Source: The Washington Post | Dino Grandoni | July 11, 2017
President Trump has said that he wants to spend $1 trillion on rebuilding U.S. infrastructure, an investment in the nation’s public structures the size of which has not been seen since the construction of the interstate highway system.
Trump may be hard-pressed to get that tall sum from his fellow, penny-pinching Republicans in Congress. But he already has a pot of money sitting at the Energy Department that, some argue, can be used to finance energy infrastructure projects today without any additional congressional approval.
That is, if only he would use it.
The Energy Department’s loan program for innovative energy and auto manufacturing projects currently has $41 billion in existing spending authority. That money waiting in the bank, advocates of the loan program argue, could today be put toward the construction of energy and transportation infrastructure projects of the sort Trump said on the campaign trail he wanted to build.
For example, the loan program has already financed a high-voltage transmission line in Nevada, a cutting-edge energy storage project in New York and advanced nuclear reactors in Georgia. The only catch is that the infrastructure its put toward must be deemed innovative.
“There’s been a lot of talk about $1 trillion. There’s a really huge open question about where it’s going to come from,” said Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford and former head of the DOE’s Office of Energy Efficiency and Renewable Energy (EERE) under President Clinton.
“I can point to close to 5 percent that’s already there on the books for energy infrastructure,” Reicher said.
But Trump and his budget director, Mick Mulvaney, who as a Freedom Caucus congressman opposed the loan program, have called for its cancellation in the president’s proposed budget.
Trump’s stance on the DOE loan program has been “concerning and oddly disconnected from the Trump administration’s rhetoric about wanting to generate American jobs and build out American infrastructure,” said Mike Carr, a former principal deputy assistant secretary at EERE under President Obama and a partner at the energy advisory firm Boundary Stone Partners. “It’s a very strange disconnect.”
Created by Congress in 2005 to finance innovative energy or auto-manufacturing projects, the loan program has a reputation still colored in the eyes of some conservatives by the most infamous of the firms to receive financing — Solyndra. That erstwhile solar-panel maker, which received $535 million in DOE money, went bankrupt in 2011 and became a knock on Obama the following year as he sought reelection.
But a few years later into Obama’s second term, the loan program was operating back in the black.
Despite the success of the program’s portfolio, opponents view the government financing as a distortion of the free flow of capital from private backers.
“The economic pain cuts deeper than wasted taxpayer money because government interventions distort free enterprise, create government dependence and allow Washington to direct the flow of private-sector investments,” Nicolas Loris, a fellow in energy and environmental policy at the Heritage Foundation, told Congress in March. “This is not a recipe for more innovation and economic growth.”
Carr represents a proposed $1.8 billion chemical plant in the state of Washington that is seeking a portion of the $8 billion in DOE financing set aside for fossil-fuel-related projects. Like the liquefied natural gas export terminals Trump recently trumpeted during his trip to Europe, the Kalama, Wash. project would export abroad some of the surplus of U.S. natural gas by converting it to methanol, a chemical building block used to make everything from furniture to pharmaceuticals.
What happens next: Right now, there is disagreement in Congress between key House and Senate Republicans. A first-stab budget bill that passed a House appropriations subcommittee would eliminate the loan program. But Sens. Lisa Murkowski (R-Alaska) and Maria Cantwell (D-Wash.), the chair and ranking member of the Senate Energy and Natural Resources Committee, have recently put forward a comprehensive energy bill that would, among other things, tweak but preserve the loan program. That legislation is an update to the 2005 energy bill that originally created the loan program.
The big question mark: What Senate budget appropriators — in particular, Sen. Lamar Alexander (R-Tenn.), chair of the appropriations subcommittee overseeing the Energy Department’s budget — think about saving the loan program, which is just one of the many targets within the Energy Department in the Trump budget.