Post by Trades on Dec 2, 2014 15:26:22 GMT -5
Government-Backed Green Energy Goes Bust
Ira Stoll|Dec. 1, 2014 4:30 pm
The recent Chapter 7 bankruptcy and liquidation filing of the Toledo, Ohio-based solar-panel manufacturer Xunlight Corp. has attracted barely any national attention.
Maybe it’s gotten to the point—after Solyndra, Evergreen, Abound, and Satcon—that the failure of another government-backed alternative energy company is a dog-bites man story. It’d be newsworthy if any of them actually ever succeeded.
But it’s worth pausing for an autopsy and retrospective on Xunlight, because it’s a great (or terrible, depending on how you look at it) example of how government at all levels—state and federal—and in both parties—Republican and Democrat —wastes taxpayer money by subsidizing politically connected businesses.
The stereotype is of the Washington, D.C. Democrats shoveling stimulus money into solar energy firms. And indeed there were plenty of Democrats involved with Xunlight.
According to the Toledo Blade, one of the few press outlets following the story, “In 2010, the company received $34.5 million in tax credits as part of the stimulus bill. U.S. Rep. Marcy Kaptur (D., Toledo) helped secure nearly $3 million in federal earmarks for the company. The company received a $3 million grant from the National Institute of Standards and Technology, a more than $4 million loan from the state, and more than $2 million in state and local tax credits.”
But it wasn’t only Democrats who wanted to use the power and dollars of government to give Xunlight a boost. Senator Portman of Ohio, the perennial vice-presidential hopeful who was director of the Office of Management and Budget in George W. Bush’s administration, issued a press release touting legislation that he said would “would boost Toledo’s growing leadership in green industries and initiatives. The opportunities that could emerge would complement the efforts of existing companies in the region’s rapidly maturing solar industry. These include Xunlight Corp., whose innovative solar panel technologies are powering the first totally solar-powered billboard in New York’s Times Square.”
And in the closing days of the 2008 presidential race, the McCain campaign sent its vice presidential candidate, Governor Palin of Alaska, to speak in Toledo at Xunlight headquarters. “I appreciate the hospitality of Xunlight Energy, and all the people of Toledo. The folks at Xunlight are doing great work for this community and our country,” Palin said on October 29, 2008. “Every day, when there are no cameras around to draw attention to it, this company and others like it are engaged in the great enterprise of energy independence. And what we see here is just a glimpse of much bigger things to come. Solar power is one of many alternative energy sources that are changing our economy for the better. And one day they will change our economy forever.”
The Economist magazine wrote a dispatch about Xunlight and its 100 employees under the headline “Greening the Rustbelt:” “Green investment presents new hope,” the magazine declared.
Federal Election Commission records show the company’s founder, Xunming Deng, donated $3,000 to the campaigns of Marcy Kaptur, a Democratic congresswoman from Ohio. In 2010, he gave $4,500 to the campaign of Ohio’s governor, Ted Strickland, a Democrat, Ohio state campaign finance records show.
U.S. Senate lobbying records show Xunlight spent $100,000 total in 2008 and 2009 to hire lobbyists at the PMA Group, which closed in 2009 after being raided by federal prosecutors.
Maybe someone, someday will yet figure out how to make a successful business out of Xunlight’s solar technology, or out of some other solar technology. If they do, though, I hope it will be on the basis of having good technology, not on having pull in Washington or in some state capital.
The Xunlights of the world raise issues of both justice and efficiency.
Justice, because how is it just for individuals laboring in unsubsidized industries, or in heavily taxed ones, to have their earnings taxed and transferred to the Xunlights of the world?
And efficiency, because what evidence is there that government or politicians are better than venture capitalists or other market-based investors in selecting companies to invest in? The incentives are all off: by the time the subsidized businesses go belly-up, many of the politicians are out of office, and the press has moved on to other things, so few voters even notice.
The whole process could benefit from some sunlight. Not Xunlight, but sunlight of the old-fashioned, standard-spelling variety.
