A good friend and loyal reader sent me a link over the holiday weekend regarding President Obama's announcement of nearly $1.5 billion in loan guarantees to a Spanish company, Abengoa Solar, which will be used to build a solar plant in Arizona. Also included in the statement was the announcement that Abound Solar, a closely held company based in Loveland, Colorado, 'will receive a $400 million loan guarantee to expand a solar-panel manufacturing plant in Longmont, Colorado, and to open a new plant in Tipton, Indiana.' According to White House documents, the loans are anticipated to create about 3,000 short-term jobs, as well as approximately 1,600 long-term jobs.
Different people on various points of the political spectrum could of course find a number of distasteful facts hidden in the above paragraph. Some would gripe about spending federal funds on solar development at all. Others might protest giving guaranteed loans to a foreign company. Still others might point out that pledging nearly $2 billion in guaranteed loans for what amounts to be 1,600 jobs in an economy beholden to foreign investors and with record trade and current account deficits is not necessarily the most efficient use of funds. Since Blawgconomics happens to be (in some mind's paradoxically) firmly in both the green development and globalization camps, the first two points are non-starters. However, considering previous research and postings, the third point provides fertile ground for discussion.
Whether you are more Al Gore or Glenn Beck on the global warming debate is inconsequential when it comes to green development. It is an area that will provide jobs, has potential to reduce reliance upon continuously declining and foreign-held resources, and nearly no one could honestly argue that turning sunlight into electricity is worse for the world than burning compressed dinosaur and plant matter. Additionally, some of our presumed competitors for the crown of the world's great economic superpower are already far ahead of America in this growth area. However, there are better ways to promote the growth of the green development sector than throwing money at it. In cases like this and in a Tea Party era of politics, it may even be worse for the green development movement when the government provides statistics revealing that it is financing jobs at a cost of about $1.2 million a pop.
If it were true that solar development was an important leg of the future energy platform and this were the only way to finance its development, that would be one thing. However, there are other potential solutions which take advantage of existing structures and which would incent developers to build large-scale arrays without costing the government anything but tax revenue. No small consideration to be sure. However, when the current solution is to print money financed by oil powers and China, foregone tax revenue for job creation and reduced reliance upon those same foreign powers doesn't seem so bad. One such solution would be the aforementioned Solar, or S-REIT, developed by yours truly and recommended to the Government by the GW Solar Institute. Without rehashing the whole S-REIT model here, it is enough to say that by giving solar developers certain tax benefits to develop solar arrays, the same benefits currently given to more common real estate investments like malls, office buildings and apartment complexes, development would be stimulated even at today's costs and prices.
America is running out of resources and money. It is time to innovate and advance creative solutions. Throwing money at the economy, and specifically at green development, is not the best way out of economic malaise or energy problems. The Solar-REIT is a solution to green development problems that would cost the government nothing but marginal tax revenues. It would promote growth, jobs and the entrepreneurial spirit that seems to be so lacking these days. And the potential of it becoming a viable solution is reduced every time another loan guarantee is made.