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60 Minutes: ‘The Cleantech Crash’ ($150 billion boondoggle exposed)

Leslie Stahl (CBS): Part of this [green technology investment] was supposed to be creating new jobs. Everything I’ve read there were not many jobs created.

Steven Koonin (DOE-ex): That’s correct.

Stahl: So what went wrong there?

Koonin: I didn’t say it would create jobs. Other people did.

Stahl: So you never thought it was gonna create ….

Koonin: I didn’t think it mattered as a job creation, no.

Last night (January 5, 2014), Leslie Stahl of 60 Minutes (CBS) exposed the green-technology boondoggle before a national audience.

The Cleantech Crash focused on venture-capitalist (and rent-seeker) Vinod Khosla, “the father of the Cleantech revolution.” Khosla has invested more than one billion dollars personally in approximately 50 energy startups, along with much taxpayer commitment. Yet his projects are in the red.

Joe Romm over at Climate Progress is mad, hoping mad at 60 Minutes’ “hit job.” Sorry, Joe. Profit/loss and cash flow from operations is what matters with any new technology. It is not about growth or cost statistics—that is Enron imaging. (The extensive graphics that Enron used in its last year had everything but profits and cash flow.)

Here is the exchange between CBS’s Stahl and former DOE green-energy grant allocator Steven Koonin (subtitles added).

DOE Green Bonanza

Stahl (background): These loans and grants were administered by the Energy Department. They wouldn’t give us an interview, but Steven Koonin was actually the head scientist for the department, approving many of the stimulus projects.

Koonin: I think they saw it as a technical opportunity, thinking that the people in energy are just troglodytes and they don’t understand what they’re doing.

Stahl (background): Former Energy Department under secretary, Physicist Steven Koonin, says there was a lot of arrogance. He thought the venture capitalists and Internet geniuses were underestimating the challenges of the energy sector.

Stahl: Like what?

Koonin: Managing risks that have to do with market, with supply, with operation, with regulation. And in the end, hoping that you get returns on a 20 or 30-year time scale.

Stahl: Yeah, but they must’ve known they weren’t going to get a payoff for 20 or 30 years.

Koonin: I don’t think they understood that.  The average venture capitalist likes to get in and out in about 3 to 5 years.

$150 Billion For What?

Stahl: The government spent about $150 billion into these innovations. Taxpayer dollars. Money well spent?

Koonin: I think there are significant developments that have come out of that spending that impact our energy system now. New technologies demonstrated. I think it was good value for the money.

Stahl: Well, Solyndra went through over half a billion dollars before it failed. Then I’m gonna give you a list of other failures: Abound Energy, Beacon Power, Fisker, V.P.G., Range Fuels, Ener1, A123. ECOtality. I’m exhausted.

Koonin: As I told you in the beginning, the energy business is tough.

Stahl: What happened?

Koonin: Oh, gosh, there are so many reasons. I put some of the major blame on the government, both the executive branch and Congress, for an inability to set a thoughtful and consistent energy policy.

Personal Mistakes?

Stahl: Let me interrupt you. You were the government. How many of the loans were you involved in?

Koonin: Difficult to know the exact number. But I would say in the order of 30.

Stahl: Did you make mistakes?

Koonin: I think I didn’t do as good a job as I could’ve. In retrospect, I would’ve done things a bit differently.

Green Jobs … What Jobs?

Stahl: Part of this was supposed to be creating new jobs. Everything I’ve read there were not many jobs created.

Koonin: That’s correct.

Stahl: So what went wrong there?

Koonin: I didn’t say it would create jobs. Other people did.

Stahl: So you never thought it was gonna create-

Koonin: I didn’t think it mattered as a job creation, no.

………………………………………………….

Some time ago in a MasterResource post, Electric Car Verdict: Another Government-Subsidized Bust (September 26, 2012), I concluded:

When government tries to pick losers and winners, it typically picks losers. Why? Because in a free market, consumers pick winners to leave the losers for government.”

It is high time, and a very positive development, to now see the mainstream media exposing Cleantech (ObamaGreen?) like they are exposing the tip-to-toe failure of ObamaCare. Such is a sea change from the past, including 60 Minutes’ uncritical acceptance of the Bloom Box Energy Machine several years ago.

