Solyndra

Post image for President Obama’s Inaugural Speech: New Heat on Warming?

President Obama’s second inaugural speech featured climate change more prominently than did his first inaugural address. As Greenwire (subscription required) observed:

Gone was Obama’s roundabout reference to climate change through “the specter of a warming planet” from four years ago. This time, the president put the issue front and center.

Will that make any difference legislatively? Probably not. In the House, Republicans opposed to cap-and-trade, EPA regulation of greenhouse gases (GHGs), and carbon taxes are still in charge.

Is the President’s renewed emphasis on climate change just a sop to his environmentalist base? Doubtful. As a second termer, Obama has less reason politically to restrain his ‘progressive’ impulses. Several regulatory options are now in play:

  • The Department of Interior could list more species as threatened or endangered based on climate change concerns.
  • The President could finally veto the Keystone XL pipeline — a key objective of the climate alarm movement.
  • The EPA could issue GHG performance standards for existing (as distinct from new or modified) coal power plants, as well as GHG performance standards for other industrial categories (refineries, cement production facilities, steel mills, paper mills, etc.).
  • The EPA could finally act on petitions pending from the Bush administration to set GHG emission standards for marine vessels, aircraft, and non-road vehicles.
  • The EPA could finally act on a December 2009 petition by the Center for Biological Diversity and 350.Org to establish national ambient air quality standards (NAAQS) for carbon dioxide (CO2) and other GHGs.

I’ll make one prediction: If Obama does not veto the Keystone XL Pipeline after talking the talk on climate change, green groups will go ballistic (even though, Cato Institute scholar Chip Knappenberger calculates, full-throttle operation of the Keystone XL Pipeline would add an inconsequential 0.0001°C/yr to global temperatures). My colleague Myron Ebell reasonably speculates that Obama’s tough talk on climate was a signal to green groups to organize the biggest anti-Keystone protest ever.

Now let’s examine the climate change segment of Obama’s inaugural speech: [click to continue…]

Post image for Why the GOP Will not Support Carbon Taxes (if it wants to survive)

Last week on National Journal’s Energy Experts Blog, 16 wonks addressed the question: ”Is Washington Ready for a Carbon Tax?” Your humble servant argued that Washington is not ready — unless Republicans are willing to commit political suicide. That’s no reason for complacency, because spendaholics have on occasion gulled the Dumb Party into providing bi-partisan cover for unpopular tax hikes. President G.H.W. Bush’s disastrous repudiation of his ‘read-my-lips, no-new-taxes’ campaign pledge is the best known example.

To help avoid such debacles in the future, I will recap the main points of my National Journal blog commentary. Later this week, I’ll excerpt insightful comments by other contributors.

Nearly all Republicans in Congress have signed the Taxpayer Protection Pledge, a promise not to increase the net tax burden on their constituents. Although a “revenue neutral” carbon tax is theoretically possible, the sudden interest in carbon taxes is due to their obvious potential to feed Washington’s spending addiction. If even one dollar of the revenues from a carbon tax is used for anything except cutting other taxes, the scheme is a net tax increase and a Pledge violation. Wholesale promise-breaking by GOP leaders would outrage party’s activist base. 

Even if the Taxpayer Protection Pledge did not exist, the GOP is currently the anti-tax, pro-energy alternative to a Democratic leadership that is aggressively anti-energy and pro-tax. Endorsing a massive new energy tax would damage the product differentiation that gives people a reason to vote Republican. Recognizing these realities, House GOP leaders recently signed a ‘no climate tax’ pledge.

That’s good news. But this is a season of fiscal panic and I was there (in 1990) when the strength of Republicans failed. Perhaps the best time to kick carbon taxes is when they are down. So let’s review additional reasons to oppose a carbon tax. [click to continue…]

Post image for Treasury OIG: Watchdog Pussyfoots Around Solyndra Debacle

Earlier this week, the Treasury Department’s Office of Inspector General (OIG) released an audit report on Treasury’s role in reviewing, in March 2009, the Department of Energy’s (DOE’s) $535 million loan guarantee to Solyndra, the solar panel manufacturer that filed for bankruptcy in September 2011. Before going belly up, Solyndra burned through $528 million of the $535 million it received from Treasury’s Federal Financing Bank (FFB). Nearly all of the defaulted loan will be paid off by American taxpayers.

