“Another government failure in political venture capital.”
The Wall Street Journal editorializes:
Another day, another taxpayer-funded, green-energy failure. This month’s flop is Range Fuels, that former darling of green Silicon Valley, which a few years ago was boasting it would build the nation’s first commercial cellulosic plant, near Soperton, Georgia. More than $225 million later, Range Fuel’s only factory was auctioned off in a fire sale last week, for a mere $5.1 million. It had produced not one ounce of cellulosic ethanol.
Range did help to waste taxpayer dollars. In 2007 the Bush Energy Department gave Range a $76 million grant—of which Range received $46 million. In 2009 the Obama Administration signed off on a further $80 million loan guarantee—of which $42 million was doled out. The state of Georgia kicked in a $6 million grant, and county officials coughed up tax abatements. That’s aside from the more than $160 million Range drummed up from private investors.
Range bet those dollars on technology and products that were unproven and incapable of competing in a marketplace without government mandates and support. These are the common characteristics behind all of President Obama’s green energy fiascoes—from the bankruptcies of solar company Solyndra and storage firm Beacon Power, to the growing struggles of electric battery makers A123 Systems and Ener1. The question is increasingly not which will fail next, but whether any will succeed.
When these columns published a critique of Range a year ago, we were rebuked by Range investor Vinod Khosla, who claimed that the company’s virtue was in allowing political venture capitalists like himself to “assess what was economic and what was not.” That was no doubt helpful, given Range’s factory was ultimately sold for pennies on the dollar to New Zealand-based LanzaTech, a start-up whose top backers include… Mr. Khosla. LanzaTech has also been awarded millions in federal funding.
We don’t begrudge Mr. Khosla his chance to recoup something from a failed investment. Too bad federal taxpayers don’t have a similar opportunity.