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Home » Business News/Analysis, Federal Agency, Federal Legislation, Funding/Financing, Government Resources, Opinions, Policy

Obama May Kill Key DOE Loan Guarantee Program

Submitted by on November 8, 2010 – 8:05 amNo Comment

by Jim Lane (Biofuels Digest)  Washington, the Obama Administration developed and has been debating an option to kill the Section 1705 DOE Loan Guarantee program, and transfer remaining funds to a pool for Section 1603 investment tax credits that, as currently structured, are unavailable for biofuels.

Solar, wind win, biofuels lose

The big potential winner, wind energy, and possibly solar, as wind energy projects are helped by the Section 1603 program and in 2009 nearly 10,000 megawatts of wind energy were built in the US. Researchers at Lawrence Berkeley National Laboratory estimated that up to 25 per of the capacity would not have been built if the tax credits had not been available.

The proposal was included in a package of options placed before President Obama by White House energy policy coordinator Carol Browner, former chief economic policy advisor Lawrence Summers, and Vice President Biden’s chief of staff Ron Klain. Among other options: improving the efficiency of the loan guarantee process, or limiting the oversight role of OMB and the US Treasury. 

…The loan guarantees were developed to assist in proving out the feasibility of transformational projects in order to unlock the availability of traditional project finance, which traditionally avoids first-of-kind technologies. Instead, the DOE has been able to deploy only 2.5 percent of the $2.5 billion in funds…

The Digest’s Take

The Browner memo is a classic study of a government project that choked on a lethal combination of high ambition and inexperience. Among the factors they cite are an overly consultative process of review, an aversion to risk, and a bloated bureaucracy.

We agree that the Section 1705 program has gone off the tracks, but Vice-President Biden is right: the program requires streamlining, not abandonment. Going back to the legislature, in this uncertain environment, could have disastrous implications.    READ MORE   View MEMO

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