The Title XVII Loan Guarantee Program (1703) is a part of the Energy Policy Act of 2005, and was established to provide loan guarantees for ‘innovative energy technologies’. Qualifying projects must “avoid, reduce or sequester air pollutants or greenhouse gases; employ new or significantly improved technologies and provide a reasonable prospect of repayment.” The problem with this is that the definition of ‘innovative’ in this context was interpreted to include nuclear and coal.
We’ve discussed time and time again the fundamental flaws of the Title XVII program. It puts taxpayers at enormous risk while simultaneously promoting technologies that will get us no closer to a clean, green energy future. The program does more harm than good.
Title XVII’s main renewable energy program, 1705, concluded in September 2011 as part of the stimulus package. What remains in the 1703 program is a minimal amount for renewable energy sources and large chunks for fossil fuels and nuclear. Most renewable energy companies are too small to be the beneficiaries of loan guarantees, as the program skews towards large, risky, capital-intensive projects.
So with the innate problems of this program, on one hand we welcome the interest in reforming the program from the Republican majority in the House Energy and Commerce Committee. Called the "No More Solyndras Act," in reference to the loan guarantee debacle of last fall, the proposed legislation would make some welcome changes to the program. It would eliminate DOE’s right to subordinate taxpayers’ right to reclaim lost assets (ie: putting taxpayers at the back of the line when it comes time to collect debts) in the event of default. Second, it includes the Department of Treasury (who would be issuing the funds) in the loan guarantee review process. Finally, it starts to address the program’s transparency issues by mandating special reports to Congress.
But that is not nearly enough. The major problem is that the bill does nothing to ensure the process is transparent to the public or address the many high-risk loans on the docket before the end of last year. By setting an arbitrary cut-off for DOE to issue loans for applications that have been received before December 2011, the proposed sunset date of the program, taxpayers remain on the hook for enormous, risky loan guarantee projects which include:
These loans combined could cost taxpayers far more than Solyndra ever did.
The bottom line is that it’s time to stop this broken program. Title XVII is getting us nowhere in the efforts to revolutionize the energy sector so that we can have a healthy, sustainable future. Instead the program continues to put billions of taxpayer dollars at risk while propping up dangerous, dirty, and costly energy projects.