File under Another One Bites the Dust: the innovative lithium-ion battery maker A123 Systems has just declared bankruptcy. Since the company received a hefty loan from the Department of Energy under the Obama Administration, that makes it a legit political football, especially on the eve of the second presidential debates. Indeed, the predictable kick was swift in coming, but as the ball goes flying down the field, the important thing to watch for is where it lands, and who makes the catch.
Romney and Obama Trade Barbs over A123 Bankruptcy
As always, our friends over at The Hill have done a great job of keeping up with the political action. Under the header “Romney pounces,” The Hill’s Ben Gemen quotes presidential Mitt Romney claiming that the A123 Systems bankruptcy represents a “disastrous strategy of gambling away billions of taxpayer dollars.” Gemen is careful to note, though, that the 2009 loan was supported by Republicans in Congress as well as Democrats.
Gemen followed up a few hours later with another piece under “Obama parries,” in which an Obama campaign spokesperson points out that all together, the President’s support for federally funded clean energy initiatives including the wind energy tax credit, solar power, and advanced manufacturing has added up to thousands of new jobs while leading to savings for consumers.
That’s backed up by the Department of Energy, which asserts that fueling costs for electric vehicles are currently the equivalent of $1.00 per gallon. That marker is expected to drop even farther as new technologies come on line.
So Long A123 Systems, Hello New Batteries
From its inception under the Bush Administration, the DOE loan program was structured to absorb a reasonable element of risk, and as it turns out, U.S. taxpayers might not be so much on the hook for the A123 bankruptcy. The four-star global technology company Johnson Controls has already agreed to keep A123′s automotive battery operations humming along, and A123 is optimistic that its other assets will be picked up, too.
Returning to that football metaphor, what the A123 bankruptcy demonstrates is that the U.S. clean tech sector is growing and maturing to the point where some companies have the resources to catch others when they stumble. In other words, a small measure of failure is proving the success of a much broader policy, part of which involves building up the U.S. battery manufacturing sector.
As to where that ball is going to fall, keep an eye on the price of lithium, which is a key factor in the overall price of electric vehicles. Currently, the domestic battery industry relies heavily on imported lithium, but new lithium extraction technologies and new lithium plants in the U.S. could turn that situation around and bring prices down.
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Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. You can also follow her on Twitter @TinaMCasey and Google+.