60 minutes wrong questions

Lesley Stahl’s segment on 60 Minutes last Sunday entitled the “Cleantech Crash” has been the subject of much commentary.  The segment largely reiterates the popular storyline that the U.S. Department of Energy (DOE) wasted billions of dollars on worthless Cleantech investments, which the Chinese are now buying for a song.

Critics have called the segment a "hit job," a "debacle," an "about face" and even "Dumb & Dumber Part 3."  What immediately comes to my mind, however, is the old Woody Allen line about the food being bad and there not being enough of it.  The idea that the DOE invested in something worthless and that the Chinese are now stealing it from us does not stand up to logic.

But while I agree with the critics, that 60 Minutes got it wrong last Sunday, it is important to understand exactly what it got wrong.  60 Minutes did not get the facts wrong.  Nor did it unfairly cite those facts selectively.  What 60 Minutes got wrong was that it asked the wrong question.

In advanced battery technology, the bulk of the DOE’s Stimulus Package investments, about which 60 Minutes complained, came through the Electric Drive Vehicle Battery and Component Manufacturing Initiative (FOA-26). In all, more than $2 billion was invested in electric battery production and supply facilities spread among 30 corporate grantees.  Among those grantees, as noted by 60 Minutes, were companies such as A123 Systems and EnerDel, which subsequently went bankrupt.

Indeed, the whole focus of the 60 Minutes segment was on the Cleantech companies that have failed.   At one point, Lesley Stahl dramatically reads a list of failed Cleantech companies to Vinod Khosla before exclaiming “Pfff…I’m exhausted.”

The point Ms. Stahl missed is that it is irrelevant whether the companies that received DOE money succeeded or failed.  The DOE never invested in companies.  It never purchased a single share of stock.  It is true that many private investors lost money in companies that received DOE awards.  Those investors made bets on A123, EnerDel and other Cleantech companies.  Had those bets worked out, the investors would have profited handsomely.  Unfortunately they failed.  Too bad.  Tough luck.  Or, as Pin Ni of Wanxiang put it in the 60 Minutes program, “That’s capitalism.”

What the DOE invested in was technology.  The goal of the FOA-26 grants was to improve the technology and reduce the costs of advanced batteries so that they might one day reduce the use of petroleum-based fuels in transportation.  Which investors ended up owning that technology was of no concern to the DOE, and rightfully so.  All that was intended was to fund the development of a new technology that might one day reduce national reliance on petroleum-based fuels.

The question Ms. Stahl should have asked is what happened to the Cleantech technology funded by the DOE? The answer to that question would certainly reflect much better on the DOE’s investment choices.  In the advanced battery space, industry has made slow but steady progress on increasing the energy density of batteries capable of powering electric vehicles.  Since 2009, by some estimates the cost of advanced automotive batteries on a per kilowatt basis has been reduced by half.

Advanced battery technology still has a way to go in order to displace a material quantity of petroleum used by our national vehicle fleet.  The energy density of advanced batteries needs to go up and their price needs to come down.  It is possible that the technology will never get there.  And if it does not, then it would be fair to say, with respect to advanced batteries, that Cleantech has crashed.

But it is just possible that one day advanced batteries and electric motors will improve to the point where they become an economically attractive alternative to petroleum-fueled cars for many American consumers.  That day may not be far off.  When that day comes it is likely that we will look back at the early DOE investments in technology developed by long since failed Cleantech companies and understand how important those investments were.

It is worth noting that A123 Systems and EnerDel, which both went bankrupt, have since reorganized and attracted new private investment.  The advanced battery technologies owned by them in which the DOE invested continue to develop and improve.

Photo Credit: 60 Minutes and Wrong Questions/shutterstock