The recent Solyndra LLC collapse is not the first time this has happened, nor can it be blamed solely on the Obama administration simply due to his zeal for alternative energy - the Department of Energy began the loan guarantee program in 2006 when there was a Republican Congress and a Republican senate and in 2005 the wasteful ethanol subsidies and mandates were put into law.
Yet the House Energy and Commerce committee will be looking into the Obama administration's role in continuing to promote Solyndra even after there were concerns - his May 2010 visit to the company, calling it a “a testament to American ingenuity and dynamism”, followed by a special exemption from the Energy Department subordinating taxpayer debt to investors who are key Obama fundraisers certainly looks bad, but it isn't just Republicans engaging in political theater and delighting that FBI raids are occurring. Rep. Henry Waxman, D-Los Angeles, has urged an Enron-type investigation.
In reality, if a crime has occurred it will fall on the shoulders of Solyndra CEO Brian Harrison and company founder Chris Gronet but Democrats will take some heat for blocking disclosure of documents related to these loans. The real issue is our persistent desire to buy science 'magic rocks'.
Magic rocks, if you aren't familiar with them, are crystals that grow in water. They were invented in 1940 and are a clever novelty still sold in stores today. Science knows sodium silicate and water soluble metallic salts are not actually magic, even if they might seem like it to politicians and kids. Magic rocks have acquired a colloquial meaning as well, namely when it comes to correlation/causation arrows that are mixed up, like the notion that subsidies will create free market viability for a technology that has never been very good.
Here's an example of a magic rock scenario, courtesy of pop-culture stalwart "The Simpsons" and an exchange between father Homer and daughter Lisa.
HOMER: Well, there's not a bear in sight. The Bear Patrol is sure doing its job.
LISA: That's specious reasoning, Dad.
HOMER: Thank you, sweetie.
LISA: Dad, what if I were to tell you that this rock keeps away tigers.
HOMER: Uh-huh, and how does it work?
LISA: It doesn't work. It's just a stupid rock.
HOMER: I see.
LISA: But you don't see any tigers around, do you?
HOMER: Lisa, I'd like to buy your rock.
In this instance, Lisa is science and Homer is the government desiring to fund a magic rock despite any science evidence it will do anything new. Copper indium gallium diselenide (CIGS) thin film photovoltaics are nothing special, plenty of companies are trying to make that work just in Californa but they live and die on the price of silicone and when that dropped, competitors' products become more affordable. Given that obvious insecurity, what made Solyndra special to the Obama administration - so special they received loan rates a full percentage point lower than other Energy Department loans - is the subject of industry curiosity. We know solar energy technology is not going to get better just by throwing more subsidies at it. Yet we continue to offer companies money for their magic rocks.
On August 26th, over a month after it took a subpoena to the Office of Management and Budget to obtain documents related to existing DOE loan guarantees (every Democrat on the Oversight Subcommittee voted against issuing the subpoena at all) another loan for another solar energy company was issued; this one $852 million to the Genesis Solar Project.
Less than two weeks before that announcement, Evergreen Solar in Massachusetts filed for bankruptcy with $485.6 million in debt. Loss to Massachusetts taxpayers: $58 million. In California, electric car start-up company Green Vehicles folded, taking with it an investment of over $540,000 from the tiny town of Salinas, which had bought the magic rock of cleaner cars and consumer demand and green jobs.
There are future technologies, like hydrogen, that are more deserving of research money and, if we must subsidize any company at all, it should at least be common practice to spread the money (and risk and reward) around multiple ventures and not take a chance on one because a Democratic fundraiser is an investor.
We may have another magic rock waiting in the future. The Dunes Solar Energy project in Nevada has $737 million in loan guarantees - but hasn't even hired a worker after two years.