Ira Stoll|Dec. 1, 2014 4:30 pm
The recent Chapter 7 bankruptcy and liquidation filing of the Toledo, Ohio-based solar-panel manufacturer Xunlight Corp. has attracted barely any national attention.
Maybe it’s gotten to the point—after Solyndra, Evergreen, Abound, and Satcon—that the failure of another government-backed alternative energy company is a dog-bites man story. It’d be newsworthy if any of them actually ever succeeded.
But it’s worth pausing for an autopsy and retrospective on Xunlight, because it’s a great (or terrible, depending on how you look at it) example of how government at all levels—state and federal—and in both parties—Republican and Democrat —wastes taxpayer money by subsidizing politically connected businesses.
The stereotype is of the Washington, D.C. Democrats shoveling stimulus money into solar energy firms. And indeed there were plenty of Democrats involved with Xunlight.
According to the Toledo Blade, one of the few press outlets following the story, “In 2010, the company received $34.5 million in tax credits as part of the stimulus bill. U.S. Rep. Marcy Kaptur (D., Toledo) helped secure nearly $3 million in federal earmarks for the company. The company received a $3 million grant from the National Institute of Standards and Technology, a more than $4 million loan from the state, and more than $2 million in state and local tax credits.”
But it wasn’t only Democrats who wanted to use the power and dollars of government to give Xunlight a boost. Senator Portman of Ohio, the perennial vice-presidential hopeful who was director of the Office of Management and Budget in George W. Bush’s administration, issued a press release touting legislation that he said would “would boost Toledo’s growing leadership in green industries and initiatives. The opportunities that could emerge would complement the efforts of existing companies in the region’s rapidly maturing solar industry. These include Xunlight Corp., whose innovative solar panel technologies are powering the first totally solar-powered billboard in New York’s Times Square.”
And in the closing days of the 2008 presidential race, the McCain campaign sent its vice presidential candidate, Governor Palin of Alaska, to speak in Toledo at Xunlight headquarters. “I appreciate the hospitality of Xunlight Energy, and all the people of Toledo. The folks at Xunlight are doing great work for this community and our country,” Palin said on October 29, 2008. “Every day, when there are no cameras around to draw attention to it, this company and others like it are engaged in the great enterprise of energy independence. And what we see here is just a glimpse of much bigger things to come. Solar power is one of many alternative energy sources that are changing our economy for the better. And one day they will change our economy forever.”
The Economist magazine wrote a dispatch about Xunlight and its 100 employees under the headline “Greening the Rustbelt:” “Green investment presents new hope,” the magazine declared.
Federal Election Commission records show the company’s founder, Xunming Deng, donated $3,000 to the campaigns of Marcy Kaptur, a Democratic congresswoman from Ohio. In 2010, he gave $4,500 to the campaign of Ohio’s governor, Ted Strickland, a Democrat, Ohio state campaign finance records show.
U.S. Senate lobbying records show Xunlight spent $100,000 total in 2008 and 2009 to hire lobbyists at the PMA Group, which closed in 2009 after being raided by federal prosecutors.
Maybe someone, someday will yet figure out how to make a successful business out of Xunlight’s solar technology, or out of some other solar technology. If they do, though, I hope it will be on the basis of having good technology, not on having pull in Washington or in some state capital.
The Xunlights of the world raise issues of both justice and efficiency.
Justice, because how is it just for individuals laboring in unsubsidized industries, or in heavily taxed ones, to have their earnings taxed and transferred to the Xunlights of the world?
And efficiency, because what evidence is there that government or politicians are better than venture capitalists or other market-based investors in selecting companies to invest in? The incentives are all off: by the time the subsidized businesses go belly-up, many of the politicians are out of office, and the press has moved on to other things, so few voters even notice.
The whole process could benefit from some sunlight. Not Xunlight, but sunlight of the old-fashioned, standard-spelling variety.
reason.com/archives/2014/12/01/government-backed-green-energy-goes-bust/print
