Loan Guarantee Process Needs Improvements, Says Industry at Senate Energy Committee Hearing
On September 23, a Senate energy committee hearing was held on the Department of Energy Loan Guarantee Program. Energy industry representatives told lawmakers that the loan guarantee process is slow and unpredictable and that renewable energy innovations could potentially be threatened by barriers it presents. Despite improvements over the last 12 months “[DOE] is still short of people, still short of resources,” said John Clapp, chief financial officer of Solar Trust of America.
In Sen. Jeff Bingaman’s (D-NM) opening statement he commended Secretary Chu and the DOE for its commitment in “getting this program moving” but expressed concern over the U.S. level of commitment compared to its competitors, saying the American public does not want to fall behind other countries in developing clean energy technologies.
“While we are arguing about whether or not we can afford to restore the $3.5 billion that was withdrawn from the $6 billion program set up less than two years ago, [China’s domestic clean energy support] is measured in the hundreds of billions,” Mr. Bingaman said. He added that while there are many reasons companies would locate in the U.S., “I would argue that we must lift the barriers that currently make it impossible to develop and manufacture new clean energy technologies here.”
Bingaman said a loan guarantee program that is fully functional with all parties committed could provide a remedy to market failure. “I’m concerned that there are those, including some in the Administration, that view financing as merely another benefit, like tax credits, to be cut when other needs dictate, rather than a remedy to a fundamental market failure that is acting as a barrier to domestic technology development.”
“What I’d like to explore today is level of the Administration’s commitment to this effort, not just at the Department of Energy, which I am persuaded does have a commitment in this area, but at other key decision-making centers, like the Office of Management and Budget,” he said.
Tim Newell represented US Renewables Group as a witness at the hearing. “I am here today because we believe the Department of Energy’s loan guarantee program to be a crucial part of US renewable energy policy, as well as an important component of our country’s overall economic policies – particularly with respect to supporting US competitiveness in global energy markets,” he said in his statement.
Newell said the Loan Guarantee program and related programs, such as the Sec. 1603 Treasury Grant program (which provides cash grants to renewable energy projects in lieu of tax credits) are crucial to attracting long-term renewable energy investors. He added that of the $6 billion in appropriated funds for the Loan Guarantee program, $3.5 billion which was diverted to other programs still needs to be restored. “Congress should act immediately to restore funding for this critical program,” he said.
Aside from having full funding restored, Newell said the program could be additionally strengthened through extending the “Commence Construction” date by two years, clarifying and limiting the role of the OMB, extending the Program’s mission to support small business lending, and providing for a permanent renewable energy financing mechanism to support US leadership in renewable energy.
Read witness testimonies and watch the hearing at:
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