December 9, 2013

Income Redistribution: A Litany of Section 1705 Failure

Green energy is more about greed than anything.

An obscure portion of Department of Energy loan guarantees in Section 1705 of the overall American Recovery and Reinvestment Act – better known as the “stimulus” – was supposed to jumpstart the renewable energy industry, but the law has proven to be a cesspool of failure and cronyism. A Reason Foundation study released last week details the program’s lack of tangible results with the only successes apparently being those of enriching politically connected investors.

Among the more spectacular and well-documented failures such as Solyndra and Abound Solar, most of the other 24 companies that benefited from Section 1705 loans were already mired in junk-bond status prior to receiving the infusion of taxpayer cash, according to the Reason study. Study authors Victor Nava and Julian Morris also blasted the federal government for a lack of diversity in selecting recipients, noting that 83% of the project funding went to solar projects, with most of the rest supporting wind-based energy.

Rather than investing in new ideas for improving existing technology, such as improvements in electrical transmission infrastructure or in hydropower, which were allowed in the authorizing legislation, those who selected Section 1705 recipients seemed to lean on the all-important criteria of political connection. The study notes that larger loan recipients tended to spend more on lobbying, but those who spent nothing on lobbying had something even more important: a senator to back their project. Maine “Independent” Sen. Angus King founded Independence Wind, a company that received $102 million in loan guarantees for the Record Hill Wind project; meanwhile, all three Nevada-based projects had backers who collectively funneled over $58,000 in campaign cash to Senate Majority Leader Harry Reid.

Instead of a system riddled with questionable investments and cronyism, the authors suggest a different approach: a prize system based on the ongoing X Prize project in which competitors come up with solutions based on a set of specific criteria. One example given in the study is a competition to remove oil from the surface of seawater, with seven of the 10 finalists exceeding the given criteria and the winner besting the existing industry standard fourfold.

The only standard the government seems to exceed under the current system is largess for the well-connected, and that’s not a direction we need to take.

Start a conversation using these share links:

Who We Are

The Patriot Post is a highly acclaimed weekday digest of news analysis, policy and opinion written from the heartland — as opposed to the MSM’s ubiquitous Beltway echo chambers — for grassroots leaders nationwide. More

What We Offer

On the Web

We provide solid conservative perspective on the most important issues, including analysis, opinion columns, headline summaries, memes, cartoons and much more.

Via Email

Choose our full-length Digest or our quick-reading Snapshot for a summary of important news. We also offer Cartoons & Memes on Monday and Alexander’s column on Wednesday.

Our Mission

The Patriot Post is steadfast in our mission to extend the endowment of Liberty to the next generation by advocating for individual rights and responsibilities, supporting the restoration of constitutional limits on government and the judiciary, and promoting free enterprise, national defense and traditional American values. We are a rock-solid conservative touchstone for the expanding ranks of grassroots Americans Patriots from all walks of life. Our mission and operation budgets are not financed by any political or special interest groups, and to protect our editorial integrity, we accept no advertising. We are sustained solely by you. Please support The Patriot Fund today!

★ PUBLIUS ★

“Our cause is noble; it is the cause of mankind!” —George Washington

The Patriot Post is protected speech, as enumerated in the First Amendment and enforced by the Second Amendment of the Constitution of the United States of America, in accordance with the endowed and unalienable Rights of All Mankind.

Copyright © 2022 The Patriot Post. All Rights Reserved.

The Patriot Post does not support Internet Explorer. We recommend installing the latest version of Microsoft Edge, Mozilla Firefox, or Google Chrome.