Reason Foundation Study Details Depths of Green Energy Crony Capitalism
Not an investment in the future but in people who know the right politicians
The Reason Foundation (the non-profit that publishes both this site and Reason magazine) has released a new report today that really explores the terrible decisions made by the Department of Energy in its green energy loan programs and subsidies. This is the program that brought America Solyndra (and several other similar cases that have gotten less attention.) They summarize:
A new Reason Foundation study finds 22 out of 26 projects were rated as "junk" grade investments before they were awarded taxpayer-backed loans as part of the Department of Energy's Section 1705 loan program, which was part of the 2009 stimulus bill that focused on renewable energy, electric power transmission, and biofuels projects.
The report also highlights taxpayer-backed loans given to companies with ties to Senate Majority Leader Harry Reid, former Vice President Al Gore, former New Mexico Gov. Bill Richardson, and a company founded by former Maine Gov. Angus King, who is now a U.S. Senator. According to the Reason Foundation study, the companies that spent the most on lobbying received the biggest Section 1705 loans.
"These projects were rated by credit rating agencies as junk investments with a high likelihood of failure, but the Department of Energy didn't seem to care because it was giving loans to the firms that were well connected or were spending the most on lobbying," said Julian Morris, vice president of Reason Foundation and co-author of the report.
Far from offering loans for all different types of energy innovation, the lion's share of the money went entirely to solar projects. The study takes note of the relationship between the amount of lobbying the companies reported and the size of the loan guarantees they received:
Also of note: The completed projects so have far produced less than 100 permanent jobs. They (and the uncompleted and troubled products) produce thousands of temporary construction jobs (usually handed out to connected unions via labor agreements), but they don't have to care whether the projects are financially viable once their work is done.
Read the Reason Foundation's summary here and the whole report is accessible here (pdf).