Wyoming Liberty Group
Eating Their Own
Whether green energy efforts go bankrupt or have unintended lethal consequences for wildlife, green energy efforts have seen significant struggles. To aid these companies in a market that would see them fail of their own accord, the federal government now allows wind turbines to kill protected species and has been using your tax dollars to guarantee loans for green energy research. Wind turbines in Wyoming will not have to worry about additional fines for killing eagles while the industry searches for a solution. Major media outlets do not generally cover the widespread failure of these efforts, and a recent piece on “60 Minutes” may provide the answer as to why that is.
One thing is certain about ideologically driven media: As soon as a member of the group voices an opinion or fact that does not comport to the “shared” ideology that member is aggressively attacked. So is the case of the CBS program “60 Minutes.”
Last Sunday, CBS highlighted several failures of the Department of Energy’s (DOE) loan guarantee program for renewable energy. The Huffington Post did an excellent job of capturing the harsh reactions of DOE, the New York Times, the Washington Examiner and others.
Notably, the HuffPo article points to a 2004 study regarding the success rate of green energy startups. This is interestingly useless information in two ways: (1) at nearly 10 years old, the study is hardly relevant in discussing the current success rate of these companies, and (2) the study predates the Energy Policy Act of 2005—the law that created the DOE loan guarantee program that was the focus of the “60 Minute”s piece.
The article further points to 2012 testimony by Jonathan Silver, who once headed the DOE loan program in which he states “funds represented by investments that have failed represent less than 3% of the total portfolio” (emphasis removed). HuffPo takes as fact his statement that the program he ran “has been a significant success” without reservation. This, however, is also flawed information. To understand why this is, we must understand what Mr. Silver is referring to as the “total portfolio” and “failed.” The total portfolio Mr. Silver refers to includes more than $34 billion in loans.
The largest of these loans were generally given to large, established companies and did not represent investment in a green energy startup. For example, while Fisker, Tesla and The Vehicle Production Group LLC receive a total of just more than $1 billion in guarantees, Ford and Nissan combined received more than $7.3 billion in loan guarantees. If Fisker, Tesla, and The Vehicle Production Group failed this would represent only a 14 percent failure of the Advanced Technology Vehicles Manufacturing program in terms of dollar value of loan guarantees while 60 percent of the individual investments that were included in the program failed.
As it turns out, Tesla has only profited thanks to government financial support in addition to the loan guarantees, Fisker is a bankrupt company Chinese companies are seeking to purchase in order to gain the intellectual property U.S. taxpayers funded. The Vehicle Production Group LLC went out of business and was purchased by AM General. Were these successes?
It is difficult to determine what Mr. Silver meant by “failed.” DOE does not require Ford and Nissan to report the profits made on programs funded by guaranteed loans. If these companies fail to produce a single marketable product from research funded by these loans, the loan is still not a failure for DOE as long as Ford and Nissan make the payments. In other words, Mr. Silver’s 3-percent figure is in no way representative of the success of the programs funded by the loan guarantee program.
What is telling, though, is the failure rate of companies whose entire business model was funded by guaranteed loans. In DOE’s ATVM program this failure rate would be 67 percent as of today, but would likely be 100 percent if not for the taxpayer funded “clean-air credits,” which provides a taxpayer funded $7,500 credit to buyers. Of course, DOE does not keep records regarding this particular statistic, just as they continue to list as “permanent” or “created/saved” the jobs created by companies that are no longer in business (including Solyndra and The Vehicle Production Group LLC).
It is also telling that these media organizations teamed up with biased parties like DOE and Climate Progress to attack “60 Minutes” without being able to point to a single fact that was incorrect. They instead chose to point to outdated and misleading information to further an ideological perspective. This is humorously (although unintentionally so) emphasized in the closing of the HuffPo article, which puts forth the criticism of others that “60 Minutes” did not use phrases such as “global warming” in its discussion of the economics of these investments. This highlights their inability to evaluate the economic decisions without the color of ideological bias—not to mention that “global warming” is a bit passé as warming has ceased for approximately 15 years.
Given that their critics could not discredit their facts, perhaps “60 Minutes” got it right after all.