An agency’s OIG is supposed to be a watchdog guarding the public fisc from waste, fraud, and abuse. Watchdogs bark and even bite. This watchdog pussyfoots.

The title of the audit report is “Consultation on Solyndra Loan Guarantee Was Rushed.” Well, it was that. Treasury signed off on the Solyndra loan guarantee only two days after being asked on March 17, 2009 to vet it so that DOE could issue a press release touting the loan on the morning of March 20.

A more accurate title would be ”Consultation on Solyndra Loan Guarantee Was Half-Assed.” Granted, government reports must eschew the use of idiomatic pejoratives. Nonetheless, the OIG did not have to make excuses for Treasury and DOE. The report ascribes to regulatory vagueness derelictions more reasonably attributed to negligence, incompetence, and pliancy in the face of political pressure.     [click to continue…]

Even the liberal Washington Post, which hasn’t endorsed a Republican for President since 1952, seems to be souring on the Obama Administration’s failed energy programs, saying they were “infused with politics at every level.” As it noted in discussing the Solyndra scandal: “Obama’s green-technology program was infused with politics at every level, The Washington Post found in an analysis of thousands of memos, company records and internal ­e-mails. Political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials. The records, some previously unreported, show that when warned that financial disaster might lie ahead, the administration remained steadfast in its support for Solyndra,” which was owned by major Obama backers, like George Kaiser.

As law professor Glenn Harlan Reynolds notes, “all the ‘stimulus’ and ‘green energy’ stuff was never anything but a program to put taxpayer money into the hands of cronies and supporters.”

The Obama Administration hastily approved the  taxpayer subsidies for Solyndra despite obvious danger signs and warnings from accountants about the company’s likely collapse, the misgivings of agency officials, and the company’s mismanagement and lousy-quality products. (Solyndra executives are now pleading the 5th Amendment to avoid disclosing incriminating information.) The Obama administration was determined to shovel taxpayer money to its cronies as fast as it could. As an Obama fundraiser and Solyndra stakeholder exulted,  “there’s never been more money shoved out of the government’s door in world history and probably never will be again than in the last few months and the next 18 months. And our selfish parochial goal is to get as much of it . . . as we possibly can.”  “At the time Solyndra received its grant, Vice President Joe Biden declared that the Solyndra investment is ‘exactly what the [the stimulus package] is all about.’”

While diverting taxpayer money away from productive and efficient businesses to corporate-welfare recipients controlled by political cronies, the Obama Administration is busy wiping out jobs through thousands of pages of counterproductive regulations.  Some of these new regulations are designed to spawn lawsuits that will enrich trial lawyers at businesses’  and consumers’ expense.

Obama appointees at the EEOC are busy harassing businesses that hire and fire based on merit, thus discouraging employers from hiring or expanding operations, and the EEOC is bringing costly, unjustified lawsuits against businesses.  The 2010 healthcare law imposes financial burdens — some of them large, and others difficult to calculate — on the nation’s employers, resulting in some business owners deciding not to expand or hire new employees.

Many businesses are also suffering from the effects of the Dodd-Frank financial “reform” law, a 2,315 page monstrosity that makes it harder for small businesses to obtain credit, and also outsources and wipes out jobs in the financial sector. Even one-time Obama supporters in the business community have grown disenchanted: Democratic businessman Steve Wynn called Obama“the greatest wet blanket to business and progress and job creation in my lifetime,” saying that “the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.”

The Obama administration has sought to temporarily pump up the economy with stimulus spending paid for with massive deficits, but as the Congressional Budget Office has noted, the stimulus package will actually shrink the economy in the long run, so it will not be able to offset the economic drag resulting from all of the Obama administration’s new regulations and red tape.

Post image for Solyndra: ‘I’ll Take the Fifth’

At today’s House Energy and Commerce Oversight and Investigations Subcommittee hearing, “From DOE Loan Guarantee to FBI Raid: What Solyndra’s Executives Knew,” the witnesses, Solyndra President and CEO Brian Harrison and Solyndra VP and CFO W.G. Stover, invoked their Fifth Amendment right against self-incrimination in response to every question asked by Committee members. Harrison and Stover told the committee nothing about what Solyndra’s executives knew.

