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Solyndra a Scandal? What it Means for Obama and Green Energy

Tuesday, September 20, 2011

Ben Bierman (R) and Chris Gronet (L) lead U.S. President Barack Obama on a tour of the Solyndra solar panel company May 26, 2010 in Fremont, California. (Getty)

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, Joe Stephens of the Washington Post explained the scandal surrounding the failed solar company Solyndra, and Lisa Margonelli, director of the Energy Policy Initiative at the New America Foundation, put it in the context of the green energy sector.

When the flagship sinks

The solar company Solyndra was supposed to be America's green energy flagship. Recipients of a $1.5 billion government loan guarantee, (the first company of its kind to get such a deal), Solyndra was to return the taxpayers' investment in the form of solar panels that were cleaner and more efficient than the ones coming out of China.

But China is cornering that market, and while Solyndra was spending money to expand its operation, Chinese companies were lowering their prices. Almost as soon as Solyndra completed its second plant, they were forced to shut down the first one. Now the company has filed for bankruptcy, all employees have been laid off, and the government won't be getting its money back.

It all looks bad for the Obama administration, Joe Stephens said. The president has toured Solyndra and even given a speech there, calling the company "our future."

You would think they were picking the bright shining light for this sector, and on top of that they doubled down on it; they personally put themselves out there. The president doesn't personally go to every company out there that gets government assistance....So it's even more startling when it goes down.

And Solyndra's biggest investor is...

As if buyer's remorse wasn't enough, the Obama administration may have a bigger PR problem stemming from their relationship with Solyndra—their relationship with George Kaiser, billionaire part-owner and, yes, Obama fundraiser. Joe Stephens said that Kaiser was one of the major "bundlers" who would get other people to contribute to the Obama campaign; Kaiser even hosted an event at his home. He's visited the White House "a dozen or so times" according to Stephens.

Is this a case of mutual back-scratching? You round of millions of dollars for my election bid, I fast-track a massive government loan guarantee to the company you run? Could we make this look worse?

Yes. Stephens said that another Obama fundraiser connected to Solyndra was appointed to oversee the management of the loan.

Campaign fundraisers monitoring loans to people with ties to the campaign, that doesn't sound like good government. It's enough to raise questions. That particular individual had recused himself from any dealings with Solyndra because of an issue with his wife, who is an attorney, but...It's murky.

Lender of last resort?

The Solyndra debacle raises questions about everything from money's influence on politics, to the Obama administration's energy intentions, to the wisdom of government subsidies. Lisa Margonelli pointed out that the government stepped in to provide a loan to a company that the market wasn't willing to put on its feet. Perhaps the market was telling us something.

If venture capital and banks aren't willing to fund things, why should the taxpayer be the lender of last resort? For one thing the optics are bad; even when things are good it looks bad, because how is the government making these decisions?

Secondly, venture capitalists aren't like you and me. they are people with weird metabolisms that are interested in risk and willing to take both a left brain/right brain approach to putting money on risky things, and i dont think that government bureaucrats are really set up to do that.

Margonelli said the government has started thinking of itself as a "surrogate venture capitalist," and in this new role it has pushed its labs to produce more commercially-ready ideas. What's falling by the wayside, and what government should be throwing money at, is research.

"Solar panels themselves came out of NASA research," Margonelli said.

Rethinking subsidies

Subsidies need a sea change, and one need not dig deep to find fault with the government's strategy. Lisa Margonelli said that the U.S. taxpayer subsidizes nuclear energy at rate of 140 percent per kilowatt—we're "taking a bath", as Brian Lehrer put it, and Margonelli said it didn't make sense.

We've got an artificially low price for nuclear that's competing with our panels that we're also funding. We need to adjust this business of subsidies and really think about what we want.

Is it a scandal?

This has been bad for the green energy sector and it's been bad for the Obama administration, but is it really a scandal, as so many in the media and especially on the Right have called it?

Joe Stephens doesn't think "scandal" is the right word.

For me, a scandal would mean that you do it for your own personal self-interest, and although there's a lot of smoke out there, no one has proven yet that this was done for political purposes.

