A Department of Energy program designed to promote the development of a new generation of battery cars could have its funding cut as part of the effort to rein in the federal budget deficit.
Republican leaders are proposing to shift money away from the federally-guaranteed loan program to help cover the cost of repairing recent storm damage in states such as Virginia – though proponents of the loan program contend the GOP is sacrificing the nation’s need to increase its energy independence. Critics worry that the proposal by House Republicans to slice $1.5 billion in Section 136 loans will hurt efforts to create auto manufacturing jobs.
The Section 136 Loans were created in 2007 with bipartisan support to promote innovation and research in new automotive technologies before the auto bailout in 2009. But energy independence could now fall victim to budget austerity.
The entire goal of the DoE loan program, initially approved with broad bi-partisan support, was to push improvement in fuel economy and lessen the U.S. dependence on imported oil. A wide range of manufacturers, such as Indiana-based EnerDel, have received loans aimed at improving battery technology – and developing a manufacturing base in the U.S.
Until recently, there was only a single, relatively low-volume lithium-ion production facility in the country. Most of those advanced batteries were being produced in Asia or Europe.
Democrast also charge Republicans would sacrifice manufacturing jobs if the Section 136 program is cut.
“By introducing a plan to gut Section 136 loans, House Republicans have shown that they don’t care about manufacturing jobs in places like the Greater Detroit Area,” said U.S. Rep Gary Peters, D-Mich. “We should fund recovery efforts in Eric Cantor’s district, but not at the expense of programs designed to address the economic disaster that manufacturing states,” Peters added, making reference to Congressman Eric Cantor.
Not so coincidentally, the Republican lawmaker’s home state of Virginia has suffered severe storm damage in recent months but House GOP budget cutting efforts have impacted the availability of emergency funds.
The Department of Energy Section 136 loans have protected and created 41,000 manufacturing jobs across the U.S. and could cost thousands of manufacturing jobs if reduced, Peters said.
The loans have not only helped domestic automakers such as General Motors and Ford, but also Japanese manufacturers such as Nissan, which is using a DoE loan to expand its plants in Smyrna, Tennessee to produce the Leaf battery-electric vehicle. Currently, the Leaf is imported from Japan.
The Section 136 loans have been particularly critical to automotive start-upts such as Tesla Motors, which is expanding production in the San Francisco Bay area in advance of the launch of its new Model S battery car.
Cantor, the Republican majority leader in the House, has said repeatedly that any extra spending on disaster relief for Virginia and other states will have to be paid for with cuts in other parts of the budget.
In addition, the GOP’s hand has been strengthened by the collapse of a California-based maker of solar panels that had previously received more than $536 million in DOE loans.
The elimination of $1.5 billion in Section 136 loans is part of the Republicans Continuing Resolution to fund the Government through Nov. 18, 2011. Republicans argue that the U.S. can better secure energy independence by more oil drilling.
However, drilling activity has steadily increased over the past year and the U.S. Department of Defense has quietly joined in the lobbying for the development of alternative vehicle technology that can reduce dependence on petroleum products.
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