Cutting Loan Program Far From a Guarantee

Rolling Analysis, FY21 Budget Cutting Loan Program Far From a Guarantee

Energy & Natural Resources,  | Analysis
Feb 10, 2020  | 1 min read | Print Article

For the fourth time, the FY 2020 President’s Budget calls for eliminating the Title 17 Energy Loan Guarantee Program in the Department of Energy. A move we’ve long supported. With lending terms far more generous than the private sector for high-risk capital-intensive projects, like a pair of $25+ billion floundering nuclear reactors, TCS has opposed the program from the beginning.

Created in the Energy Policy Act of 2005, the Title 17 Program puts the full faith and credit of the United States on the line for energy projects employing a range of technologies, including renewable, nuclear, and advanced fossil fuels. Over the years, we’ve seen safeguards for the program erode and applicants that should have covered part of the risk of their loans through the “subsidy cost” get off scot free. The program was also expanded in the 2009 Stimulus (the American Recovery and Reinvestment Act) but that portion of the program, known as Section 1705, had fully appropriated subsidy costs has since expired.

In the past, we’ve noted the hypocrisy of calling for the program’s end then following that announcement just months later with an additional $3.7 billion in loan guarantees for the Vogtle nuclear project in Georgia.

This year we’ll have to wait and see if taxpayers are any better off.