This morning, Energy Secretary Steven Chu face the House Energy and Commerce Committee for questioning over the Department of Energy’s $535 million loan guarantee to the bankrupt solar firm, Solyndra.
In his prepared remarks, released Wednesday, Secretary Chu focused on the need to succeed in the “fierce global race to capture [the clean energy] market.”
Chu noted that not only China, but over other 50 countries offer public financing for clean energy projects. He referred to the difficult market conditions which warrant government support of the industry, and help to explain recent bankruptcies: the falling price of solar cells coupled with growing Chinese market share.
Regarding the Department of Energy’s response to Solyndra’s financial difficulties in 2010, Chu decided to restructure the loan rather than force the company into immediate bankruptcy because the former option had a higher chance of recovering the loaned funds.
“Immediate bankruptcy meant a 100 percent certainty of default, with an unfinished plant as collateral,” he said in his remarks. “Restructuring improved the chance of recovering taxpayer money by giving the company a fighting chance at success, with a completed plant as collateral.”
Energy Secretary Steven Chu. Photo Credit: The Guardian
Chu also mentioned that Congress appropriated funds to cover potential losses, acknowledging the “inherent risks of funding new and innovative technologies.”
“The loan guarantee to Solyndra was subject to proper, rigorous scrutiny and healthy debate during every phase of the process,” he wrote. But emails recently released by Subcommittee Chairman Cliff Stearns have provided ammunition for Congressional scrutiny.
Nevertheless, Secretary Chu stood by the loan guarantee program, citing the potential to employ over 60,000 Americans and annually displace over 300 million gallons of gasoline.
“The Energy Department is committed to continually improving and applying lessons learned in everything we do, because the stakes could not be higher for our country. When it comes to the clean energy race, America faces a simple choice: compete or accept defeat. I believe we can and must compete.”
Follow The Guardian live blog of the hearing here.
