What the DOE and Black Holes Have in Common

Last night, President Obama once again heralded the potential of “renewable” energy, saying America is “finally poised to control our own energy future.  In his world, “businesses will partner with the Departments of Defense and Energy to turn regions…into global centers of high-tech jobs.”  The Department of Energy (DOE) has proven to have the same flaw as most of its fellow federal departments: it’s a proverbial black hole for taxpayer dollars.

DOE implemented its Vehicle Technologies Program, “to develop and deploy efficient and environmentally friendly highway transportation technologies to reduce the Nation’s dependence on foreign oil and provide greater energy security.”  To that end, the program was given $2.4 billion under the American Recovery and Reinvestment Act of 2009, also known as the “stimulus.”

That’s a lot of money.  One would hope it would be managed well, but it wasn’t.

Here’s the scoop from the department’s inspector general:

 In February 2010, LG Chem Michigan Inc. (LG Chem Michigan), formerly Compact Power, Inc., was awarded more than $150 million in Recovery Act funding to help construct a $304 million battery cell manufacturing plant in Holland, Michigan.  On October 24, 2012, a complaint was received that LG Chem Michigan misused Recovery Act funds.  The review confirmed the allegations.  Specifically, LG Chem Michigan inappropriately claimed and was reimbursed for labor charges incurred by a variety of supervisory and staff employees for activities that did not benefit the project.  As a result, up to about $842,000 in reimbursements for labor charges were questioned.  Also, work performed under the grant to LG Chem Michigan had not been managed effectively.  Based on progress to date and despite the expenditures of $142 million in Recovery Act funds, LG Chem Michigan had not yet achieved the objectives outlined in its Department-approved project plan.

The report adds.  “[E]ven though the facility had produced a large number of test cells, the plant had yet to manufacture battery cells that could be used in electric vehicles sold to the public”. 

And there is little hope in sight.  DOE offers the consolation that “corrective action had been taken and/or has been initiated.”

Unfortunately, that is an insufficient means of assuaging our reservations and disapproval of how DOE operates.  And more importantly, the task of developing and deploying efficient and environmentally highway transportation technologies should be taken up by the private sector, not the federal government.

Hack jobs like this have happened time and time again.  The private sector has proven more efficient than the federal government and a much more appropriate means of funding energy projects and research.  The truth is “[b]usinesses do not need public investment to improve efficiency and cut costs; they make those investments regularly with their own money.”

The Heritage Foundation’s Nick Loris explains:

Congress’s ultimate objective should be to eliminate any Department of Energy function that does not support a critical national interest unmet by the private sector.  

The blunder made by the DOE’s Vehicle Technologies Program gives a great deal of credibility to Loris’s suggestion.  Unless, of course, you’re the type that gets satisfaction from seeing your taxpayer dollars flushed down the DOE’s green-friendly toilet.

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