Yes, More Solyndras for Clean Energy

The solar company failed, but the decision to invest in it was the right one

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Illustration by James Yang for TIME

The Solyndra “scandal” is trotted out every few months as part of the big-vs.-small-government debate in this country, but it is not and never was a scandal. The federal clean-energy loan program that the infamous solar-panel maker was a part of was designed to finance risky ventures, and Solyndra was a reasonable risk: an innovative manufacturer with huge private backing and an opportunity to transform the industry. But the industry transformed itself first. Silicon prices plunged, Solyndra’s advantages vanished, and the firm went bust. It happens. The Bush and Obama Administrations both selected Solyndra from 143 applicants for the program’s first loan, and investigators found no evidence that political interference made that happen. Yes, a White House official wrote “Ugh” in an e-mail when she heard about the $535 million default. What was she supposed to write?

But no matter how often independent fact checkers debunk charges of crony capitalism, Washington Republicans won’t be deterred from pushing a No More Solyndras Act, vowing to kill the loan program. Mitt Romney is basically running a No More Solyndras campaign, attacking Obama’s entire green push as a payoff to donors. Government aid isn’t supposed to guarantee success; subsidized farms and entrepreneurs with Small Business Administration loans fail all the time. According to one White House official, some students who receive Pell Grants end up drunks on the street. Still, Solyndra has become shorthand for Big Government sleaze.

There’s a legitimate debate to have about Solyndra and green industrial policy, but it’s not the debate over imaginary corruption we’ve been having. For example, economists know public investments can crowd out private investment. Romney once tried to make this case, claiming handouts in Obama’s stimulus to firms like Solyndra were “killing” solar energy. But he was wrong. Solar power has increased over 600% since 2009, partly because of the low prices that doomed Solyndra. The installer Solar City is now preparing to go public. As I explain in my new book, The New New Deal: The Hidden Story of Change in the Obama Era, the $90 billion for clean energy in the stimulus actually crowded in private investment, luring an additional $100 billion in matching funds from the sidelines.

Much stronger arguments can be made against government support for manufacturing. Even Obama’s economists warned it would be wasteful to finance inefficient factories in the U.S. And it’s tough to compete with countries like China, which pumped $30 billion into its solar manufacturers in 2010. In fact, the U.S. loan program mostly supported relatively safe projects generating renewable power, which is why independent reviewers have concluded that its reserves will easily cover Solyndra-style losses. The stimulus created a brand-new battery industry for electric vehicles and scores of factories making green stuff.

And yet Republicans haven’t argued against subsidies for manufacturing. In fact, they’ve argued that the stimulus shipped manufacturing jobs overseas, which is ludicrous. It has increased the domestic content of U.S. wind turbines from 20% to 60%. Politics aside, that’s a good thing. It would be a shame to trade our dependence on foreign oil for dependence on foreign turbines, solar panels and lithium-ion batteries, all products that were invented in the U.S. Many scientists and engineers believe that as high-tech manufacturing drifts overseas, our culture of innovation will follow it. And it’s expensive to ship a wind turbine overseas. If we want clean energy, we’ll need a domestic supply chain.

This is the real debate: Do we really want clean energy? Government subsidizes lots of things, from agriculture to postal delivery, and it has jump-started many industries, from aerospace to info tech. Republicans accuse Obama of “picking winners and losers,” but what he has picked is the game itself, reducing fossil fuels, which will reduce our emissions and our vulnerability to price shocks. The stimulus poured unprecedented cash into wind, solar and geothermal power, electric vehicles, biofuels and other clean-transportation plays. It subsidized hundreds of technological and entrepreneurial strategies so the market could pick the winners and losers.

Solyndra was one of the losers, but the winners might change the world. No More Solyndras is just another way of defending the fossil-fuel status quo. Ugh.