Lisa Margonelli said that while the administration certainly didn't have to give Solyndra this money, American politicians have little choice but to invest in solar and other green energies. China is cornering the market precisely because it has the cash to throw at job creation; keeping a billion people employed is necessary for political stability. Solyndra wasn't a wise choice, but the possibility of it being a scandal overshadows the reality that we're falling behind in new technologies.

The amount of energy the world is going to use is going to increase by 53 percent by 2035, and estimates are that the fastest growing sector is going to be green energy. The U.S. has to be in that sector. We have to be competitive if we're going to have a manufacturing sector by 2035. I don't see us as having much of a choice, but we have to understand it's not just about throwing money at them.

Guests:

Lisa Margonelli and Joe Stephens

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Comments [23]

Tom Kacandes from New Paltz, NY

Your guest Lisa Martinelli made it sound like America's venture capital community is the answer for startups and gov't funding should be reserved for basic science - sorry, that's just uninformed cr_p. I've had the special pleasure of presenting a start up solar business for B-round funding to the #1 VC firm in the world and two dozen others. Many told us point blank that THEY don't want to fund manufacturing any more because they can put $1MM into the next Facebook 30 times for what a more capital intensive business needs to do anything. Meanwhile, I've also been to solar PV plants in China where they aren't trying to invent anything, get free land, interest free loans, and have a positive balance sheet from day one. Solyndra's particular technology didn't make enough energy for it's cost, period. It was unique, and is not indicative of green technology, much less solar technology prospects. We absolutely can manufacture solar here and must, but funding basic science and "stretch" technology goals as DOE is doing just subsidizes the Chinese financing machine.

Sep. 21 2011 11:04 AM

If the benefit of their technolOgy is that it piloted less, than nothing will give this product an edge -- except a reward for polluting less. China is already poisoning itself -- i wish they were bickering in the un about implementing a carbon tax!

Sep. 21 2011 07:42 AM
jph from NYC

Saw this pretty comprehensive summary at Think Progress. It's too long to quote here, but I urge folks who want some perspective to read it - The Solyndra story began a long time ago - it was a Bush Administration pet project (for understandable reasons) and it's not a scandal -- it's a story of a business with a good idea (an alternative to Silicon intensive photovoltaic solar panels) that got priced out of business by an unexpected change in market conditions (China flooded the market with cheaper silicon based solar cells). - To date, Solyndra is the only loan from it's program that’s known to be troubled. Useful to keep this in mind as the scandal machine explodes -

Exclusive Timeline: Bush Administration Advanced Solyndra Loan Guarantee for Two Years, Media Blow the Story | ThinkProgress http://thinkprogress.org/romm/2011/09/13/317594/timeline-bush-administration-solyndra-loan-guarantee/

Sep. 20 2011 10:43 PM
laurence from brooklyn, ny

For the chief justice...how can we allow companies the same rights as individuals?

Sep. 20 2011 11:24 AM
Chuck from NYC

China invested over 30 billion in renewable energy.

The U.S. invested 2.3 billion.

China is now able to keep prices way down. China is now outselling us in solar panels.

We should invest more. Companies fail.

We need to get our heads out of the sand and Washington should stop acting like a grammar school lunch room.

Sep. 20 2011 10:56 AM
Edward from NJ

$500 million is not "a lot of money" for the federal government. It's about $4.44 per household. If we were talking about it in terms of a budget cut or tax increase, the guests would be using phrases like "a drop in the bucket".

Remember when we shipped $10 billion in cash to Iraq and then just sort of lost it?

Sep. 20 2011 10:38 AM
Gene Barrack from New Jersey

You mentioned the half billion dollar loan from taxpayers. How about the billions in wars without taxpayer approval

Sep. 20 2011 10:33 AM
Tony

China has been subsidizing solar panel manufacturers very heavily, effectively bankrupting Solyndra.

Once they have the market cornered, they will reduce the subsidies.

Sep. 20 2011 10:28 AM
Sophie from Poughkeepsie, NY

@carolita from NYC

Yes! And part of the reason we can't manufacture here is because Americans want the cheapest priced end product, and that's where China comes in to fulfill that deisre.

