In addition to Solyndra, Beacon Power, and a host of other “Stimulosers,” we can now add solar panel manufacturer Amonix to the list of federally-backed alternative energy companies jeopardizing taxpayer funds. The latest embarrassment is especially relevant in light of this week’s planned vote on the “No More Solyndras Act” [.pdf], which would discontinue new loan guarantees and would limit the DOE’s discretion in approving pending applications.
At this point, supporters of the Obama Administration’s loan program have little else to say except, “Bush did it too!” Yes, as IER has warned in the past, President Bush and many other Republicans were no angels on free-market energy policy. Federal interventions that have hampered businesses and raised energy prices for consumers are, unfortunately, a bipartisan affair.
Amonix, the Latest Fiasco
A BusinessWeek story sums up the latest:
Amonix Inc., a closely held maker of solar panels that qualified for $21.5 million in federal subsidies, closed its 214,000-square-foot plant in Nevada.
The company, based in Seal Beach, California, plans to restructure its operations and will vacate the factory by early August, according to an e-mailed statement today.
Amonix was offered a U.S. tax credit of $5.9 million and received a $15.6 million grant from the U.S. Energy Department in 2007, according to Jen Stutsman, an agency spokeswoman. It didn’t receive a loan guarantee under the program that backed the failed solar manufacturers Solyndra LLC and Abound Solar Inc.
The BusinessWeek writer’s style is very telling, reflecting the unfortunate political aspect to energy policy debates. Amonix is yet another example of a failing solar company that received explicit taxpayer support. As we at IER have stressed over and over, the federal government is not qualified to pick winners and losers in the energy sector. We supposedly live in a market economy, and it is the job of the capital markets—where investors have skin in the game—to direct funds to new projects.
When the government supports particular businesses, either directly with grants or indirectly through loan guarantees backstopped by the taxpayer, the result is inefficient. Government officials have less knowledge and incentive to steer funds correctly, compared to private-sector counterparts. Beyond the general loss of wealth, government steering of funds is an inevitable invitation to corruption, as we’ve seen with the DOE’s program.
Amonix Fiasco: Obama Didn’t Build That, Somebody Else Did That
In this context, it is silly to defend the Obama Administration’s program by pointing out that Amonix received its grant from the Bush Administration. The problem is government picking winners and losers in the energy sector with taxpayer funds; whether it’s a Republican or a Democrat doing the picking is irrelevant.
It is particularly ironic for the defenders of Obama, Steven Chu, et al. to harp on the origins of the Amonix grant. After all, the principle behind it—namely, that the federal government should be supporting alternative energy companies in order to reduce American usage of fossil fuels—is exactly the same justification given for Obama’s expansion of such efforts
Indeed, Obama himself praised federal support for Amonix the summer of 2010, as the short video clip below shows:
And Senator Harry Reid (D-Nev.) was on hand to flip the switch when Amonix went online for its brief moment in the sun:
Whether Amonix actually used its tax credits (praised by Obama in the video), is hardly the point. The reason it claims it didn’t use them is that it earned no taxable income! The fact that the company failed so badly, that it couldn’t even use the federal aid specifically mentioned by Obama, is hardly a good defense of the president’s remarks.
The lesson from Amonix is clear: As with Solyndra, Beacon Power, and so many others, the latest fiasco demonstrates that the federal government shouldn’t be running an energy hedge fund. We have capital markets to steer investment to new businesses. Letting government officials get involved will cause inefficiency, invite corruption, and raise energy prices