Trump budget plan would scrap energy grants, auto loan program

Source: By David Shepardson, Reuters • Posted: Friday, March 17, 2017

The Trump administration on Thursday proposed eliminating Energy Department loan programs and some research funding for energy- efficient technology and electric vehicle development at three carmakers as the industry shifts more of its focus to electric and self-driving vehicles.

The White House budget blueprint proposes ending the Advanced Research Projects Agency-Energy, or ARPA-e, program, which gives $300 million a year in grants for research in technologies aimed at reducing fossil-fuel consumption and improving energy efficiency.

The program, created in 2007 under President George W. Bush, has supported research into micro-organisms that produce replacements for petroleum, battery storage systems, improving window-pane efficiency and technology that allows vehicles to communicate to avoid crashes.

The Trump budget proposes scrapping the ARPA-e program, along with two energy loan programs because the “private sector is better positioned to finance disruptive energy research and development and to commercialize innovative technologies.”

The White House would also eliminate a U.S. Energy Department clean vehicle loan program that boosted Tesla Inc (TSLA.O), Nissan Motor Co 7201 and Ford Motor Co (F.N) during the last industry downturn, but has not funded a new project in six years.

The program was first funded in 2008 and used to help provide critical liquidity to some automakers.

The $25 billion Advanced Technology Vehicle Manufacturing loan program made low-cost loans to Ford ($5.9 billion in 2009), Nissan ($1.45 billion in 2010) and Tesla ($465 million in 2010). It last completed a loan in March 2011.

The program backed two losers. Startup automaker Fisker Automotive Inc and Michigan-based Vehicle Program Group shut down despite government support. Taxpayers lost $139 million on loans to Fisker and the Vehicle Program Group, which planned to build wheelchair-accessible vehicles.

The Obama administration in March 2015 proposed awarding Alcoa Corp (AA.N) a $259 million loan to help build high-strength aluminum at a Tennessee plant, but never paid it out. A spokeswoman for Arconic Inc (ARNC.N), which split from Alcoa, did not immediately comment on Thursday.

The Alliance of Automobile Manufacturers, a trade association, declined to comment on Thursday on the budget proposal, saying it was reviewing it.

The budget would scrap another program that has provided loans for wind farms, solar generation and the first new commercial nuclear power plant to be built in the United States in three decades.

The National Resources Defense Council said the energy loan program “plays a critical role in bringing promising technologies out of the lab and into the real world, bridging a funding gap that entrepreneurs call ‘the valley of death.'”

The Obama administration halted nearly all green-energy loans after the collapse of solar panel startup Solyndra in 2011, which became a target for Republicans.

The Energy Department declined to answer questions on the auto loan program, saying a detailed budget proposal would be released in May.

The auto loan program, which was funded with $7 billion by Congress in 2008, still has $4.2 billion remaining in subsidies that could be used to support $16.6 billion in loans, according to a 2014 Government Accountability Office report.

(Editing by Jeffrey Benkoe and Peter Cooney)