CREDIT: Reuters / Kevin Lamarque
In a big policy speech in New York City, as well as an interview with the Detroit News in New Jersey, he covered nearly all the top issues. He suggested his agency may revive its auto manufacturing loan program. The Advanced Technology Vehicle Manufacturing Program was created by Congress in 2007 to promote the development of more fuel-efficient cars, through both startups and retooling older plants. It was part of a larger umbrella program of energy loans started by the government in 2005 to encourage low-carbon energy technologies throughout the economy, and then bulked up in 2009 by the Democrats’ stimulus bill.
Worth $25 billion, the auto loan program created 40,000 of the 60,000 jobs the energy loan program as a whole helped generate. But after General Motors and Chrysler — two of the five auto companies that received the auto loans — ceased production on their projects, the program came under increased scrutiny as part of the “Solyndra” blowback. It hasn’t issued a new loan since March of 2011.
“We are looking at what a new [loan] solicitation might look like. That’s an ongoing discussion,” Moniz told the Detroit News, though he admitted the Energy Department is not actually considering any new loan applications at this time. “We are actively looking at what might be an effective new [request for proposals].” The agency initially received over 100 applications between 2008 and 2009.
The other three companies to receive the auto loans — Ford, Nissan, and Tesla — have performed well. Moniz singled out Tesla in particular in his speech to Columbia University’s Center on Global Energy Policy in New York City the same day. Tesla paid back its $465 million loan nine years early, and its all-electric Model S car has been enjoying rampant initial successes. The company recently saw its first profitable quarter, the car received a score of 99 out of 100 from Consumer Reports, and Vehicle Safety Scores rated the Model S the safest car they’ve ever tested. Admittedly, the car remains out of the price range of most consumers, but it’s been outselling similarly-priced gas-powered vehicles from BMW, Audi, and Mercedes-Benz.
The Tesla loan “was viewed as very risk” at the time in 2009. GM had just declared bankruptcy and jobs in auto manufacturing were at a low point, from which they’ve since bounced back thanks in part to the government’s intervention in favor of greener vehicles. “The portfolio was supposed to take some risks,” Moniz said.
The Energy Secretary’s speech also highlighted the successes of the broader loan program. In 2009, there were no 100-megawatt, utility-scale solar plants in the United States, for instance. Nor was there any commercial financing for such projects. Then the loan program invested in six of them, and since then private investors have funded ten more.
“Not every investment is going to succeed. And frankly I think you’d worry about the program if every one did,” Moniz commented wryly. But the $34.4 billion loan portfolio includes over 30 projects, with current projected losses to taxpayers totaling only two percent of the overall portfolio and ten percent of the loan loss reserve fund Congress set up. Its successes range from “one of the world’s largest wind farms, several of the world’s largest solar generation and thermal energy storage systems, the first new commercial and nuclear pows replant in three decades, and more than a dozen new or retooled auto manufacturing plants across the country.”
The speech also put those successes in greater context, as an example of the moves needed to cut down carbon emissions and do something about climate change. Moniz called the growing threat of extreme weather, droughts, and stronger storms “likely harbingers of things to come,” and stated flatly that “I’m not here to debate what’s not debatable. The evidence is overwhelming. The science is clear — certainly clear for the level that one needs for policymaking — in terms of the real and urgent threat of climate change.”
On the subject of the damage climate change could do, Moniz also brought up the social cost of carbon, which was recently revised upward and has since come in for attacks from conservatives. The central estimate of $36 in economic costs per ton of carbon emissions is “well within the spectrum of other analyses, perhaps even on the low end.”