Reason Foundation Study Details Depths of Green Energy Crony Capitalism

The Reason Foundation (the
non-profit that publishes both this site and Reason magazine) has
released a new
report today that really explores the terrible decisions made
by the Department of Energy in its green energy loan programs and
subsidies. This is the program that brought America Solyndra (and
several other similar cases that have gotten less attention.) They
summarize:

A new Reason Foundation study finds 22 out of 26 projects were
rated as “junk” grade investments before they were awarded
taxpayer-backed loans as part of the Department of Energy’s Section
1705 loan program, which was part of the 2009 stimulus bill that
focused on renewable energy, electric power transmission, and
biofuels projects.

The report also highlights taxpayer-backed loans given to
companies with ties to Senate Majority Leader Harry Reid, former
Vice President Al Gore, former New Mexico Gov. Bill Richardson, and
a company founded by former Maine Gov. Angus Reid, who is now a
U.S. Senator. According to the Reason Foundation study, the
companies that spent the most on lobbying received the biggest
Section 1705 loans.

“These projects were rated by credit rating agencies as junk
investments with a high likelihood of failure, but the Department
of Energy didn’t seem to care because it was giving loans to the
firms that were well connected or were spending the most on
lobbying,” said Julian Morris, vice president of Reason Foundation
and co-author of the report.

Far from offering loans for all different types of energy
innovation, the lion’s share of the money went entirely to solar
projects. The study takes note of the relationship between the
amount of lobbying the companies reported and the size of the loan
guarantees they received:

Also of note: The completed projects so have far produced less
than 100 permanent jobs. They (and the uncompleted and troubled
products) produce thousands of temporary construction jobs (usually
handed out to connected unions via labor agreements), but they
don’t have to care whether the projects are financially viable once
their work is done.

Read the Reason Foundation’s summary
here and the whole report is accessible here
(pdf).