Federal Energy Investment Corporation Eyed

By Published On: July 18, 2008

The two leading members of the U.S. Senate Energy and Natural Resources Committee are pushing legislation to establish a federally-chartered energy financing corporation–similar to Fannie Mae and Freddie Mac. It would “securitize” debt for energy development projects. A Republican-backed measure is aimed at greasing the financing skids for only commercially proven technologies–like coal and nuclear power plants. A Democratic bill is aimed at helping finance breakthrough technologies, including renewable energy projects. “It’s going to take significant and sustained investment to bring these technologies to a point where they can be deployed on the scale necessary to meet our needs,” said Senator Jeff Bingaman (D-NM). He chairs the committee and is sponsoring S. 3233. Senator Pete Domenici (R-NM), who is sponsoring S. 2730, said a new tack is needed to stimulate construction of desperately needed energy projects that cut the nation’s dependence on imported fossil fuel. More than $42 billion of loan guarantees outlined in the 2005 Energy Policy Act are not working, explained the ranking minority member of the panel. At a July 15 committee hearing on the measures, Alexander Karsner, Department of Energy assistant secretary for energy efficiency and renewable energy, confirmed that the federal agency has not guaranteed financing for one project since the Act was passed. John Denniston, Kleiner Perkins Caufield & Byers partner, urged lawmakers to authorize the planned corporation to make loan guarantees and create a vibrant secondary market that would enable banks to make loans to business and homeowners to install solar systems and other distributed generation technologies. Loans then could be repackaged and sold as investment vehicles, similar to home loans, he said. The legislation seeks to enable loan guarantees and a secondary energy debt market. The corporation would be government chartered and backed, but become a private enterprise after getting started, with shares available to investors. Dan Reicher, Google climate and energy initiative director, said that the legislation would help bring technologies through “the valley of death,” the time between when they are first developed and successfully commercialized. Editors’ note: For a more detailed version of this story, please see our sister publication E=MC2 – Energy Meets Climate Challenge. You can find it at www.energymeetsclimate.com

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