Energy Department OKs loan of $259M to Alcoa to promote clean energy
A $25 billion Energy Department loan program that funded flops like Fisker Automotive Inc. and successes such as Tesla Motors Inc. resumed lending after a four-year hiatus to retool the lending project's focus.
Alcoa Inc. has been tentatively approved for a $259 million loan from the Advanced Technology Vehicles Manufacturing program to upgrade a factory making high-strength aluminum that can improve automobile gas mileage.
“The ATVM program is back in business,” said Peter Davidson, executive director of the Energy Department's various lending projects.
The Alcoa loan was announced Thursday.
The vehicle program and two related energy financing initiatives started as part of a 2008 economic stimulus law had become lightning rods for criticism with the 2011 bankruptcy of solar panel maker Solyndra LLC and the 2013 failures of Fisker and wheelchair van maker Vehicle Production Group LLC.
Despite the failed loans, the Energy Department's portfolio has performed well, with losses totaling less than 3 percent, Davidson said.
“If you compare that to banks, it's a very good number,” he said.
The Alcoa loan, which will become final when the company meets conditions set by the government, will help the company upgrade a plant in Tennessee that supplied the metal for the new all-aluminum body Ford Motor Co. F-150 pickup introduced last year. Carmakers have begun experimenting with swapping out steel for high-strength aluminum to reduce the weight of their vehicles, which improves gas mileage.
When the loan closes, Alcoa will use the money to expand production, adding 200 permanent jobs and 400 jobs at the peak of construction.
“Alcoa is pleased to be part of the government's program to encourage a greater shift to aluminum-intensive vehicles that are safer, lighter and more fuel-efficient,” Chairman and CEO Klaus Kleinfeld said in a statement.
Originally conceived as a $25 billion program to promote clean energy, ATVM still has more than $16 billion to lend. The program's authority does not expire, though Republicans in Congress continue to criticize the risk to taxpayers from such loans.
The Government Accountability Office has said the program has underestimated the costs of providing credit subsidies and needed more technical oversight to monitor the loans it has made.
Since the last ATVM loan, two of the five recipients have gone out of business: Fisker, a builder of high-end battery-powered cars, and Vehicle Production Group, which had sought to make wheelchair-accessible minivans for local transit agencies that would be powered by natural gas.
Private investors squandered more than $1 billion on Fisker after it got the Energy Department's backing, said Nicolas Loris, an energy economist at the Heritage Foundation, a Washington-based policy group that advocates limited government.
“The focus shouldn't be on creating these niche programs that protect specific industries,” Loris said. “We shouldn't distort capital markets by having the government play investment banker.”
