The House of Representatives this week approved legislation that irresponsibly eliminates a key Energy Department loan guarantee program that is helping grow California's renewable energy industry and creating jobs across Southern California.
Before I get into the particulars, here's the bottom line: By rescinding about $2 billion in Recovery Act funds and loan authority, the House has jeopardized some $40 billion of private industry investment in clean energy.
Twenty-four California companies have applied for a total of $16.2 billion in loan guarantees that would bring tens of thousands of jobs to California, firmly establishing an industry of the future in our backyard.
Funding for those loan guarantees would be eliminated by the House-passed bill. Projects likely to be scrapped — unless the funding is restored in a Senate version of the bill — include renewable energy power plants, factories to build wind turbines and solar panels, and refineries to produce low-carbon vehicle fuel.
That's an estimated 76,000 jobs — many in hard-hit counties such as Kern and Riverside — gone. That's thousands of megawatts of clean energy that could power hundreds of thousands of homes — gone. That's a smart local investment in a growing global industry — gone.
The loan guarantee program was created in 2005 with strong bipartisan support and has had a significant impact on the industry. Already, more than $26 billion in loans and loan guarantees have been committed to 24 clean energy projects, and these loans have generated billions more in private investment. Those loans have created or saved more than 58,000 jobs in 19 states.
Of those 24 projects, eight are aimed at new renewable energy sources; these projects are expected to generate more than 4,000 megawatts, enough to power more than 1 million homes.
And the return on investment is impressive: For every $1 spent in loans, we get $13 of private sector investment.
Beyond all the benefits to California and the country, killing the loan guarantee program would be punitive to companies that have played by the rules. Dozens of California companies have been working toward a September application deadline, and they have not only devoted time and energy to their submissions, they have also paid fees that fund the review process at the Department of Energy.
Now, those companies will be told that the millions of dollars they have spent were for nothing. The process is finished — game over.
Even the U.S. Chamber of Commerce supports loan guarantees:
"Financial mechanisms, like loan guarantees and other concessionary financial products … can make new and clean energy technologies like nuclear and renewable power significantly more cost competitive while using little or no federal funds," the chamber said in a recent report.
But instead, we're falling behind. Last year, China passed the United States in renewable energy development for the first time. It did this with help from $36.6 billion in financing from the China Development Bank. China is smart enough to invest in clean energy.
The House bill is an example of why we have fallen so far behind. Eliminating the loan guarantee program is a political assault on renewable energy and on California businesses, disguised as fiscal responsibility.
I will be trying to restore this program in the Senate version of the bill, because there aren't many opportunities to invest taxpayer dollars with this kind of return. If we allow this program to die, we squander billions of dollars in investment and set our economy back even further.
Dianne Feinstein is a Democratic U.S. senator from California.