THE WEAKNESSES and the ironies of American energy policy were on display in Washington last month, as a House committee grilled Energy Secretary Steven Chu over a federal loan guarantee to a now-bankrupt solar-technology company called Solyndra. The guarantee to California-based Solyndra is in line with the Obama administration’s broader strategy — anathema to oil-state Republicans — of promoting the growth of the American clean-energy industry. But Solyndra’s subsequent failure isn’t a sign that the administration has gone too far; rather, it’s a sign that Congress, which tolerates all manner of explicit and implicit subsidies for fossil fuels and corn ethanol, hasn’t done nearly enough to level the playing field for renewables such as solar and wind power.
Federal initiatives to promote clean-energy initiatives have largely focused on the supply side - by funding research into new technologies, by enacting tax credits that encourage new projects, and by offering loans and other assistance to specific startup companies that might not be able to obtain private financing. A number of states, including Massachusetts, have offered loans and other assistance to companies as well.
Such efforts are, in fact, helping an important sector take root. According to a recent report by the Massachusetts Clean Energy Center, clean-energy-related employment in the Commonwealth grew by 6.7 percent between July 2010 and July 2011. Still, there’s no denying that not all of these bets pay off, and this approach undoubtedly puts public officials in the uneasy position of making judgments about private companies. Some beneficiaries, including Solyndra and Evergreen Solar in Massachusetts, have failed despite ample help from taxpayers.
Yet the charges of “market manipulation’’ and “crony capitalism’’ ring false - especially in light of the significant boost federal policies give to other energy sectors. Between 2002 and 2008, the Environmental Law Institute has estimated, the US government spent $70 billion to subsidize traditional energy sources and $17 billion to subsidize corn ethanol. Congress has favored traditional fossil-fuel producers in one other key way: by declining to enact measures, such as cap-and-trade or carbon-tax plans, that would incorporate the long-term environmental costs of fossil fuel use into the price that energy users pay. Bringing those costs into the equation significantly reduces the price advantage of fossil fuels - and increases the relative attractiveness of clean-energy projects to private investors. Failing that, Congress could also stimulate demand for renewables in a more modest way - by imposing a national renewable-energy mandate similar to the state-enacted one already in place in Massachusetts.
But it’s simply not accurate to imply, as clean-energy skeptics have, that loans to companies like Solyndra are the government’s only involvement in the energy marketplace. Congress has been meddling for decades. What it needs to do is throw its weight behind cleaner approaches.