At a Sept. 23 congressional hearing, the DOE loan guarantee program for clean energy technologies came under fire as lawmakers criticized the glacial pace at which loan guarantees are approved. They said that although the Obama administration has made considerable progress in moving the program forward, significant challenges in getting key projects approved remain.
Supporting clean energy technologies and projects is a priority of the Obama administration, and the Dept. of Energy’s loan guarantee program, which was first established under the Energy Policy Act of 2005, has offered conditional loan guarantees for several clean energy projects in the 21 months Obama has been in office, most notably $8.3 billion in guarantees for two new nuclear reactors at the Vogtle plant in Burke, Ga.
In the five years since the program was authorized, 14 loan guarantees have been issued—all within the last 14 months.
Ten of those were issued within the last year. That suggests considerable progress in speeding up the loan approval process, but Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) suggested that the program still has a long way to go to enable America to compete globally in the clean energy arena.
Bingaman said, “While the Department, under Secretary’s Chu’s leadership, should be commended for its obvious commitment to getting this program moving, it’s impossible to ignore the enormous gap between our efforts and those of our competitors oversees.”
China, for instance, is investing hundreds of billions of dollars to support clean energy ventures, which dwarfs the amount in the DOE program.
”While we are arguing about whether or not we can afford to restore the $3.5 billion that was withdrawn from the $6 billion program set up less than two years ago, [China] is offering support that is measured in the hundreds of billions,” Bingaman said.
John Silver, executive director of the loan programs office at the DOE, acknowledged that “there are more applicants than there are resources” and that the Fiscal 2011 budget request might not provide as many resources as some would like. He added, however, “The Fiscal 2011 submission reflects the joint considered opinion of the Department and the Office of Management and Budget and …reflects the president’s priorities.”
In his testimony, he noted that loan guarantees represent "only one of a variety of potential approaches to providing federal support for clean energy."
He said: "We must think about enabling private sector clean energy financing in a comprehensive manner, ensuring that our limited resources are deployed in the most effective and coordinated manner."
Only then, he said, "will we create an environment where the private sector will invest in clean energy technologies at the scale needed to reach our national clean energy goals."
Sen. Ron Wyden (D-Ore.) called for more transparency during the “due diligence” phase of the loan approval process, and Sen. Jeanne Shaheen (D-N.H.), cited “redundancies” in the approval process that require applicants to hire outside engineers and consultants twice—once for the initial application, then again during the due diligence phase.
Silver acknowledged that challenges still exist, but noted that the DOE has made considerable progress in moving the program forward and delivering on the promises Congress made in creating and funding the loan programs.