Washington, DC — Dr. Ryan Yonk, Director of Education and Senior Research Fellow at the American Institute for Economic Research (AIER), testified Wednesday before the House Committee on Science, Space, and Technology Subcommittee on Energy, offering critical analysis of the US Department of Energy’s Loan Programs Office (LPO).
Created under the 2005 Energy Policy Act, the LPO was intended to accelerate clean energy innovation through federal loan guarantees and direct loans. In his testimony, however, Dr. Yonk argued the program has fallen short of its mission.
“The hope in creating the office was to incentivize the development of new and more affordable clean energy, which was viewed as being underprovided in the market,” Yonk said. “In practice, it has largely benefited large, politically connected corporations while increasing the likelihood that high-risk projects receive taxpayer support.”
Among the LPO’s most notable failures was Solyndra, a solar panel manufacturer that received over $500 million in federal loan guarantees before filing for bankruptcy in 2011, leaving taxpayers on the hook and raising questions about the program’s due diligence.
Yonk said the Solyndra downfall, which he chronicled in the book Nature Unbound (2016), exemplifies the structural flaws in government-backed financing.
“Government loan initiatives, like the LPO, create a moral hazard problem since companies are more likely to participate in riskier endeavors knowing that they will be able to fund them through non-market alternatives,” Yonk said.
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Watch Dr. Yonk’s testimony: