President-elect Joe Biden has nominated former Michigan Gov. Jennifer Granholm to head the U.S. Department of Energy. The former Michigan governor’s strength, supporters say, is her ability to focus on electric cars and move the country off of fossil fuels.
That was a major focus of Granholm’s two terms as governor, which she pursued by selecting particular businesses and industries to back with state taxpayer support. It didn’t work, however.
Even though the state approved billions of dollars in tax credits and grants for the chosen companies, nearly every single one fell far short of the job projections hailed by the Granholm administration in press releases. And a good number of the companies went bankrupt.
Granholms’s Green Energy Boondoggles
Here’s a retrospective of the worst alternative energy company boondoggles of the Granholm era.
Renewable and Sustainable Cos. (RASCO)
The “RASCO fiasco” ultimately cost state taxpayers very little, but it proved to be perhaps the greatest embarrassment for the Granholm administration. This “cutting edge” green company was thought up by Richard Short, though it was never really clear what product he was selling. Short was purported to have invested $18.5 million in a Flint location, which was enough to land a $9.1 million refundable tax credit from the state. His downfall was accepting an invitation to share the stage at a press conference with Granholm and other public officials. Short was on parole, and his parole officer saw the news reports and alerted officials to Short’s earlier embezzlement conviction and history of scams. The state is supposed to make sure its subsidies are economically sound, but a quick Google search would have revealed that the man officials approved for millions was then living in a borrowed room of a trailer. Short went back to prison.
Granholm joined Michigan’s two U.S. Sens. Debbie Stabenow (D) and Carl Levin (D) at an event to mark the launch of this maker of electric car batteries. President Barack Obama joined through a phone call. Thousands of jobs were predicted, with both state and federal officials promising subsidies. They gave more than $141 million in state credits and subsidies and $249 million in a federal stimulus grant. This generated a short-term burst of jobs, which did not last. The company had to perform a product recall, then was restructured in federal bankruptcy court. A123 Systems has given up manufacturing in Michigan altogether.
In 2008, Granholm and Obama both mentioned this company, which set up in several states to produce cellulosic ethanol to produce biogas. It was granted up to $120 million in state and federal funds, but a proposed Upper Peninsula plant was never built and its intellectual property was sold off.
United Solar Ovonics
The solar panel maker and its affiliated company were approved for nearly $40 million worth of tax credits over the years for plants in Auburn Hills and Greenville. There were pledges of 5,700 jobs, but the companies went out of business.
In her 2010 State of the State address, Granholm said this company “literally left Silicon Valley in California to set up shop in an abandoned auto plant in Saginaw Valley.” Her administration projected 500 jobs would result. The reality was far more complicated. The company played Texas and Michigan off of each other and made misrepresentations on its application, which gained it $42 million in state and local government financing favors. It was ultimately evicted from its facilities.
The solar cell maker was approved for grants from two different state programs and the federal government. The state grant approved under the Granholm administration was never executed. The company also received local tax abatements in Saginaw Township. The company announced a $250 million investment and pledged 500 jobs, but went through bankruptcy and shuttered its Michigan plant in 2017.
The Oak Park company developed hybrid electric power for vehicles and pledged 40 new jobs. The state gave it millions, and the federal government approved $119 million. It laid off its staff and filed for bankruptcy in 2012.
Granholm said the Holland-based company would help make Michigan “the world capital for advanced batteries” and offered it $125 million on top of much more in federal funding. But the company was forced to pay money back after a federal investigation found that workers were paid to watch movies and play games while waiting for customers and during production time. Unlike the other battery plants mentioned, at least this plant is still operating. The number of jobs in the company has actually grown in recent years, though it is still well short of the lofty expectations the governor proclaimed in nine separate press releases.
The king of Sweden honored Granholm as a “Commander First Class of the Royal Order of the Polar Star” for brokering a deal under which Swedish Biogas would convert the Flint municipal sewage and waste facility into one capturing biogas. A second facility was also planned for Reed City. None of it came to pass.
Wixom Ford Plant
Taking a shuttered auto plant and turning it into a renewable energy park sounded good. But even if all of the 4,000 jobs predicted had panned out, they would be supported by a $100 million subsidy from the state, resulting in a very expensive proposition on a cost-per-job basis. Two years later, the plans were scrapped, though the state reconfigured the credits. A different commercial activity is now taking place on the property.
The governor predicted 1,000 jobs for the wind turbine maker during a State of the State address, though news reports put the number at 700 when it was set to break ground in 2010, free from state and local taxes. Two years later, the plans were scrapped, and the company does not appear to exist anymore.
The (former) Midland company pledged more than 100 jobs and, in return, received about $2 million, nearly $4 million in abatements at the local level and $84.9 million from the federal government. Two years after opening, it filed for bankruptcy.
An analysis of the main tax credit program used by Granholm — the Michigan Economic Growth Authority — found that only 2.3 percent of the projects it supported met their projections. This resulted in only 10 percent of the promised jobs coming into being.
In the 2010 State of the State address cited above, Gov. Granholm named 40 or so companies being helped by state incentive programs — mainly business tax credits, many “refundable” or payable to the firm in cash. She specifically cited job numbers for 17 companies. It appears that every single one of companies those fell short of its promises.
Before taking her new job in the Biden cabinet, Granholm must be confirmed by the U.S. Senate. Senators should pose some hard questions to her concerning her plans for future federal support for green energy projects in the light of her poor performance picking green energy winners and losers as Governor.
This article was originally published in Michigan Capitol Confidential, a news source produced by the Mackinac Center for Public Policy, and is republished with the permission of the author.