A second Energy Department solicitation for advanced fossil energy loan guarantees is coming soon, according to a recent Government Accountability Office (GAO) report. Currently, the Department of Energy (DOE) has $8 billion in congressionally directed authority for high cost, risky fossil energy projects such as coal-to-liquids, integrated gasification combined cycle, petroleum coke-to-liquid, and coal-to-synthetic gas. Further, there is only one fossil energy application active at DOE which has requested a $2.8 billion loan guarantee. Pending a final award by DOE to the one active applicant, this would leave approximately $5.2 billion in authority to be awarded to additional fossil energy projects under the flawed DOE loan guarantee program.
The first loan guarantee solicitation for fossil energy projects was announced in September 2008 and sought coal-based power generation and industrial gasification projects that incorporated carbon capture and sequestration (CCS) technology as well as advanced coal gasification projects. The solicitation received a total of eight applications requesting more than $17 billion in loan guarantees. As previously noted above, only one of eight applicants is currently active at DOE.
Putting the full faith and credit of the U.S. government behind multi-billion dollar, high-risk projects that the private sector won’t finance is fiscally irresponsible. If DOE intends to award the remaining $5.2 billion in loan guarantee authority for fossil energy projects, Congress and DOE must reform the inadequate taxpayer protections within the program—which lead directly to the hundreds of millions lost with default of the loan guarantee to Solyndra.
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