Are physics knowledge and wide experience in innovation impediments to a national technopolitical leader’s effectiveness? Steven Mufson argues so in a 28 October front-page Washington Post political-analysis article.
The feature-length piece reports on Secretary of Energy Steven Chu and the controversy over Solyndra, the failed, federally bankrolled energy innovation company. Mufson asserts that with Solyndra now “a financial and political blowout ... it has made Chu look naive, at best, for saying in March that with Solyndra’s sales rising and its equity investors kicking in more money, he was ‘confident they can repay’ the federal loan.”
The naïveté theme shows in the headline on a prominently placed home-page blurb: “Energy Secretary Chu learns rules of politics defy laws of physics.” It shows in the headline in the paper edition: “For Chu, lessons in political science: Solyndra fallout puts energy secretary, a renowned physicist, at center of policy storm.”
From a recent New Yorker article, here’s a context-setting summary of the controversy itself:
Two years ago, the solar company Solyndra was a darling of the Obama Administration. The company had received more than five hundred million dollars in loan guarantees from the Department of Energy, and was building a factory to manufacture a revolutionary new successor to the solar panel — one that didn’t require expensive silicon and came in a convenient tube format. It seemed like an ideal show horse for the Administration’s green-jobs strategy. Vice-President Joe Biden spoke by video at the plant’s groundbreaking ceremony, saying that the company was creating “the jobs of the future.” The following May, Obama gave a speech at the factory, and declared, “The true engine of economic growth will always be companies like Solyndra.”
Not quite. In fact, Solyndra had a huge problem: the price of silicon panels was plummeting, making its products uncompetitive. The company burned through its pile of cash in a futile attempt to stay afloat; in late August, it declared bankruptcy and fired eleven hundred workers. Solyndra went from show horse to cautionary tale. Its offices were raided by the F.B.I., and congressional Republicans have held hearings, including one at which two of the company’s top executives took the Fifth Amendment. Allegations of corruption are flying; critics of the Administration are arguing that the whole idea of government support for green companies should be abandoned as a pure boondoggle.
In the Post, Mufson declares that for “Chu, a Nobel Prize-winning physicist, [the controversy] has been a demonstration that the laws of politics are more important in Washington than the laws of physics,” that “if the laws of physics and politics still resemble one another” it’s because the “Solyndra story, once in motion, has tended to stay in motion,” that “Chu was an unorthodox choice for the Energy Department from the start,” that Chu “had spent much of his life in labs,” that he “has faith in science to solve problems,” and that some “clean-technology investors said that if Chu made errors with the loan guarantee program, they might be attributed to his passion for technological solutions and his inexperience with what was essentially a venture capital program.”
At one point, Mufson offers a passage meant to characterize further Chu’s allegedly naïve approach to energy politics:
Many of his views were not in line with the entrenched energy establishment of oil, coal and nuclear, or with the priorities of past energy secretaries. Chu declined to comment for this article. In an interview with The Washington Post in 2007, he said that the U.S. cost of electricity was “anomalously low,” that a cap-and-trade approach to limiting greenhouse gases “is an absolutely nonpartisan issue” and that scientists had come to “realize that the climate is much more sensitive than we thought.”
He said then that debates over whether climate change is being caused by humans were “reminiscent of the dialogue in the 1950s and ’60s on tobacco.” (At that time, many argued that there was insufficient evidence linking smoking to cancer.) In a speech, he once said that “coal is my worst nightmare,” a comment tossed back at him during confirmation hearings.
Once in Washington, he continued his focus on alternative energy sources. In a speech soon after taking office, he talked about energy efficiency, transmission lines and renewable energy. Afterward, Peter J. Robertson, vice chairman of Chevron at the time, dryly noted that “it would be nice to hear a bit about oil and gas.” In a session with reporters, Chu said the Organization of the Petroleum Exporting Countries was “not in my domain.”
In the end, Mufson describes some initiatives that “have won Chu devoted fans,” but repeats that “others question Chu’s management of the department and his lack of political skills.” The final paragraph quotes no less an authority on the nation’s energy future than “Scott Segal, an energy lobbyist at the law firm of Bracewell & Giuliani.” Segal caps Mufson’s naïveté charge: “To be energy secretary, it is not necessary to be able to explain how a nuclear plant works. We need someone to talk about what policy should be, which may be more complicated.”
Complicated indeed. James Surowiecki’s recent New Yorker piece, quoted above, argues that the current “backlash against green subsidies” is an “overreaction every bit as hysterical as the pro-Solyndra hype was.” Yes, Solyndra was a bad bet, Surowiecki grants. But he goes on to recall that “government intervention in the market was instrumental in the postwar rise of countries like Japan, South Korea, and Taiwan,” that “Germany has built a sizable solar industry using subsidies,” and that “there are a few industries” — including renewable energy — “where it makes a lot of sense for the government to complement the market by subsidizing research and development.”
Surowiecki defends that last assertion:
That’s because the energy market is not like most other markets. Indeed, the economics of alternative energy are such that private investors, left to their own devices, are bound to underinvest in it, since the considerable social benefits — cleaner air, fewer greenhouse emissions — accrue to everyone, not just to direct customers. That means that the economic rate of return is significantly less than the social rate of return. Energy markets are also dominated by entrenched, regulated companies, and that reduces the incentive for investment; despite the immense size of the energy market, as of 2005 spending on energy R. & D. accounted for just two per cent of total spending on R. & D. in the U.S.
Surowiecki goes on to recall that government was heavily involved in establishing nuclear power, that the coal industry “was heavily subsidized during the nineteenth century,” and that the “oil-and-gas industry has received tax breaks and allowances worth billions of dollars a year for more than half a century — to say nothing of the implicit, but incredibly costly, subsidy that oil producers have received in the form of the Fifth and Sixth Fleets.” His ending merits quoting:
An economist’s ideal solution to all this might be to repeal the oil industry’s tax breaks, tax carbon to reflect its social costs, and let the market work its magic. But that seems to be, at least for now, a political impossibility. Putting money into alternative energy is as close as we can get to levelling the playing field. Solyndra was a big bet that happened to go bad. But we probably need to be making more bets like it.
Steven T. Corneliussen, a media analyst for the American Institute of Physics, monitors three national newspapers, the weeklies Nature and Science, and occasionally other publications. His reports to AIP are collected each Friday for "Science and the media." He has published op-eds in the Washington Post and other newspapers, has written for NASA's history program, and is a science writer at a particle-accelerator laboratory.
