Analysis: Energy Secretary Chu likely to survive Solyndra

WASHINGTON Fri Nov 18, 2011 5:30pm EST

U.S. Energy Secretary Steven Chu testifies during the House Energy and Commerce Oversight and Investigations Subcommittee  hearing on 'The Solyndra Failure: Views from Energy Secretary Chu' on Capitol Hill in Washington November 17, 2011.  REUTERS/Kevin Lamarque

U.S. Energy Secretary Steven Chu testifies during the House Energy and Commerce Oversight and Investigations Subcommittee hearing on 'The Solyndra Failure: Views from Energy Secretary Chu' on Capitol Hill in Washington November 17, 2011.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - Energy Secretary Steven Chu is taking the heat for government decisions on Solyndra, but he is unlikely to take the fall for taxpayer losses on a $535 million loan guarantee to the failed solar company.

Chu will likely keep his job, unless damning new details come to light in several parallel investigations into Solyndra.

Chu faced about five hours of grilling on Thursday from Republicans on the House Energy and Commerce committee about Solyndra. By most accounts, he held his own.

Chu took responsibility for Solyndra but stood firm that his staff did their homework on the loan. He said falling prices for solar panels drove the company into bankruptcy and were to blame for taxpayer losses.

He unequivocally said he was not influenced by Solyndra investor George Kaiser, a donor to President Barack Obama's campaign.

Some lawmakers, who described the loan as rushed and poorly monitored, have questioned whether Chu should step down.

But quitting now would hand Republicans a political victory before the 2012 presidential elections while doing little to end the controversy over Solyndra, once held up by Obama as a model for creating jobs through green energy.

"I don't think there was any kind of 'smoking-gun' type question-and-answer that came out of the session," said Salo Zelermyer, who was a senior counsel at the Energy Department during President George W. Bush's administration.

Chu's testimony does not end the scrutiny. If new information emerges that casts a poor light on Energy Department decisions it could create a political scenario where he could be asked to fall on his sword, said Zelermyer.

The Energy Department's Inspector General -- an internal but independent watchdog -- is investigating Solyndra in tandem with the FBI, which raided the company in September.

The timing of that review is unknown, but if it holds the Energy Department responsible for poor decisions, that could add to pressure on Chu to depart, said Zelermyer, now with Bracewell & Giuliani, a lobbying and law firm.

The White House commissioned an independent report from Herb Allison, a former investment banker, on the department's entire loan portfolio of $35.9 billion, due in late December.

A negative report also could weigh on Chu.

Republican lawmakers eager to keep an Obama embarrassment in the headlines have also promised to continue their probe.

"I don't know if anyone's job should be at risk over Solyndra, but in this political environment that's always an issue," said Dan Kammen, an energy professor at the University of California, Berkeley.

"BLAST" E-MAILS

Solyndra is a regular feature in "blast" e-mails sent to reporters covering the 2012 presidential campaign. Republicans are using it to criticize Obama's energy and jobs politics, and highlight it as a waste of taxpayer money.

If Chu leaves now, it could feed that criticism.

"I don't think Secretary Chu will be leaving. Doing so would not stop Solyndra from being a part of the election," said Andrew Holland, an energy policy analyst at the American Security Project, a Washington think-tank.

Caving to Republican criticism over green energy would not play well with environmentalist Democrat voters, who have already turned up the heat on Obama on a decision to postpone new smog rules for coal plants, and a pending decision on the Keystone XL pipeline for crude oil from the Canadian oilsands.

Obama and Chu have so far given no quarter to their critics. Chu toured a Colorado solar plant owned by General Electric -- a plant that was not a recipient of an Energy Department loan guarantee.

"The public and private sectors can, and should, work together to make sure clean energy technologies are invented in America, made in America and sold around the world," Chu said.

"Secretary Chu has the President's full confidence and we are all proud of his tenure as Secretary of Energy," White House Spokesman Eric Schultz said in a statement.

Fans of Chu, a Nobel laureate, say he has added scientific heft to Washington politics.

"It brings credibility to an agency that is first and foremost a science agency," said Elgie Holstein, an Energy Department official during the Clinton administration.

"He's a compelling spokesman for the energy revolution that's needed," said David Victor, a political scientist at the University of California, San Diego.

If Chu survives scrutiny about the Solyndra loan, he may still step down if Obama wins a second term in 2012.

It is not unusual for energy secretaries to stay for only one term. Some observers say Chu lacks the political and financial acumen needed to advance Obama's clean energy agenda, particularly the use of renewable energy, which has been hurt by the Solyndra fallout.

"Secretary Chu is a wonderful and brilliant man, but he is not perfect for the other critical DOE mission: deploying existing technologies at scale and creating jobs," said Dan Carol, a former Democratic campaign adviser, whose private concerns became public last week in an e-mail the White House released to Republican investigators.

(Additional reporting by Nichola Groom in Los Angeles)

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Comments (2)
DrZanger wrote:
It is funny yet sad how Chu was touring a GE solar plant touting that solar panels should be made here in America. GE several years ago bought AstroPower who was at one time the largest US producer of panels and since that time they moved production of those panels to China. GE was willing to layoff those AstroPower workers in Delaware. When will they be laying off these workers in Colorado? If it was not for government subsidies there would be no solar production here in the The United States.
Solar is still one of the least cost effective ways of making electricity. It is a perfect fit for the US government. Solar is one of the least effective ways of producing electricity and the government is one of the least effective venture capitalist.

Nov 19, 2011 10:55am EST  --  Report as abuse
I’ve read at least a dozen news articles about the Solyndra “scandel” and I am unconvinced it’s a scandal, the most scandelous thing after all the subpeonas and accusations and whatnot so far was some email asking to conviently time the anouncement of some layoffs. Which barely registers as a scandal, people time announcements all the time. All these ridiculous allegations of “crony capitalism” fall flat when the overall timeline of the loan program is considered. The same people calling Obama a crony capitialist who also think he’s a socialist, well, which is it anyway? A man with socialist ideals would not be engaging in crony capatilism. It’s just more BS. Anyway, most people realize that investment has an inherent risk, and what’s really important is not an individual loan but how much the loan program overall is doing, and no one is reporting that one. Also, some are quick to point out that this is an example of why the public sector shouldn’t be investing in anything. Considering that private investors lost over a billion on Solyndra, isn’t it more an example of why the privat sector shouldn’t investing in anything? Of course not, both stances are ridiculous, the argument is ridiculous. How is the overall loan program doing? And will the overall program be costing the public? Those are the important questions. Someone should be reporting those. But I haven’t seen anything. Ok I will stop ranting for the time being.

Nov 20, 2011 4:05am EST  --  Report as abuse
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