The Atlanta Journal-Constitution reported Sunday that documents obtained under a Freedom of Information Act request show the doubts that surrounded the Range Fuels plant at Soperton, Ga., before it obtained government backing.
Located about 80 miles west of Savannah, the Range Fuels operation was proposed to transform wood chips into ethanol fuel, but it closed last year without producing any usable ethanol. Taxpayers lost at least $75 million in loan guarantees and grants.
The newspaper reported that Hosein Shapouri, a senior economist with the U.S. Department of Agriculture in Washington, in late 2008 issued a critique that called the proposed Range Fuels plant “a high risk venture” that should raise “a red flag.” Three weeks later, top USDA officials approved the guarantee anyway; in all, it received access to some $162 million in government money, including $6.2 million from the state of Georgia.
The documents show that three USDA officials who vetted the project approved it, and three opposed it. Three others who made critical comments about the proposal had their opinions redacted.
Shapouri, now retired, said decision-makers dismissed Range’s many, easily detectable faults.
“Nobody ever expected them to produce anything,” he said. “I told them not to finance it. They didn’t listen to me. They decided to rush, rush, rush and give them the money.”
Federal officials say they learned from the Range Fuels collapse and have established safeguards to prevent recurrences.
“While the Agency is disappointed that this one company did not succeed, it is important to remember that USDA has a long history of successful lending that supports rural homeowners, business owners, utilities and cooperatives,” the agency said in a statement to the newspaper.
The agency said the delinquency rate on more than 1 million loans is 2.16 percent, although relatively few involve alternative energy.
Government support for alternative energy has become a hot-button political issue, pitting the promise of energy independence against the prudent use of tax dollars.
Both the Bush and Obama administrations strongly supported Range Fuels, which was expected to showcase the feasibility of cellulosic ethanol, as did politicians of both parties keen to bring jobs to Georgia.
The breakdown of taxpayer losses includes $43.6 million from DOE and $32 million from USDA. Georgia’s loss is $6.2 million – unless the factory’s new owners succeed
USDA now requires more technical and financial information before, and after, approval of a loan guarantee.
“Obviously, hindsight is perfect,” said Brian Williamson, the deputy commissioner of the Georgia Department of Community Affairs. “If we got the same deal tomorrow, we would use what we experienced from Range and learn from it.”