Late yesterday while I was alone in my office, working on an analysis of Italian bond price effects on exchange rates for the Euro, Gretchen opened one of the oak doors leading to the reception area and poked her head in.
“I’ve got Vice President Joe Biden on Line Two,” she informed me. “He says he wants to talk about energy policy.”
Tom: Good afternoon, Mr. Vice President.
Biden: Hello, Tom. As usual, you can call me Joe.
Tom: Certainly, Joe. What can I do for you?
Biden: Well, as you know, those pesky House Republicans are raising a stink about Solyndra, and they’ve gone and convened a House Energy subcommittee hearing and subpoenaed Brian Harrison, the Chief Executive Officer, and the Chief Financial Officer, W. G. “Smokey” Stover – both of them are really fine guys, you know, and they definitely didn’t deserve this kind of stuff. So they both took the Fifth…
Tom: Excuse me? A couple of “really fine guys” who are top executives at a company that borrowed $535 million from the United States government and then went utterly, completely and totally Chapter Seven bankrupt – waltzed into a congressional hearing about it and invoked their Fifth Amendment rights not to incriminate themselves?
Biden: What, you missed it?
Tom: No, not only had I read, earlier this week, that’s what they would do – their announcement was all over the media, of course – but I also watched them actually do it earlier today on my office HD television. I’m just astounded, that’s all. It’s a bit much, don’t you think, Joe?
Biden: I figure it’s their constitutional right and besides, they only did it because their lawyers told them to.
Tom: Did either of them offer you the courtesy of an explanation?
Biden: Well, when we asked him about it – off the record – all we got out of Stover was “Notary Sojac.”
Tom: Harrison?
Biden: He just pointed at Stover and muttered, “What he said.”
Tom: Sounds like those two could give the Colombo Family lessons in omertà.
Biden: Yeah, I must admit, that kind of behavior is… embarrassing… for the administration, and those two taking the Fifth was like waving a red flag in front of a bull. Those Republicans tore into them like a pack of ravenous coyotes. Cliff Stearns, the committee chairman, pretty much called Harrison a crook and a liar when he complained that Harrison had looked him in eye, not two months ago, and assured him that everything at Solyndra was just hunky-dory, thank you. Then Stearns pointed out that the company went bankrupt just thirty days later and asked if all of the documents for the loan that Solyndra submitted to DOE, OMB, the White House and Congress where “accurate and complete.”
Tom: Yes, I saw that.
Biden: And they kept on complaining and asking sarcastic questions like, “can either of you tell the committee when the taxpayers can expect to get their $535 million back?” And they kept up with a bunch of other snarky stuff like that, too, until Henry Waxman jumped in and told them to knock it off.
Tom: I also saw that, and it was the right thing to do, but Representative Waxman’s choice of words was unfortunate, though.
Joe: Really? Which ones?
Tom: Likening what the Republicans were doing to “badgering a witness” and saying that it amounted to “prosecutorial misconduct.” He was speaking as if those two guys were already busted, indicted, on trial and balking during testimony right in front the jury.
Joe: Well, I’m sure Henry didn’t mean it that way. But I must say, it’s a refreshing change of pace for me to be explaining what Henry meant when he said something, since it’s usually the other way around. Tom, this whole thing is just grossly unfair – it’s nothing more than grandstanding. I mean really – look at the facts! A solar energy company went bankrupt and it happened to have a federal government loan. Big deal – it’s not very much money anyway.
Tom: Joe, you and I both know that $535 million is only thirteen one-thousandths of one percent of the federal budget, but there are three factors working against us here. First, most Americans aren’t good enough at math to realize the difference between a million, a billion and a trillion. Second, most of them couldn’t even perform the long division problem I just did in my head on a calculator, let alone on paper. And third, most of them don’t realize that a million dollars couldn’t even buy a decent house in Chevy Chase, Maryland these days, Great Recession notwithstanding. In short, even though people like us know better, to them – the teaming throngs of the Great American Public…
Biden: The salt of the earth! Bless their hearts, I love ‘em all!
Tom: Uh, yeah… to them, a million dollars is a huge amount of money. Not only is it more money than they will ever see in one place as long as they live, for many of them, it’s more money than they will ever earn, no matter how long they work. And five hundred and thirty five of those things – those millions of dollars – to them, that is an unimaginably enormous amount of money. So, the first thing I would advise, Joe, is that nobody in the Obama administration should ever try to argue that the $535 million the federal government loaned Solyndra isn’t all that much. If a member of the Obama administration ever says that, or, God forbid, if President Obama himself ever says that, every Republican running for office in 2012, no matter what office they’re running for, will have at least one campaign commercial with that video clip in it.
Biden: Okay, I’ll pass your observations along to Barack. But I can’t guarantee anything. Turns out he doesn’t listen to me nearly as much as I thought he would.
Tom: I can’t imagine why.
Biden: Me neither. And it’s only going to get worse now, I suppose.
Tom: You mean, you recommended the Solyndra loan?
Biden: Well, ah, I… that is… it… gee whiz, Tom, copper-indium-gallium-selenide thin-film photovoltaics are an extremely innovative technology with a projected total cost of ownership that’s very dramatically less than many others, on a installed basis.
