Tuesday, January 17, 2012

CBS News: US Taxpayers Taking a Hit on Green-Renewable Energy Firms

Political supported green renewable energy companies have been sinking US taxpayer funds.

(hat tip: Mark Perry)

From CBS
It's been four months since the FBI raided bankrupt Solyndra. It received a half-billion in tax dollars and became a political lightning rod, with Republicans claiming it was a politically motivated investment.

CBS News counted 12 clean energy companies that are having trouble after collectively being approved for more than $6.5 billion in federal assistance. Five have filed for bankruptcy: The junk bond-rated Beacon, Evergreen Solar, SpectraWatt, AES' subsidiary Eastern Energy and Solyndra.

Others are also struggling with potential problems. Nevada Geothermal -- a home state project personally endorsed by Senate Majority Leader Harry Reid -- warns of multiple potential defaults in new SEC filings reviewed by CBS News. It was already having trouble paying the bills when it received $98.5 million in Energy Department loan guarantees.

SunPower landed a deal linked to a $1.2 billion loan guarantee last fall, after a French oil company took it over. On its last financial statement, SunPower owed more than it was worth. On its last financial statement, SunPower owed more than it was worth. SunPower's role is to design, build and initially operate and maintain the California Valley Solar Ranch Project that's the subject of the loan guarantee.

First Solar was the biggest S&P 500 loser in 2011 and its CEO was cut loose - even as taxpayers were forced to back a whopping $3 billion in company loans.

Nobody from the Energy Department would agree to an interview. Last November at a hearing on Solyndra, Energy Secretary Steven Chu strongly defended the government's attempts to bolster America's clean energy prospects. "In the coming decades, the clean energy sector is expected to grow by hundreds of billions of dollars," Chu said. "We are in a fierce global race to capture this market."

Economist Morici says even somebody as smart as Secretary Chu -- an award-winning scientist -- shouldn't be playing "venture capitalist" with tax dollars. "Tasking a Nobel Prize mathematician to make investments for the U.S. government is like asking the manager of the New York Yankees to be general in charge of America's troops in Afghanistan," Morici said. "It's that absurd."
My comment:

This represents the political economy of anthropomorphic climate change. Argue about the validity of global warming then divert taxpayers money on money losing projects that benefits only politically allied cronies and their political wards.

This is further proof that even with subsidized money, green or renewable energy can hardly take off simply because consumers don't see them as reliable alternatives (in spite of the global warming bugaboo).

This also proves that government picking out of 'winners' is no guarantee of success.

Even more, the issue of moral hazard applies as cronies are hardly motivated to see the success of these companies since they know government will absorb the losses on their behalf and even perhaps knew or anticipated that these companies would eventually fail, hence, became milking cows.

And corruption will signify another aspect here, since public-private partnerships naturally leads to the prioritization of the whims of the political masters rather than of consumers.

Also one can pretend to know about the future (as the energy secretary) when we really don't.

End of the day what is unsustainable won't last. What is a fraud or unnatural will be exposed for what they are. That's how events have been playing out as shown above.

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