The Department of Energy last week announced a conditional loan of $259 million to Alcoa, Inc., supporting the manufacture of lightweight-aluminum auto bodies.
The resurrection of the DOE’s controversial fuel-efficient-vehicle loan program is a bad idea in light of the agency’s awful track record on taxpayer-backed green investments. All told, the DOE’s loan programs have lost taxpayers at least $780 million.
But Americans should also question why Alcoa, which tallied $23.9 billion in revenue last year, needs a helping hand from taxpayers. Then again, this corporate giant and its leaders have deep ties to the Obama administration.
Daniel Cruise — who became Alcoa’s vice president of government and public affairs the same year Obama took office — has been a big Obama bundler, raising between $50,000 and $100,000, according to OpenSecrets.com. He has also donated thousands of dollars to Democrats, according to Federal Election Commission filings.
Then there’s Jake Siewert. A former press secretary for Bill Clinton, Siewert worked as an Alcoa executive from 2001 to 2009, when the Obama administration tapped him to serve as a special adviser to Treasury Secretary Timothy Geithner.
The Obama administration has also repeatedly partnered with Alcoa to promote its manufacturing initiatives. In 2011, the president toured Alcoa’s facilities in Davenport, Iowa, using the plant as a setting for a speech that promoted his half-trillion-dollar Advanced Manufacturing Partnership (AMP). Two years later, President Obama chose Alcoa’s chairman and chief executive officer, Klaus Kleinfeld, to serve on the partnership’s steering committee.
By 2014, Alcoa had also become the founding member of the National Lightweight and Modern Metals Innovation Institute in Detroit, an Obama-administration program that will receive $140 million in federal funding, in addition to $140 million from Michigan taxpayers.
And last year, Alcoa, along with Dow Chemical Corp. and Siemens, helped the White House develop a national guide for apprenticeship programs.
As Alcoa cozies up to the White House, it has been playing a cynical political game, pushing for more-stringent fuel-efficiency standards and decreased U.S. emissions. Keep in mind that these are the very regulations that spawned the Advanced Technologies Vehicle Manufacturing Fund, from which Alcoa will now receive taxpayer cash.
The policies for which Alcoa has lobbied “act as energy taxes — effectively taxing the weight of a car,” wrote Tim Carney in the Washington Examiner in 2010. “Absent such regulations, an aluminum car frame is much more expensive than a steel car frame,” Carney wrote. “With these regulations, aluminum, which is lighter, becomes more desirable.”
And never mind that purifying aluminum is extremely carbon-intensive, he notes; that part of the process takes place in Australia, where U.S. environmental regulations don’t apply. In the end, Carney rightly concludes, “Alcoa’s green agenda not only costs consumers more, but it also leads to more greenhouse-gas emissions and more coal being burned — and those who oppose this agenda are demonized for selling out the planet.”
To be sure, Alcoa isn’t the first politically connected company to make a buck off environmental concerns. The Hoover Institution’s Peter Schweizer claimed that as many as 80 percent of the green companies receiving DOE support were “either run by or primarily owned by Obama financial backers — individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic party.” Among these companies: Solyndra, Fisker Automotive, AboundSolar, and Tesla Motors, to name a few.
You know how that story ended. The spectacular failure of Fisker Automotive and Vehicle Production Group, LLC — which forced taxpayers to swallow more than $181 million in losses — was enough to put the Advanced Technologies Vehicle Manufacturing Fund on hold for four years.
But like so many of Washington’s monsters, this program refuses to die. The award announcement to politically connected Alcoa shows that the DOE has learned nothing. Alcoa may be unlikely to go belly-up, but who knows about the next beneficiary — especially given that Energy Secretary Ernie Moniz seems to think that broadening the eligibility criteria for loan recipients is something to advertise, not hide.
Despite the last round of scandals, the Obama administration continues to divert millions in taxpayer funds to renewable projects based more in political realities than market ones. The outcomes remain predictable.
Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.