Mitt Romney’s Own Solyndra Problem
The Article: Mitt’s Solyndra? He handed out renewable energy subsidies, too by Darren Samuelsohn on Politico.
The Text: Republicans are pounding Barack Obama on Solyndra, but it may be a complicated argument for their front-runner to maintain: While Mitt Romney was governor, Massachusetts also picked some winners and losers with energy subsidies.
And like Obama, some of the companies Romney’s state invested in came out on the losing end.
The scale is dramatically different: While the Obama administration dumped $535 million alone into Solyndra — the California solar panel company that subsequently filed for bankruptcy protection — the energy loans, grants and other financial help Romney distributed during four years as governor add up to just a fraction of that amount.
But Democrats — and even some Republicans — say the core issue is the same: If the federal government shouldn’t be betting on one company rather than the other, then neither should the state of Massachusetts.
“It’s exactly the kind of thing he’d say you invest in, that you win some, you lose some,” said Sonia Hamel, a former special assistant who handled climate issues for Romney in the Massachusetts Office for Commonwealth Development. “It does seem hypocritical.”
Just under three weeks into his term as governor, Romney brought a $1.5 million check to Konarka, a well-connected solar startup in Lowell, Mass., itching to buy a new pilot production assembly line.
Four other companies also scored renewable energy subsidy awards that same day, including Evergreen Solar, which won $2.5 million for a major expansion and to cover operating losses as it tried to become profitable.
Also that day, Romney announced plans to take $15 million from Massachusetts’ Renewable Energy Trust Fund — a pot of more than $150 million collected from electricity customers following passage of a 1998 energy deregulation law — and start up a new private venture capital outfit that would back green-minded state businesses with equity, loans and management advice.
“The trust fund has been growing for years, and I believe now is the time to refocus its assets in such a manner that it can become a major economic springboard for the commonwealth,” Romney said at the January 2003 press conference.
“Clean energy is a technology-driven industry well suited to the state’s strengths,” added Doug Foy, a Boston environmentalist who was lured into Romney’s team by the opportunity to lead the newly created commonwealth development office. “We have all the ingredients to be a leader in the sector: world-class universities, high-tech companies and a highly educated workforce.”
But just as Obama’s team has discovered with Solyndra, not all of the investments made during Romney’s watch would be winners.
Massachusetts did bank millions when it sold shares of Evergreen Solar stock offered as part of its payback for the initial loan. But that early investment was followed by tens of millions more from Romney’s successor, Democratic Gov. Deval Patrick, and it all ended up backfiring when the company filed last year for Chapter 11.
Some of the companies that landed coveted spots in the Massachusetts Green Energy Fund also have stumbled.
Outside experts say that Konarka, winner of both the state loan and a place in the venture capital fund, still shows plenty of promise. But the company developed at the University of Massachusetts with a Nobel Prize winner on its technical team hasn’t lived up to expectations: Its primary products on the market are a solar bag and solar umbrella.
“They would probably be the first to admit it hasn’t worked out the way they hoped,” said Lawrence Gasman, a principal analyst at the research firm Nanomarkets.
Fuel cell company CTP Hydrogen Inc., another initial member of the Green Energy Fund, shut down in 2008, laying off most of its 10-person staff. And after failing to make a profit, fuel cell developer Protonex Technology Corp. delisted in 2010 from an alternative arm of the London Stock Exchange and laid off a third of its employees and closed a Colorado plant.
William Osborn, a clean energy investment expert hired to manage the Green Energy Fund, said that there have been some failures with the portfolio. But “the jury is still out” on the overall success of the fund, which expires in 2014, he added.
“We’ve not gotten our Apple or Google yet,” he said. “I think I’ve got some candidates.”
Osborn and others connected to the Green Energy Fund said the venture capital plan wasn’t Romney’s idea. The Massachusetts Technology Collaborative, a quasi-public agency only indirectly and partially overseen by the Romney administration, set up the program with money from the Renewable Energy Trust Fund. Rob Pratt, the trust’s director at the time, said he came up with the concept as state officials wrestled over places to spend the larger pot of money. He said he ran the idea by Foy as Romney’s team was still getting settled in and they jumped at the chance to tout it.
“That’s what governors do,” Pratt said. “They take credit for things that other people do.”
Now running for president, Romney, a former venture capitalist, has repeatedly brought up Solyndra, hopeful that images of last year’s FBI raid and dozens of embarrassing emails will damage an Obama White House that has managed to survive its first term without a major scandal.
“I’d like to look at Barack Obama’s record,” Romney said last month as he met with reporters in flight from New Hampshire to South Carolina. “So as we talk about my experience in the private sector, I’ll talk about his experience — he’s now been a venture capitalist in Solyndra, Fisker, Tesla, and he’s been a private equity guy in General Motors and Chrysler.”
Asked about his work as governor, Romney’s campaign noted the Renewable Energy Trust Fund predated his term and its independent management didn’t report to him. The initial $9 million in grants that he handed out as governor were predetermined winners before he came into office. Romney also caused a stir with environmentalists, the campaign added, when he redirected $17 million from the trust to close the state’s budget deficit.
“Gov. Romney worked to limit the role of the state as venture capitalist,” campaign spokeswoman Andrea Saul said. “Unlike President Obama, Gov. Romney doesn’t believe that government has all the answers. As president, he will end crony capitalism and look primarily to the private sector to lead the economy out of its doldrums.”
Several of the officials who worked on the Renewable Energy Trust Fund and the Green Energy Fund recalled incidents where state agency officials and state legislators would offer an offhand suggestion to look at certain companies, or to weigh in to make sure nothing happened to promote the Cape Wind project that Romney opposed. But none of the startups got into the Green Energy Fund because of their political connections.
“They had a relatively hands-off approach,” said Warren Leon, a former director of the Renewable Energy Trust Fund and senior adviser to the Green Energy Fund. “It was set up with a fair amount of distance from political influence.”
Leon said he disagreed with the former governor’s attacks on Obama for making similar moves at the Energy Department.
“[Romney’s] administration was certainly at that point willing to support the establishment of a fund that was going to be in the business of giving money to individual companies and in effect picking winners,” Leon said. “This is true. In some ways, it’s a question of on what basis one wants to be critical of his position now.”
Konarka CEO Howard Berke, a self-described moderate Republican who is backing Romney’s presidential campaign, said Romney took appropriate steps to help state businesses. But he said energy subsidies like the ones Konarka got should be distinguished from the Energy Department, which he argued “ought to be investing in basic research” and not specific companies.
“I think taking a million and using it as a lubrication for economic development is one thing,” Berke said. “Taking billions, tens of billions, of taxpayer money is quite a different order of magnitude. There’s just a shared difference in the amount of capital exposure and risk that one should be taking with taxpayer money, and I believe that one has to contrast the two situations in that regard.”
