After listening to President Obama’s speech he gave on jobs to a
joint session of Congress a few weeks ago, I wondered why he failed
to tout the benefits of promoting clean green energy industries
over dirty brown fossil fuel industries for stimulating America’s
economic future.
After listening to President Obama’s speech he gave on jobs to a joint session of Congress a few weeks ago, I wondered why he failed to tout the benefits of promoting clean green energy industries over dirty brown fossil fuel industries for stimulating America’s economic future. I’m beginning to suspect the reason for this omission is his concern about the political fallout from the recent Solyndra bankruptcy. Obama’s close links to the Fremont-based solar energy company, where 1,100 people lost their jobs recently, might come back to haunt his green collar job-creation initiatives – and jeopardize his re-election in 2012.
In May 2010 when Obama took a tour of the Solyndra manufacturing site, the solar energy company was touted as a model for the emerging clean-tech industry. Unlike the flat silicon-based panels that now are common, Solyndra’s innovative cylinder system allowed it to collect more of the sun’s photons. Solyndra’s technology was cutting edge – and expensive to manufacture.
Under Obama’s stimulus law, Solyndra received a $528 million loan guarantee from the Department of Energy. It was one of 42 projects benefitting from the DOE’s $30 billion portfolio in loan guarantees for clean energy innovation. That program was originally created in 2005 to support clean energy endeavors that, because of their high-risk factors, would not get conventional bank loans. Solyndra first put in its application for federal loans during President Bush’s administration, but was turned down. It tried again with Obama. In September 2009, Solyndra was the first company to receive a loan guarantee under Obama’s expanded stimulus package.
Now the stench of potential scandal is whiffing around Solyndra – and the White House. It turns out that the Obama administration restructured Solyndra’s federal loan so that private investors went ahead of taxpayers in the line for repayment in case the company defaulted. Among those private investors is George Kaiser, an Oklahoma billionaire who raised as much as $100,000 for Obama’s 2008 election campaign. Kaiser was also a frequent White House guest, stopping by for several visits previous to the date when the Department of Energy approved Solyndra’s application for federal funds.
Soon after Solyndra filed for bankruptcy and dismissed its employees, the FBI raided the company’s headquarters and homes of officials. This federal criminal investigation points toward something irregular about the way the Solyndra deal was greenlighted so quickly by Obama’s administration.
Obama should have been cautious with Solyndra. There had been warning signs among government investigators as far back as 2009 saying that the DOE lacked quality control in approving loan guarantees. In March 2010, two months before the president took his tour of the solar company’s plant, PricewaterhouseCoopers issued a warning that Solyndra wasn’t making money and questioned its ability to continue operating.
Morgan Hill resident Peter Kohlstadt, a former research and development engineer in Solyndra’s product development group, is now filing a class action lawsuit against the company on the basis that it provided workers with no severance pay and no notice of layoff. Also, workers are owed hundreds of hours in accrued vacation time, he said.
Inexpensive panels from China, heavily subsidized by the Chinese government, played a role in Solyndra’s inability to compete in the solar market, he said. China’s solar products use established silicon-based flat-panel technology that is cheaper to manufacture than Solyndra’s more advanced cylindrical technology.
Kohlstadt still has hope for the solar product he worked on.
“In my opinion, the product is viable. It’s a good product. It’s easy to install,” he said. “Our task was to bring the cost down of the components that made up the panel.”
No doubt, the drama of Solyndra will raise hard and embarrassing questions for Obama. That’s politics. It’s perfectly fair for Republicans to question the president’s character if in fact he played favorites with his clean energy contributors. The Democrats did the same toward George W. Bush and Richard Cheney for their cozy relationship with big oil and big coal campaign contributors.
But going beyond the political, there are ethical questions rising from how the government uses federal dollars to fund the emerging clean energy industry. Should Uncle Sam play venture capitalist and invest in private companies with no proven track record for commercial success? Should taxpayers’ money go into the gamble of high-risk and unproven innovations in clean energy? Giving Solyndra more than half a billion dollars in loan guarantees gave it the government’s seal of approval, encouraging private investors to also invest money.
Will a Solyndra scandal hurt Obama’s campaign in 2012? Possibly. Will Solyndra stop the dawning of America’s solar energy industry? Definitely not. Companies in all industries fail. It’s part of the business environment.
As Kohlstadt said, “If there are good companies out there with good products and they’re given a chance, they will keep on going.”
