One of Steven Chu's first acts after becoming Energy Secretary in January 2009 was to tell the department's staff to "accelerate the pace of review and issuance of loan guarantees," according to a policy memo released Tuesday by Republicans on the House Energy and Commerce Committee.
Nine months later, the Energy Department approved a $535 million loan guarantee for Solyndra, the now-bankrupt solar panel maker based in Fremont.
Chu is set to speak before the House Energy and Commerce oversight subcommittee on Thursday, the highest-ranking member of the Obama administration to testify about the loan guarantee.
Chu's critics say his enthusiasm for Solyndra demonstrates his willingness to overlook unfavorable facts and steamroll opposition in order to make deals.
But many of Chu's longtime colleagues say his approval of the loan guarantee reflects his scientific interest in innovation. They say Chu, who won the Nobel Prize for physics in 1997 and was the director of Lawrence Berkeley National Laboratory before President Barack Obama appointed him to a cabinet post, is first and foremost a scientist — one willing to take a chance on failure for the possibility of an innovative breakthrough. While directing the lab, Chu was also a professor at the University of California, Berkeley, where was appointed Philomathia Chair in Alternative Energy.
“He has a rare combination of being a brilliant Nobel Prize-caliber physicist and also being interested in the real-world applications of physics with these energy programs,” said Art Rosenfeld, a physicist and former member of the California Energy Commission who first met Chu at a lecture in 1974.
Rosenfeld said Chu was likely to be less concerned about the particular economic fortunes of Solyndra and more interested in supporting new, more innovative types of solar panels than were currently available on the market.
"This is the government making the decision that it's in the national interest to get more solar power than banks are willing to fund," said William Perry, a former secretary of defense under President Bill Clinton whom Chu appointed to chair the Secretary of Energy Advisory Board.
Perry said he didn't believe the failure of one loan-guarantee recipient would surprise or disturb Chu. "The whole reason the government considers making a loan for a company is because the company is proposing to do something which has enough risks with it that it can’t do it through normal sources," he said.
Internal Obama administration emails released released last month by Democratic members of the House Energy and Commerce Committee paint the debate over Solyndra’s half-billion-dollar loan guarantee as a struggle between staffers at the Energy Department, who supported the company’s innovative technology, and analysts at the Office of Management and Budget, who correctly predicted Solyndra would fold.
In April 2010, after the accounting firm PricewaterhouseCoopers warned that Solyndra had financial troubles deep enough “to raise substantial doubt about its ability to continue,” an OMB staffer wrote that Energy Department officials “seem completely oblivious” to the company’s precarious position.
Tad Patzek, a professor at the University of Texas who left the Berkeley Lab after clashing with Chu, said Solyndra's failure shows the limitations of turning the Energy Department over to someone with an extensive academic pedigree but limited business experience.
“When you’re in the research mode, your only goal is to innovate,” Patzek said, “but when it comes to commercialization one also needs to listen to market analysts and other people who know more about what might succeed or fail in the real world.”
Republicans have speculated that the Energy Department ultimately approved the loan guarantee under direction from the White House, because one of Solyndra’s largest investors, George Kaiser, was also a major fundraiser for Obama’s presidential campaign.
Emails to and from Kaiser indicate Chu has remained personally involved in the Solyndra case.
In one email, dated March 5, 2010, Steve Mitchell, the manager of Kaiser’s investment firm, Argonaut Private Equity, wrote to his boss saying, “[I]t appears things are headed in the right direction and Chu is apparently staying involved in Solyndra’s application and continues to talk up the company as a success story.”
Seven months later, while Solyndra was seeking a second DOE loan guarantee, Kaiser wrote to Mitchell warning him not to go over Chu’s head to talk to White House energy czar Carol Browner or White House Chief of Staff Peter Rouse.
“I am concerned that DOE/Chu would resent the intervention and your problem could get more difficult,” Kaiser wrote.
Chu’s critics at Cal said the energy secretary has a history of close relationships with particular businesspeople that can blur his academic objectivity. As head of Lawrence Berkeley National Laboratory, Chu secured a controversial $500 million biofuels research grant from BP. After Chu was confirmed as energy secretary in 2009, he appointed BP's cheif scientist, Steven Koonin, as the Department of Energy's undersecretary for science.
Ignacio Chapela, a UC Berkeley ecology professor, unsuccessfully fought Chu’s attempt to secure the BP grant, arguing that taking so much money from an oil company could bias research. In an interview, Chapela said that “shutting out criticism or critique or discussion is very characteristic of Chu.”
Chapela said questions about whether the faculty could continue to study biofuels in an unbiased fashion were dismissed in the same way that the Obama administration dismissed critics of Solyndra’s loan guarantee.
But Chris Somerville, director of the Energy Bioscience Institute at UC Berkeley, which was founded with BP’s donation, counters that deals Chu brokered with BP and Solyndra show Chu’s “visionary approach to investment.”
Somerville said that Chu, who began his career at Bell Labs, “had a formative period in his life where a lot of game-changing discoveries were made, and so he believes strongly that innovation can improve our lives.”