Sep. 20 2011 10:27 AM
Edward from NJ

@Martin, perhaps you couldn't find any mention on the Huffington Post because you seem to think the company is called "Solera". A search for Solyndra yields multiple results. http://search.huffingtonpost.com/search?q=solyndra&s_it=header_form_v1

Sep. 20 2011 10:27 AM
Carlos Rey from NYC

Anyone who says the govt shouldn't be funding new technologies ... who funded the creation of the Internet?

Sep. 20 2011 10:27 AM

While this does look somewhat problematic from a political side, it is hardly much different from the way a lot of corporate interests get their position on the table with the Federal Government. And it is definitely small potatoes compared to the way Cheney ran energy interests: in concert with HIS industry, big Oil, and behind closed doors.
At least this is a technology in which we should be investing - It's a shame it wasn't handled better. And I echo all those who are stating the bigger issue: China's part in all this.

Sep. 20 2011 10:26 AM
Jay F.

More lost jobs.... Boston Power moves to China:

http://news.cnet.com/8301-11128_3-20108353-54/boston-power-moves-ahead-by-moving-to-china/

Sep. 20 2011 10:25 AM
carolita from NYC

Face it -- there isn't ANYTHING we can manufacture here in America that China or Bangladesh can't copy and manufacture more cheaply. That is the problem, not the market.

Sep. 20 2011 10:23 AM
barent

we're just pussyfooting around with a great technology. i'm sure the oil and nuclear people are just ecstatic. everything is stacked against the green techs,including fools in a certain nj town, who don't like, the way solar panels look on telephone poles. i guess eternal blood for crude oil, is more attractive to them. we're lost,we're just bleepn' lost....

Sep. 20 2011 10:22 AM
justin from Brooklyn

China heavily subsidizes its solar industry and it now leads the world in the industry. We heavily subsidize the oil industry and that is leading us down the road of inefficiency and producing the most climate change gas emission per person and never ending wars in the middle east.

Please compare this to subsidies to the oil and nuclear industry.

Sep. 20 2011 10:20 AM

They should have put tax expenditures towards installation of solar panels on our domestic houses & commercial businesses.

Sep. 20 2011 10:19 AM
In Hell's Kitchen (NYC)

Here is a link to Joe Romm's fact-checking all these falsehoods pushed by the right wing about this particular business failure :

http://thinkprogress.org/romm/2011/09/20/323353/what-the-press-is-getting-wrong-about-solyndra/

Sep. 20 2011 10:15 AM
jgarbuz from Queens

The destiny of America, as Jefferson hoped, is to become a land of small farmers again! The Chinese will sell us our solar panels as the Japanese sold us our transistor radios back when. And we will sell them wheat and dairy products. Subsidized farmers, of course! And we'll take care of grandma down on the farms while we're at it. Our Chinese solar and windmills will provide basic electrical needs as we all become subsistance farmers once again! God bless Ron Paul :) No need for money either. We'll go back to bartering.

Sep. 20 2011 10:15 AM
john from office

So are we to just lose an entire industry to China??, We should be giving money to the solar industry.

Sep. 20 2011 10:15 AM
David from Fredericksburg, VA

It is a scandal, but not just for the Obama administration. This just shows that we have the best government money can buy.

Sep. 20 2011 10:11 AM
anonyme

Lots on Grist on Solyndra that we are not hearing elsewhere: http://www.grist.org/solar-power/2011-09-13-bush-admin-pushed-solyndra-loan-guarantee-for-two-years

Sep. 20 2011 09:52 AM
Martin Chuzzlewit from Manhattan

OMG.......a leftist media outlet, WNYC, finally mentions the word "Solera"....even though Congressional investigation hearings start this week. (By the way, the Huffington Post censors the topic and any mention of it that gets through the moderators is immediately scrubbed clean from the site.) The fact that this story is buried by the "progressives" should tell you that it's a real hot potato.

I'm sure that your guest will be well versed on the "green energy" spin on this story.......but the real story here is POLITICAL. Why were these people meeting with Valerie Jarrett and Austin Goolsbee in the White House over the course of their 20 (!) visits? If this was a Republican administration, it would be the new Enron for the Left.

Sep. 20 2011 05:19 AM

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