One of the clearest dividing lines in the 2012 presidential campaign is 'green' energy subsidies. President Obama has pushed them in his four years in office. Challenger Mitt Romney wants to eliminate them, under the theory that government should avoid tinkering with the private sector.
At Wednesday night's presidential debate, GOP candidate Romney summarized the difference with this zinger: "You put $90 billion — like 50 years worth of tax breaks — into solar and wind, to Solyndra and Fisker and Tesla and Ener1," he told the president. "I had a friend who said: 'You don't just pick the winners and losers; you pick the losers.' "
He has a point. In pushing green energy, Mr. Obama has pursued a high-risk strategy of handing out loan guarantees and other federal subsidies to green energy companies, a strategy most of his predecessors have avoided. The results have not always been pretty.
Romney cited four examples: Solyndra, Ener1, Fisker, and Tesla. The first two – a solar-panel manufacturer that got $528 million in federal subsidies and a car-battery company that got up to $118 million – went bankrupt. (The Solyndra loan was actually initiated by the Bush administration.) Ener1's paid-by-the-USA technology now belongs to a Russian tycoon.
Plug-in hybrid car manufacturer Fisker is still afloat, but delays and high-profile failures have pushed it to begin talks with other companies to share parts and technology. After getting a $529 million US federal loan guarantee, it began assembling its cars in Finland.
That leaves Tesla, whose new Model S all-electric luxury hatchback has run into production delays that are cutting heavily into revenues. It still hasn't turned a profit. But its chief executive said Wednesday the company will begin repaying its $465 million federal loan early. And the Model S, at around $50,000, is getting rave reviews.
You can't call Tesla a failure at this juncture. The jury is still out. And that's the point.
Of the $90 billion handed out, less than $1 billion has been lost, even counting two other failures Romney didn't mention: Beacon Power and Abound Solar. That's less than the $2.4 billion Congress has set aside for losses, The New York Times points out. If Romney had that kind of record at Bain Capital, he'd be a proud member of the billionaire's club right now.
Of course, he was using private venture capital. The Obama administration is using the public's money, so a higher standard should apply.
Even if Obama 's record is positive so far, the ultimate success of these companies is by no means guaranteed. By their very nature, high-tech start-ups are risky – doubly so in the volatile energy industry, where an oil price plunge can turn today's sure-fire winner into tomorrow's loser.
That's what makes Obama's green energy push such a gamble. If, say, a bailed out General Motors uses its Volt battery technology to create a blockbuster hybrid plug-in car in, say, 2015, no one will worry about Solyndra and the president's green energy program will look far-sighted.
If oil prices fall to $80 a barrel and consumers turn their backs on hybrids and solar power, it will look like another government boondoggle. Just ask Jimmy Carter, the last president to make a big push into alternative energy.