Today, the House Oversight Committee will hold its third hearing on Solyndra. Since the Solyndra’s bankruptcy, GOP lawmakers have been on the offensive against clean energy manufacturing loans. Last month, Republicans in the House of Representatives effectively threatened to shut down the federal government if Democrats didn't agree to cut $5 billion in loans from the Advanced Vehicle Technology Manufacturing (AVTM) program. But the U.S. needs to keep moving forward with creating a clean energy economy; jobs and or energy security depend on it.
The AVTM loan guarantees were originally signed into law in 2008 by then-president Bush, and are currently helping to fund the construction of next-generation vehicle facilities for the likes of Ford, Nissan, Tesla and Fisker, that will save or create an estimated 40,000 jobs. The remaining $15.9 billion in the program is projected to net an additional 60,000 jobs, but if Republicans like Florida representative Cliff Stearns had their way, that money would be scrapped in its entirety. “The government should not be picking winners and losers—that’s what they’re doing with Nissan, Tesla and Fisker,” said Stearns in an interview recently.
The “winners and losers” charge has been repeated time and time again by opponents of green energy investment, with one Heritage Foundation blogger charging recently that only “economically uncompetitive” vehicle technologies need the help of the government.
But the big winners and losers in what is now a global race to cut oil consumption, won't just be car companies. Many of the world's largest auto markets are putting regulations in place to ensure that the average fuel economy of the vehicles sold in their countries rises substantially in the coming decades, and whether the next generation of efficient vehicles is built in the United States, China, Germany, Japan or elsewhere, it will get built somewhere.
The Nissan LEAF electric sedan, for example, didn't come into existence because of the AVTM program, but the 1.3-million-square-foot factory in Smyrna, Tennessee—where the batteries for as many as 200,000 electric vehicles will be built each year—likely did. Nissan has said that the $1.4 billion in loan money it received from Washington factored heavily in its decision to build battery packs for the LEAF in the United States.
Then there are emergent companies like Tesla and Fisker, who will use the loans to develop and build their technologies in sufficient volumes to make them price-competitive in the larger vehicle market. Tesla used its AVTM loan money to develop the Model S sedan, creating about 1,000 jobs in the process. When that car hits the market next year, the startup projects it will add another 1,000 employees.
The United States isn't the only country working to ensure that it's a hub for the electric vehicle industry. Whether it is subsidies to consumers or loans to companies working on electric cars, governments around the world are competing to become players in the plug-in vehicle market. Germany recently announced that it will distribute 500 million euros (about $705 million) for vehicle electrification by the end of next year. China, in its bid to become both the world's largest EV market and producer, has flooded its auto industry with $15 billion in grants and subsidies for hybrid and electric vehicles.
Though the recent trend in Washington has been to call for cuts to clean energy programs, in reality, it’s the dirty fuel industry that has historically received the enormous subsidies. The oil industry receives an estimated $4 billion per year in tax breaks from the federal government—a number far greater than the $1.5 billion in credit subsidies the House hoped to cut from the AVTM program. In fact, as my colleague Brian Siu points out, the Office of Management and Budget estimates that repealing six oil and gas tax expenditures would save roughly $43 billion over ten years.
Though cuts to the AVTM program were averted at the last minute, I wouldn’t be surprised to see more calls by Republicans to roll back government investment in fuel-efficient technologies as the budget fights leading into 2012 elections continue. The United States needs to remain firm in its commitment to these technologies, or it risks being a loser in the race to end oil dependency.