More
- Classifieds
- Cars
- Deals
- Real Estate
- Rentals
- Photos
- Find&Save
- Obituaries
- Archives
- Topics
- Blogs
- WP Wine Club

Before Solyndra, a long history of failed government energy projects

By Steven Mufson,November 11, 2011

View Photo Gallery - Solar company fails after getting federal loan guarantees: Solyndra,…

Solyndra, the solar-panel maker that received more than half a billion dollars in federal loans from the Obama administration only to go bankrupt this fall, isn’t the first dud for U.S. government officials trying to play venture capitalist in the energy industry.

The Clinch River Breeder Reactor. The Synthetic Fuels Corporation. The hydrogen car. Clean coal. These are but a few examples spanning several decades — a graveyard of costly and failed projects.

Not a single one of these much-ballyhooed initiatives is producing or saving a drop or a watt or a whiff of energy, but they have managed to burn through far more more taxpayer money than the ill-fated Solyndra. An Energy Department report in 2008 estimated that the federal government had spent $172 billion since 1961 on basic research and the development of advanced energy technologies.

What does Washington have to show for these investments? And should the government even be in the business of promoting particular energy technologies?

Some economists, executives and financiers — as well as Energy Secretary Steven Chu — argue that the government must play a role because certain technologies have non-financial benefits, such as producing fewer greenhouse gas emissions or easing U.S. reliance on foreign oil. The semiconductor industry is often held up as a model of how government money can help build a new type of economy.

But others argue that the history of government attempts to reach for the holy grail of new energy technology — a history that features both political parties — is not inspiring. “We’re making very large bets, and the decisions seem to be more grounded in politics and geography than in engineering and science,” said Michael Graetz, a professor at Columbia Law School and the author of “The End of Energy.”

Consider the saga of the Clinch River Breeder Reactor.

In 1971, President Richard Nixon set a goal of building an experimental nuclear power plant. The Clinch River reactor was supposed to be a sort of perpetual motion machine, producing power as well as plutonium that could be used in other plants.

Private utilities agreed to kick in $175 million, less than half of the $400 million that the Atomic Energy Commission estimated it would cost to build. As expenses ballooned, the government covered all the overruns. The project was criticized by activists and scientists worried about the risk of nuclear weapons proliferation. Cheap uranium undercut it.

After President Ronald Reagan was elected, Clinch River survived the first round of his spending cuts, in part out of deference to Senate Majority Leader Howard Baker (R-Tenn.), a strong supporter of the reactor, which was in his home state. But finally, in 1983, with the Congressional Budget Office saying the cost might exceed $4 billion, Congress terminated the program. Blueprints had been drawn up, modeling done, components ordered and some ground cleared, but the reactor was never built. The price tag for the federal government: $1.7 billion ($3.9 billion in today’s dollars).

Then there was the Synthetic Fuels Corporation.

President Jimmy Carter called it the “keystone” of U.S. energy policy; Congress authorized $17 billion for it to act as a sort of investment bank, funding projects that would turn plentiful U.S. coal and shale into oil and gas. Carter set a goal of producing 2 million barrels a day of “synfuels” by 1990.

Not quite. A handful of coal and auto companies tapped the new funds to build a facility that was intended to produce 50,000 barrels a day, the first of what was supposed to be a network of synfuel plants, many on federal lands. But after oil prices leveled off, then fell, in the early 1980s, the project was not economically sound, even with government help. The private partners pulled out.

Congress ousted the corporation’s president in 1983 after the entity was accused of handing out money for political reasons. In 1986 the corporation closed down. It had spent $2 billion (more than $4 billion in today’s dollars).

This sort of industrial policy fell out of favor in the Reagan era and into the 1990s, but then it returned, as fears of climate change spawned new “clean energy” ideas.

President George W. Bush had his own pet projects. In his 2003 State of the Union address, he called for “a new national commitment” to work toward hydrogen-powered vehicles so that “our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom.”