Nonetheless, the hearing spotlighted information that can only build public support for the Committee’s ongoing investigation.

As part of the hearing record, the Committee released a June 23, 2011 document, “Exceeding Expectations: Solyndra Today,” that makes enthusiastic claims about the company’s progress and prospects that are difficult to reconcile with its decision to file for bankruptcy just nine weeks later:

Solyndra, one of the only volume solar manufacturers in the United States, continues to make excellent progress to the company’s overall annual strategic plan, while meeting the company’s technical, cost and performance milestones. The factory is ramping and Solyndra is hiring employees today, creating jobs at the company, within our primarily domestic supply chain, and through integrators and installers implementing our systems on rooftops in the U.S. and around the world.

Solyndra does not publicly release quarterly results but is on track for this year. The ability to command a slight price premium as a result of substantial differentiation and product benefits continues and our cash production cost per watt is dropping rapidly at pace with the industry.

The Committee also released a July 13, 2011 letter from Solyndra CEO Brian Harrison to Subcommittee Chair Cliff Stearns (R-Fla.) and Ranking Member Diana DeGette (D-Colo.) extolling the company’s successes such as the growth in revenues from $6 million in 2008 to $140 million in 2010 with revenues expected to double in 2011. It is hard to square this information with the company’s imminent collapse. At a minimum, other more pertinent information was not disclosed.

In addition, the Committee released an email dated september 10, 2011 from Solyndra’s counsel pledging that Harrison would “appear voluntarily and answer the Committee’s questions.” The email references a request, honored by the Committee, to postpone the hearing so that Harrison could concentrate on managing asset sales to minimize taxpayer losses. But then three days ago, Chairman Stearns said in his opening statement, Solyndra’s counsel informed the Committee that Harrison and Stover would decline to answer questions. [click to continue…]

Post image for Blame China for Solyndra’s Downfall?

Tomorrow, the House Energy and Commerce Committee will hold its second hearing on Solyndra, the manufacturer of innovative non-silicon-based solar panels that borrowed $527 million only to file for bankruptcy, shutter its brand new Freemont, Calif. factory, and lay off 1,100 employees on September 6. Expect Committee Democrats to blame China and the allegedly unforeseen fall in the price of conventional silicon-based solar panels for the debacle.

That’s the line the Department of Energy’s (DOE) witness, Jonathan Silver, took at the Committee’s first (September 14) Solyndra hearing, noting China’s provision of more than $30 billion in subsidized financing to its solar manufacturers, which rapidly dropped silicon prices, “taking Solyndra, and many industry analysts, by surprise.” DOE’s blog, Energy.Gov, had already adopted this explanation on August 31, the day Solyndra announced it would file for bankruptcy.

Similarly, Solyndra’s August 31 announcement coyly cited the “resources of larger foreign [i.e. Chinese] manufacturers” and a “global oversupply of [mainly Chinese] solar panels” as factors foiling the company’s business plan. Solyndra’s ex-employees have applied to the Department of Labor (DOL) for aid under the Trade Adjustment Assistance (TAA) program, claiming that China put them out of work. If DOL approves the application, Solyndra’s former workers will receive allowances for job retraining, job searching, and health care for up to 130 weeks, or about $13,000 per employee. Blogger Scott Linicom decries such double dipping:

So to recap: massive government subsidies created 1,100 “green jobs” that never would’ve existed but for those massive government subsidies.  And when those fake jobs disappeared because the subsidized employer-company inevitably couldn’t compete in the market, the dislocated workers blamed China (instead of what’s easily one of the worst business plans ever drafted) in order to receive . . . wait for it . . . more government subsidies. Behold, the Circle of Government Life.

Whether it’s Solyndra execs and DOE officials trying to save face, ”progressives” defending the honor of green industrial policy, or former employees looking for more taxpayer freebies, they all would have us believe that Solyndra’s $535 million loan guarantee was a good bet at the time it was made. They need a scapegoat for Solyndra’s crash, so they blame China. Indeed, some (e.g. Grist) claim Solyndra’s collapse shows that the U.S. government isn’t doing enough to help our “clean tech” companies “compete.” Balderdash.     [click to continue…]