainable growth in the supply to it of tellurium for it to grow and achieve competitive pricing is a big risk for short-term investors. The maximum supply and production levels attainable of tellurium are quantifiable even if the actual production figures are murky, and they do not bode well for the future of First Solar if it must make profits to survive.
The next time you hear a politician like Max Tyler tout the benefits of “free” and “clean” energy, remember Abound Solar because there is no such thing as a free lunch.
No one read a press release from the Environmental Protection Agency stating that drinking water in Dimock, Pennsylvania is safe to drink and not contaminated by hydraulic fracturing because the EPA didn’t issue one. Instead it sent an email to Dimock residents.
-Original Message—– From: Taylor.Trish <Taylor.Trish@epamail.epa.gov>
To: Cc: Polish.David <Polish.David@epamail.epa.gov>
Sent: Fri, Dec 2, 2011 6:34 am
Subject: Follow-up status re: Nov 10, 2011 visit with Dimock PA residents
Dear Dimock Residents,
This email is a follow-up to the visits to Dimock area homes by EPA on November 10, 2011 and the subsequent review of well sampling data for wells impacted by the Cabot Oil and Gas Company drilling activities. EPA has conducted a preliminary review and screening of the data provided by the Pennsylvania Department of Environmental Protection and residents. While we are continuing our review, to date, the data does not indicate that the well water presents an immediate health threat to users. EPA will continue to review available information related to the concerns of Dimock area residents. We are continuing to work with the Commonwealth of Pennsylvania going forward on this issue.
Please feel free to call me or David Polish, Community Involvement Coordinator, at (215) 814-3327, if you have further questions.
Trish Taylor, Community Involvement Coordinator
Hazardous Site Cleanup Division (Mailcode 3HS52)
U.S. Environmental Protection Agency,
Region 3 1650 Arch Street, Philadelphia, PA., 19103
phone: (215) 814 – 5539 fax: (215) 814 – 3015
Thanks to Heritage Foundation blog The Foundry for making it public:
Federal authorities have ruled that the drinking water in Dimock, Pennsylvania, which some claimed had been contaminated by nearby natural gas drilling efforts, is safe to drink. The statement lends some factual weight to a political debate wrought with emotion and more than the occasional doom-and-gloom proclamation.
Dimock has become a lightning rod in the fight against the natural gas extraction technique hydraulic fracturing. Anti-natural gas activists have used the town in a years-long campaign to prevent the practice, which they insist contaminates drinking water supplies.
But the Environmental Protection Agency says otherwise….
EPA’s findings comport with administrator Lisa Jackson’s previous statements regarding the effects – or lack thereof – of hydraulic fracturing on drinking water. Earlier this year, Jackson told a House committee that she was “not aware of any proven case where the fracking process itself has affected water.”
Scott Perry, director of the Pennsylvania Department of Environmental Protection’s Bureau of Oil and Gas Management, echoed that position. “There has never been any evidence of fracking ever causing direct contamination of fresh groundwater in Pennsylvania or anywhere else,” Perry said in April.
This is a stark contrast to how the EPA and the media responded to a “draft finding” regarding ground water in Pavillion, Wyoming.