11 comments

1 Southwestern SongDog { 01.06.14 at 11:39 am }

The one thing we can rely upon is that cronies who receive government money for their projects is that they have excellent political connections. All else is suspect.

2 The Cleantech Crash on 60 Minutes | Electricity Blog News Aggregator { 01.06.14 at 12:08 pm }

[...] the link above, or take in Robert Bradley’s fine summary and commentary at the indispensable The Master Resource blog (which, by the way, is worth reading regularly).  My favorite comment of Rob’s is [...]

3 ptsargent { 01.06.14 at 12:33 pm }

Stshl finally redeemed herself from some of the political softball interviews in the past that were infuriating. Some long term investments largely in pure research by the government could pay off (give me an hour an nI’ll come up with one), research that the private sector may find to speculative perhaps, but, cars and energy, and other stuff where the investment is principally to create jobs cannot work. Profit and loss is the only measure of success and government has no incentive to produce profit. Please have these people read Mises, Hayek, and even Freidman asap.

4 Forbes { 01.06.14 at 1:40 pm }

>”He [Koonin] thought the venture capitalists and Internet geniuses were underestimating the challenges of the energy sector. ” Such as, “[m]anaging risks that have to do with market, with supply, with operation, with regulation. And in the end, hoping that you get returns on a 20 or 30-year time scale.”

But as a Energy Dept employee, Koonin signed off on 30 of these projects–turning the government into a venture capital investor.

Pot–meet black kettle.

5 MikeK { 01.06.14 at 3:30 pm }

The space program spun off a lot of new technology. It also pushed back the frontiers of knowledge. What did Green tech do except enrich some Obama supporters?

6 Nick Johnson { 01.06.14 at 5:42 pm }

Private investors are people who have a history of successfully picking winners, without which they don’t have money to invest. Government “investors” are usually people without any successful investment track record, playing with other people’s money, so why would anyone think they can do a better job?

7 Andrew { 01.06.14 at 6:17 pm }

“I don’t think they understood that. The average venture capitalist likes to get in and out in about 3 to 5 years.”

So basically, from his point of view, the problem is that venture capitalists, as a class, are too shortsighted to do energy investment.

Funny, it’s been a heck of a lot longer than that since Amazon started, and they still have investors, and *still* aren’t profitable. So much for venture capitalists wanting quick returns.

It seems more to me that what they eventually figured out wasn’t that they weren’t going to make money on their short sighted timescale, it’s that they weren’t going to make money *at all.*

8 rbradley { 01.06.14 at 11:10 pm }

Over at Climate Progress, Joe Romm is so mad that he had a second blog on the 60 Minutes ‘Hit Job.” http://thinkprogress.org/climate/2014/01/06/3125561/60-minutes-cleantech/

9 rbradley { 01.07.14 at 9:33 am }

HuffPost Green also has a critical look at 60 Minutes and quotes a DOE spokesman defending their current program: http://www.huffingtonpost.com/2014/01/06/60-minutes-cleantech-crash_n_4548560.html

10 greg rehmke { 01.10.14 at 8:44 am }

I think it is key to search for solutions here. Many of the millions willing and able to pay more for organic vegetables would similarly pay more for “organic” gasoline. Gas from wood chips technology is appealing to people and a higher price is okay. Higher distribution costs would add to the price of “green gasoline” but buyers in high mileage cars (or rich folks in SUVs) would pay that price.

Entrepreneurs would search for ways to provide alternative green fuels to people willing to pay. And maybe the technology could develop scale and accumulate innovations that would lower costs over time.

By getting government out of the way of green fuel production and distribution, the political momentum to continue funding these projects could be channeled and ideally constrained to green customer and green investor funding.

Nobody really complains that rich people sometimes spend far more on solar panels for their giant homes than they could ever recover in lower energy costs. It’s their money. They might similarly invest tens of thousands to prepay “green gas” supplies for their cars (enough capital to fund development).

11 rbradley { 01.10.14 at 9:38 am }

Robert Rapier, who was interviewed and quoted that Cleantech was on life support, has posted on his interview: http://www.energytrendsinsider.com/2014/01/08/60-minutes-the-rest-of-the-story/

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