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  • Another Government-Picked Power Company Buried in the Green Graveyard

    When the government-backed Solyndra filed for Chapter 11 bankruptcy, policymakers supportive of the loan-guarantee program said variations of the following: “If this were a venture capital firm and only one out of 10 projects failed, they would be a great success.” That would be fine if it were private money, not taxpayer money. But now a second company is going under. Reuters reports:

    Beacon Power Corp filed for bankruptcy on Sunday, just a year after the energy storage company received a $43 million loan guarantee from a controversial Department of Energy program.

    The bankruptcy comes about two months after Solyndra—a solar panel maker with a $535 million loan guarantee—also filed for Chapter 11, creating a political embarrassment for the administration of President Barack Obama, which has championed the loans as a way to create “green energy” jobs.

    Beacon Power drew down $39 million of its government-guaranteed loan to fund a portion of a $69 million, 20-megawatt flywheel energy storage plant in Stephentown, New York.

    It’s clear that in the instances of Solyndra and Beacon, both stimulus loan guarantee recipients, the lack of financing for these projects was not a result of a market failure that necessitated preferential financing from the government. They were economically uncompetitive ventures and failed even with help from the government.

    These are only two of 28 loan guarantees that the Department of Energy distributed as part of the stimulus loan guarantee program, and it is too early to tell which companies will succeed and if any others will fail. Two kinds of companies seek loan guarantees: economically uncompetitive companies, such as Solyndra, which need the guarantees to survive, and potentially competitive companies, which use the loan guarantee to pad their bottom lines. Neither case can be justified.

    Late Friday, the White House announced it was launching a 60-day review of the Department of Energy’s loan portfolio. Rather than looking at the loan guarantee portfolio, the Administration should take a critical look at the merit of the program itself. Banks and venture capitalists, not the government, should assess risk and determine which investments make economic sense. The Department of Energy is not a bank, and it should not act like one.

    But the Administration is unlikely to back away from its support for “clean energy” investments. White House Chief of Staff Bill Daley said in a press release last Friday:

    The president is committed to investing in clean energy because he understands that the jobs developing and manufacturing these technologies will either be created here or in other countries. And while we continue to take steps to make sure the United States remains competitive in the 21st-century energy economy, we must also ensure that we are strong stewards of taxpayer dollars.

    Proponents of “keeping up in the clean energy race” often point to the huge sum of investments that China has made in wind and solar. That doesn’t tell the whole story, but my colleague David Kreutzer does:

    Getting hung up on commoditized solar-panel or wind-turbine production ignores the phenomenal increase in coal-generated power in China—an increase that swamps that country’s installed wind and solar production. From parity with the U.S. around 2005, China’s CO2 emissions will grow to roughly double America’s in 2012.

    Here’s the kicker: Market-driven energy choices are cutting more tons of CO2 in the U.S. than have been cut by wind and solar—even with their billions of dollars in subsidies.

    Natural gas-fired electricity generation has grown from 15.8 percent of America’s power generation in 2000 to 24.1 percent in the most recent 12-month tally from the Energy Information Administration. That 8.3 percent increase is enough to cut 120 million metric tons of CO2 per year compared to coal.

    Over the same span, wind- and solar-generated power grew to 2.75 percent of total power generation. That would cut CO2 by 108 million metric tons per year compared to coal power. So over the past decade, hugely subsidized wind and solar have done less to cut CO2 emissions than market-driven natural gas production.

    In summary, for those who obsess about CO2 emissions and want to have a race, we are whipping China handily. And the market has done more to cut CO2 than all the subsidies, mandates, and regional CO2 agreements combined.

    Posted in Featured [slideshow_deploy]

    8 Responses to Another Government-Picked Power Company Buried in the Green Graveyard

    1. Bobbie says:

      where's equal opportunity when government discriminates by favor and bias, subsidies (everyone elses monies) for their favorites in capitalism that shows failure to the economy? Government (democratic) overreach AND unethical acts of favoritism, discrimination, has to stop NOW!

      Get rid of the costs of ALL special interests that are not to the benefit of the tax payers. If those interested really are, they'll pay for it themselves or live without it as it should be.

    2. Lloyd Scallan says:

      Again, it's not about "green power", CO2 emissions, or the environment. It's about Obama payback to his political and financial supporters.

    3. Rand says:

      Foo-Man Chu, Obama's Energy Advisor, might as well be getting his pay from China. This brilliant UC physicist has proven that he is just a political operator in the service of Obama's enviro-regime. America will become 3rd rate with "alternative energy", as Obama and Foo well know.

    4. Spiritof 76 says:

      Why do you keep giving credence to the hoax that CO2 levels in atmosphere causes global warming? The theory is garbage and the science is toxic waste fueled by the billions of taxpayers' money given to the modern day snake oil salesmen in the academia.
      I hope China installs more coal powered plants in the future to elevate the standard of living for its people, unlike the stupid USA sitting on a vast coal reserve with banned production of it. I think the Chinese may require the US to sell them coal to settle their bond holdings.

    5. Bob M. says:

      According to "The Hill" Boston Power Corp.'s unit with the storage facilities may survive. http://thehill.com/blogs/e2-wire/e2-wire/190641-s

    6. Bob M. says:

      According to "The Hill" Boston Power Corp.'s unit with the storage facilities may survive.

    7. Mike, Wichita Falls says:

      "…the White House announced it was launching a 60-day review…"

      Whew! I feel better about it now that the foxes are guarding the chicken coop.

      Translation…the White House is hoping this embarassing failure and waste of tax dollars becomes a distant memory within two months.

    8. Jason M says:

      The action of the government bailing out and providing stimulus packages for companies brings out a huge issue. It seems as if the government is
      acting in the best interest of itself. Because the government has a focus on what it wants to do, it is taking the steps it deems necessary to
      implement this. Thus, it is using taxpayer money to fund its own agenda. This once again is allowing government to become bigger than what it
      needs to be. Instead of enforcing the rules it is playing the game and trying to make sure specific companies are successful, which is tampering
      with the ideals of the free market. By the government having more control it is dictating how we live, especially with the way it uses our
      money.

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