As the scandal surrounding the Obama administration's loan to now bankrupt solar manufacturer Solyndra play outs, Democrats and Republicans are engaged in a debate on who is to blame, but the long-term implications will be far broader than that. In today's GR Outlook, Garten Rothkopf examines the background of the scandal, and looks at the potential long-term implications for clean energy politics and the future of government support for renewable lending programs.

Since Solyndra, a solar energy company that received over half a billion dollars in Federal loan guarantees, declared bankruptcy, attention in Washington has focused on the political implications. But, in speaking to staff on both sides of Capitol Hill since news of the bankruptcy broke, GR has found that the long-term implications will reverberate beyond the hearings about who is to blame for the company’s demise. First, it will increase already growing skepticism in both parties about government industrial policy promoting “green jobs” and renewable energy. Second, it will almost certainly lead to the end of the Department of Energy (DOE) 1705 grant program, which has offered nearly $40 billion dollars in direct financial support to renewable energy, but now has lost backing from both Republicans and Democrats. These impacts will resonate broadly long after the debate on whether the Obama Administration did the due diligence on this particular company is over. Today’s GR Energy and Climate Brief examines the long-term implications of the Solyndra meltdown for the politics of clean energy, specifically the demise of direct cash grant renewable lending programs.

Solyndra Comes Under Political Attack: Two years ago as part of the stimulus, the DOE pinned a portion of its clean economy job creation hopes on Solyndra and awarded it a flagship $535 million loan guarantee. It was the first renewable energy company to receive a loan guarantee under the stimulus law and was frequently touted by the Obama Administration as a model for fostering green energy and job creation. After Solyndra closed one of its factories, laid off workers, cancelled its planned public offering and filed for bankruptcy protection, Republicans pounced on the DOE’s loan program and its use of stimulus funds. Last February, the House Energy and Commerce Committee launched a wide-ranging investigation. Now that Solyndra has gone completely belly-up, the DOE loan guarantee program will be in the Republicans crosshairs. A joint statement from committee chairman Fred Upton and the panel’s oversight subcommittee chairman Cliff Stearns accusing the Administration and Congressional Democrats of stonewalling shows how contentious the Solyndra controversy has become.

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