Tom: Yes, but in comparison to those other thin-film photovoltaic technologies, it presents an entirely different set of challenges with respect to material properties and processing techniques, particularly in deposition of the precursor and formation of the active layer.
Biden: Admittedly, there’s the need for high-vacuum deposition in a rarified vapor atmosphere, but Siemens demonstrated it successfully in a pilot plant.
Tom: Oh, come on, Joe, maintenance of product quality during scale-up of high vacuum vapor techniques is notoriously problematic. Not to mention scale-up process integration. Even the Siemens pilot plant had only a seventy percent yield.
Biden: But look at the project payback times – 1.3 years! And the efficiency – over twelve percent!
Tom: But Joe, that’s only seventy five percent of the efficiency obtainable from microcrystalline thin-film photovoltaic technology, and at a twenty-eight percent higher cost.
Biden: CIGS has a forty percent cost advantage over microcrystalline silicon in design and deployment, and a twenty three percent greater product diversity factor.
Tom: But what about the environmental impacts of production? CIGS has a production environmental toxicity factor five and one half times that of microcrystalline silicon. And how can we expect long-term viability for a technology that depends on a raw material as rare as indium? Why, the availability constraints are so high that in the long run, CIGS thin film photovoltaics could supply only seven tenths of one percent of the electricity which could be provided by microcrystalline silicon.
Biden: Okay, okay, I’ll grant you there’s a toxicity problem with CIGS, but you must concede, there’s no way this administration’s EPA would let that get out of hand.
Tom: True.
Biden: And that last statistic, the one on raw materials availability, that worried me a bit too, until I realized it was comparing the abundance of indium-bearing ores with the abundance of sand. Sometimes, you have to disregard the outliers; you know that.
Tom: Agreed. But as this affair unfolds in front of the media, you need to know the Republicans will be going after the administration’s technical decisions, so my second piece of advice on this would be for you to play dumb.
Biden: Play dumb? But that’s totally out of character for me! Who could possibly believe it?
Tom: Nevertheless, I strongly suggest you do. If the Republicans find out the depth of your understanding about this, if they get wind of how carefully you studied the technical issues, then they will try to lay the fact that the whole enterprise went to hell in a hand basket at your door.
Biden: Oh… okay, I see your point. As of today, the DOE did all the thinking about Solyndra and I didn’t do squat.
Tom: Yes, that will be much better, I think. After all, the people at DOE are career bureaucrats, and as such are never, ever held accountable for anything they do.
Biden: Good point.
Tom: Remind the administration’s detractors that Solyndra submitted its initial application in 2006 – during the George W. Bush administration, and that most of the due diligence on the transaction was conducted between 2006 and the end of 2008, all before Obama took office. Tell them that the DOE itself has confirmed that by late 2008, Solyndra was considered by those involved in the DOE loan programs to be the most advanced in due diligence review, and therefore a prime candidate for one of the first, if not, as it happened, the very first federal loan. As a matter of fact, the conditional loan agreement was put in place by DOE in March, 2009, barely nine weeks after Obama took his oath of office. See what I’m getting at here?
Biden: Oh… oh… yeah… five by five, loud and clear! Sell the whole thing as a legacy boondoggle from the previous administration!
Tom: Which, basically, it was, right?
Biden: Of course!
Tom: I mean, here was this company that was commercially viable – on paper, at least – almost entirely because the price of the silicon used to make traditional photovoltaic cells was through the roof. And Solyndra’s CIGS proposal certainly wasn’t the only alternative that looked good under those circumstances, either. All of the thin film photovoltaic technologies – even cadmium-telluride, for Christ’s sake – looked viable. And if the bureaucrats at DOE, whose job it is to know about such things, failed to foresee that China Great Land Holdings was going to expand traditional silicon wafer production so rapidly that by September 2011, every thin-film PV fab in the world would be on the verge of a shut down, then how could anyone fault the Obama administration for not seeing it coming, either?
Biden: Oh… I like that. Very nice. Blame it on the Chinese – in a good way, of course. They got busy and started producing what the global marketplace needed. The supply of photovoltaic silicon wafers went up, the price went down, and there you have it, the Invisible Hand that Adam Smith was always going on about.
Tom: Exactly; the mythic Invisible Hand in which the Republicans have as much, if not more faith, than in the Good Lord Himself.
Biden: Consequently, Solyndra went out of business, and so will a lot of other companies that can’t compete with the new Chinese capacity in the photovoltaic products market. Hey – I just thought of something! Maybe some of those companies will have great big, juicy DOE loans made by the Bush administration!
Tom: As the photovoltaic market shakeout continues, Joe, we can only hope so, I suppose.
Biden: And bottom line, the global marketplace has a whole boatload more photovoltaic capacity than it did back before all this started, right?
Tom: Considerably more. Of course, due to the ah… inimitable Chinese industrial development style, those new, high-capacity photovoltaic wafer plants are spewing record amounts of toxic pollution into the air and water over there. Not that such issues would interest the House Republicans, I don’t suspect.
Biden: I think not. Poor Henry Waxman can’t even get them interested in toxic pollution spewing into the air and water here in America. Oops… I’ve got a call from Barack coming in; gotta go.
Tom: Understood. Thanks for calling. Say hello to President Obama for me.
Biden: Will do. ‘Bye!