Energy stimulus program plagued by problems
The Department of Energy's inspector general said Wednesday that the 2009 stimulus program for green energy was so at odds with the realities on the ground that it was akin to "attaching a lawn mower to a fire hydrant."
Inspector General Gregory Friedman, testifying to the House Energy and Commerce Committee's panel on stimulus oversight, outlined a range of problems, from a flood of $35 billion in stimulus money that overwhelmed the department's $27 billion annual budget to weatherization programs of such shoddy quality that more than half of those audited failed inspection because of substandard workmanship.
Even as the Energy Department hired new workers to manage the sudden inflow of funds, Friedman said, the state and local governments responsible for spending the money were laying off workers and were "simply put, overwhelmed."
The hearing was part of an effort by Republicans to discredit the Obama administration's stimulus investments in alternative energy after the bankruptcy of solar manufacturer Solyndra. The Fremont firm received more than half a billion dollars in loan guarantees and has become a stain on President Obama's economic policies.
Energy Secretary and UC Berkeley physicist Steven Chu is now in the committee's sights, with testimony scheduled for Nov. 17.
Elliot Lewis, assistant inspector general for the Labor Department, told the panel that problems also plagued training programs for green jobs that were allocated nearly $500 million. Of the roughly 125,000 workers eligible for training, only 40 percent received it and only 8,035 participants landed jobs.
A Washington construction contractor, Brett McMahon with Miller & Long, cast doubt on claims of the creation of green jobs, saying there is no difference between a plumber who installs a water-saving, low-flow toilet and a plumber who installs a standard toilet, other than the government's definition of the first job as green.
Friedman said the stimulus programs for clean energy turned out to be "more challenging than many had originally envisioned." While stimulus funds were to go to "shovel ready" projects with the idea of creating jobs quickly, "in reality, few actual 'shovel ready' projects existed," Friedman said.
Faced with a wave of federal money, the programs required extensive planning and additional staff at the federal, state and local levels. The delays meant that as late as last month, 45 percent of the stimulus funds had not been spent.
The program put "an enormous strain" on the Energy Department, Friedman said, complicated by bureaucratic hurdles such as the "literally thousands" of state and local officials, contractors and others involved.
With the stimulus ending, he said the Energy Department "now confronts the unpleasant task of laying off significant numbers of the contractor workforce, many of whom had just recently been hired."
W. David Montgomery, a former official at the Congressional Budget Office and Energy Department who taught economics at Stanford University and the California Institute of Technology, said that trying to promote clean energy as a jobs program was misguided.
Until the government puts a price on carbon through a carbon tax or a cap-and-trade program, Montgomery said, loan guarantees such as the kind that Solyndra received "will amount to nothing more than pushing on a string," because there will be little market demand for alternative energy.
Montgomery said the stimulus program is likely to cause another boom and bust cycle in solar energy similar to the rise and fall of solar developments during the energy crisis in the 1970s. He said federal funds would be better spent on basic research, which is unprofitable for the private sector but could lead to breakthrough technologies.
Solyndra, he said, joins a long line of government investment failures in commercial clean-energy ventures, among the biggest being ethanol subsidies, coal gasification and Synfuels Corp., a government-owned firm created three decades ago before being disbanded after a few years.
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