News Story

Yes, Granholm's Administration Gave Cash To Failed Electric Car Battery Company

She denied it in a U.S. Senate confirmation hearing

Former Gov. Jennifer Granholm was grilled this week by members of the U.S. Senate Energy Committee about her track record on energy issues in Michigan, and among other things claimed that a newspaper op-ed describing the failure of "green-energy" subsidies she promoted here was inaccurate.

She implied taxpayers did not lose any money in one particular corporate subsidy deal she was asked about, which is not accurate.

Granholm made the claim at a Jan. 27 hearing by the committee on whether to confirm her nomination by President Joseph Biden as the U.S. Secretary of Energy.

The op-ed cited by the former governor was written by Jarrett Skorup, director of marketing and communications for the Mackinac Center for Public Policy. It came up when Republican Sen. John Barrasso asked Granholm about her Michigan track record on energy issues.

Barrasso cited a Dec. 29, 2020 op-ed in USA Today stating that Jennifer Granholm’s record on corporate renewable energy subsidies should frighten Americans.

“It alleges that as governor you directed hundreds of millions of dollars to battery solar other green energy countries that failed to deliver on job creation promises,” Barrasso said at the hearing.

Barrasso cited A123 Systems, a company that had promised 3,000 jobs in Michigan. A123 Systems received authorization to get more than $140 million in state tax credits and subsidies, and then declared bankruptcy. A Chinese firm bought A123 Systems’ intellectual property.

“In short, American taxpayers spent close to $400 million to subsidize a technology transfer to the Chinese,” Barrasso said. “So based on this record, can you provide us something in terms of what confidence we should have if you are confirmed that you will be able to invest U.S. taxpayer dollars wisely.”

Granholm responded by attacking the credibility of the op-ed.

“First, that article is incorrect,” Granholm responded. “In Michigan, we have something called the Michigan Economic Growth Authority that offers tax credits to firms that promise to build, create a certain number of jobs. But if they don’t, they don’t get the funds. So, in Michigan, because the way that tax credit is structured, we don’t pay out if firms don’t deliver.”

Granholm’s administration offered A123 Systems $100 million in battery credits, $25.3 million in general corporate "MEGA " credits, $10 million in grants, a $4 million loan from a “21st Century Jobs Fund,” $300,000 in training grants and additional exemptions from state taxes.

It is not known how many state tax dollars were actually delivered to the company in the form of "refundable" business tax credits for battery production, due to a 2009 government secrecy law Gov. Granholm signed that hides the actual handout amounts from the public. It is known that A123 Systems received state payments in 2012, 2013, 2014 and 2015, based on some state reports.

Due to the same secrecy law taxpayers also do not know how much the company received in refundable MEGA tax credits. It appears A123 received credits for 2010, 2011 and 2012 based on some state reports. In many, if not most cases, such credits involve actual disbursements of cash to well-connected recipients.

The company is known to have received $10 million in the form of a grant from the 21st Century Jobs Fund, and there is a footnote in a required annual report indicating that the state received $2 million in loan repayments from the company as part of its bankruptcy proceedings.

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.