Granholm Brings Michigan’s Failed Green Energy Subsidies To Washington
Former governor, now U.S. energy secretary, visits state promoting same plan as if it worked
When U.S. Secretary of Energy Jennifer Granholm was Michigan’s governor from 2003 through 2010, she championed programs granting hundreds of millions of state taxpayer dollars to so-called green energy companies. Granholm stated then the corporate handouts would create thousands of jobs and make Michigan the green energy capital of the world.
That didn’t happen. Now, under Granholm’s direction, the U.S. Department of Energy is seeking money in the federal budget to replicate many aspects of her program for Michigan.
Granholm returned to Michigan this week and again was talking about plans to create jobs through underwriting alternative energy companies.
As governor, Granholm relied extensively on programs managed by the Michigan Economic Development Corporation, the state agency in charge of giving selective taxpayer-funded subsidies to certain developers, corporations or industry sectors. The money was delivered in various forms: exemptions from property taxes, payments to companies through the tax code (refundable tax credits) and grant programs. (One program, called Centers of Energy Excellence, passed a Democratic state House and Republican Senate with few dissenters.)
“Centers of Energy Excellence will enable innovative companies to partner with the world-class universities to help make Michigan a leader in the alternative energy industry,” said Granholm in a November 2008 press release announcing a new round of the handouts.
“This new program is part of our aggressive strategy to diversify our economy, create new jobs, and be the state that helps end our nation’s dependence on foreign oil.”
That’s not what happened, though. A 2012 state auditor general report revealed that the companies receiving grants from the program created just one-third of the jobs they promised.
In 2021 the former governor and current U.S. Department of Energy secretary appears backing a similar approach. She is asking Congress to approve $4.7 billion for the Office of Energy Efficiency and Renewable Energy, a bureau in her department. This would give it a 65% increase over last year.
Granholm’s plan includes giving $54 million in federal grants to 235 businesses for technologies aimed at making the department net-zero emissions by 2050.
“With this round of federal funding, we’re going one step further to tap this homegrown resource to help bring the next generation of clean energy innovation while creating good paying jobs across the private sector,” said Granholm, as reported by the news site executivegov.com.
What follows are examples of private companies that benefited from Granholm’s policies from 2003-2011:
A123 Systems was a Michigan lithium battery manufacturer that in 2010 received $141 million in state tax credits and discounts, and $249.1 million in federal subsidies. Sen. Carl Levin said the company would bring thousands of jobs to Michigan. It was bought out of bankruptcy by a Chinese company in 2012.
American Process Inc. owned an Alpena biorefinery plant that was given $4 million by the state, a 15-year tax-exempt status through Granholm’s Centers of Excellence designation, and $22 million from the federal energy department to create cellulosic ethanol from wood molasses. At one time, reports suggested that it had 33 employees. The company no longer produces biogas, however, and the local government is attempting to collect over $800,000 in back taxes. No information could be found on any current employees.
Mascoma Corporation produced cellulosic ethanol and was given $20 million in state funds and an additional $100 million from the federal government, even though the firm admitted it had experienced previous losses and had no experience in creating biogas, a substitute for natural gas or propane. The company never broke ground on a facility expected to create 70 jobs, and only three were ever reported. The state recovered $6 million of what it gave to the company.
Sakti3 is a lithium battery company that received $3 million from the MEDC to develop battery technology. Company owner Ann Marie Sastry was invited to meet President Barack Obama. The company was bought by Dyson for $90 million, however, and several articles questioned technological advances claimed by Sastry. Some people, though, met her claims with skepticism, as she wouldn’t divulge the technology to anyone, including her employees. Recently it was noted Dyson wrote off millions from the company after reviewing its investments. Dyson did not respond to a request for comment on the status of Sakti3.
Swedish Biogas planned to convert Flint’s sewage into biomethane. It was given $4 million by the state, and the king of Sweden even gave Granholm the title, “Commander First Class of the Royal Order of the Polar Star.” The company currently has four employees and a contract with the city of Flint, whose officials say the gas saves them $500,000 per year in fuel costs.
Working Bugs LLC was given $2 million by the state for its green energy product. It continues to exist on a small scale but no longer produces green energy products.
Energetx made windmill blades and was given 15 years in Renaissance Zone tax exemptions, valued at over $27 million. It also received $3.5 million in grants from the state and $3.5 million from the federal energy department. The company projected 700 jobs but it went bankrupt several years later, so no long-term jobs created.
Astraeus Wind manufactured wind turbine blades and received $6 million from the state and $7 million from the DOE. However, the company appears to no longer be operating in Michigan.
Rasco (Renewable and Sustainable Co.s) has a questionable history, to say the least. It was never clear what the owner, Richard Short, was selling, but the company was authorized to receive a $9.1 million refundable tax credit. He was on parole for an embezzlement conviction and had a history of other scams. He was living in a borrowed room in a trailer and went back to prison. No jobs were created and green energy was not produced.
United Solar Ovonic made solar panels and was given $17.3 million in tax credits. It promised 700 jobs, but filed for chapter 11 bankruptcy in 2012.
GlobalWatt was touted by Granholm in her State of the State address as moving from Silicon Valley to set up shop in Saginaw Valley. Another 500 jobs were promised in return for $42 million in state and local financing favors. This happened even though the company was not truthful about money supposedly offered from Texas, a promise it used as leverage to get Michigan to offer more. The firm was later evicted from its facility and never collected any state dollars.
Azure Dynamics was going to create hybrid electric power for vehicles and 40 new jobs. It was given million by the state and and $119 million from the feds. It filed for federal bankruptcy protection in 2012.
Evergreen Solar had a plant for which it was given $1.8 million in state business tax credits under the MEGA program, plus $3.9 million in local property tax abatements. It was also given $84.9 million in federal stimulus money for which 100 jobs were promised. It went bankrupt in 2011.
LG Chem was going to be the “world capital of advanced batteries,” according to Granholm. It received $151 million though a federal stimulus and $100 million in state tax credits. It promised 443 new jobs, but many workers appeared to be laid off or on extended furloughs soon after the company received taxpayer handouts. An investigation found that employees were watching movies on the job and playing video games, and the firm was forced to return the money. According to a company website, it still employs 4,674 employees in South Korea and Michigan, but there is no information on how many of them are in Michigan.
Windspire Energy (formerly Mariah Power) was going to help "end our nation's dependence on fossil fuels and foreign oil" according to Granholm in 2010. Instead, the company filed for bankruptcy in 2012.
Global Wind Systems was touted by Granholm in 2008 press releases. many news agencies such as the New York Times cited it as a job creator. But the project never happened.
Granholm did not respond to a question about her green energy legacy in Michigan.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.