A 60 Minutes segment which aired on January 5 reported that the cleantech industry "has suffered a string of expensive tax-funded flops." But, there's more to the story.
Did you watch “The Cleantech Crash” on 60 Minutes Sunday evening? Correspondent Lesley Stahl reported that the cleantech sector “has suffered a string of expensive tax-funded flops,” with the segment particularly focused on Vinod Khosla and his KiOR biofuel company. Despite hundreds of millions of dollars invested, including $165 million of Khosla’s own money, KiOR is still in the red, and its production of green gasoline has faced delays, Stahl reported.
The 60 Minutes segment took a broad strike at biofuels, solar and electric vehicles—reporting that the federal government has spent billions on these technologies without much to show for it. Stahl pointed out that Solyndra, the now bankrupt solar-panel company, alone went through half a billion dollars of taxpayer money to build a factory.
But, as Michael McAdams, president, Advanced Biofuels Association (ABFA), points out, “Solyndra has nothing to do with biofuels” and what the 60 Minutes piece did not clarify is that of $38 billion originally targeted for cleantech technologies in the economic recovery bill, the biofuels industry received just $800 million in the form of grants to build pilot plants.
The biofuels industry has received additional funding through the energy title of the Farm Bill, and through the Department of Energy’s yearly grants under the biomass program, which runs a total of approximately $200 million annually. But, ABFA reports that biorefineries received just $17 million of these grants last year. The ABFA also acknowledges the Department of Defense Production Act, which has been limited to awarding grants to the biofuel industry of up to a total of $570 million (for Phase 1 and 2. Phase 2 should be awarded in July 2014). Even with this funding, it is small compared to what the government has invested in the oil industry over the years, McAdams says, adding that the biofuels industry is still in its infancy and has made significant advances in less than five years. He also points to a Bloomberg Energy report that the private sector has invested $14.7 billion in the advanced biofuels industry.
Moreover, after reviewing the government’s loan guarantees, none of the biofuel companies (with the exception of Abengoa Bioenergy), signed the agreements because the transactions costs were too high, McAdams said. “In some cases, borrowing from a commercial bank would have been cheaper.”
The 60 Minutes segment also featured Pin Ni, who heads up China’s auto parts company Wanxiang. Ni has purchased several cleantech companies after American investors gave up on them. This is where McAdams feels the 60 Minutes program got it right—an emphasis on the long-term benefits. While Pin Ni acknowledged that cleantech is not currently going well, “China is willing to make a long-term bet on the technology, and spend what it takes to develop the manufacturing.”
In answer to Stahl’s question about whether American taxpayers have gotten their money’s worth on cleantech spending, Pi Ni said, “If you measure them by today’s standard, I would say definitely not. . . But if you view this as a step stone to the future, when you get there, when you look back, I would say yes.”
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