Vermont Clean Energy Summit Report Part III

“Lighting Candles With the Wind”

By Kevin Joseph Ryan

In Parts I and II of this TN Report, we took you to the Vermont Clean Energy Summit, held at Miller’s Landing on April the 9th. There, Senator Bernie Sanders (I- VT) and Governor Peter Shumlin laid out their case for financing additional renewable energy investment here in the state. Even before the afternoon’s panels featured such Vermont luminaries as Sanders’ Policy Advisor Darren Springer and State Treasurer Elizabeth Pearce, the Sanders/Shumlin team drove the point home with their next two featured guests, National Guard General Michael Dubie and Richard L. Kauffman, Senior Advisor to the U.S. Department of Energy.

First up, Adjutant General of the Vermont National Guard Michael Dubie addressed the assembled group, and told the business community of Vermont that his support for clean energy did not come easily. “I’m not a visionary, I’m a convert.”, spoke the General. He told his story that he was contacted by Senator Bernie Sanders first three years ago, when the Senator suggested that the Vermont Air Guard could lead the way to a clean energy future for the State by constructing a “nine or ten million dollar project” at Camp Johnson, consisting of a 1.4 megawatt solar project.

General Dubie then elaborated on his reasons for climbing aboard the “Green“ bandwagon. “I’m not a energy zealot, I’ll never be a sustainable energy zealot.” Dubie explained. “I’m a practical person, and I’m a pragmatist…the famed bank robber Willie Sutton allegedly was asked why he robbed banks…I think everyone remembers what he said. Cause that’s where the money is.”

He went on to note that his conversion continued after reading the author Thomas Friedman, who’s books include “Hot, Flat and Crowded”. Friedman is an outspoken proponent of Climate Change, the need for Green Energy and has spoken of the inevitability of governments to surrender sovereignty to international institutions. Friedman has also written about the United States’ future, saying we must become more like China, a nation he described as being “led by a reasonably enlightened group of people”. A difficult proposition to swallow, but Dubie seems to believe Friedman has a prescription worth following.

Dubie has also asked Governor Shumlin to help with the permits to install a wind farm at the Underhill firing range. The Governor had agreed to help with the project, Dubie said.

Finally, as the keynote speakers for the Summit came to a close, Governor Shumlin and Senator Sanders brought out their biggest guest of the day. Richard L. Kauffman, Senior Advisor for the U.S. Department of Energy. As the initial three speakers had made their case for green energy investment in Vermont, Kauffman’s job was to explain how to pay for it.

Certainly, Kauffman has an extensive resume in finance. By his own admission, Kauffman is new to his government role. “I’m a private sector guy, I’ve only been with the Government for six months.” This much is true, as he was the former Global Head of Capital Markets at Morgan Stanley, a Managing Director at Credit Suisse and a Senior Executive of Equity Capital Markets at Goldman Sachs. The past five years, Kauffman has taken a different role as the Chief Operating Officer of Cofra Holding AG, once known as clothiers but more recently known for investing in renewable energy operations. Cofra is owned , by the German Brenninkmeijer Family, listed by some as the 15th wealthiest family in the world, with a net worth of $26 billion dollars. Kauffman left in September, 2011, to join the Obama Administration.

Kauffman began by noting, “Thanks to a number of programs, The U.S. has led the total global clean energy investment in 2011, these have been through a bunch of programs…one of the biggest programs was the 1705 loan program, which made Solyndra a household name.” Kauffman refers, of course, to the solar company which went bankrupt in September of 2011, taking with it a $535 million dollar government backed loan.

Kauffmann, however noted that such programs are coming to an end soon. 1705 loans in particular, have the Federal Government on the hook for $16.8 billion dollars worth of guaranteed loans, producing 2,934 jobs, or 1 job for every five million dollars in loans proffered. So, clearly a new financing mechanism is needed, said Kauffman.

Offered as solutions, Kauffman listed three main financing tools for renewable projects. Tax partnerships with financiers was one such option, but the three main companies involved, AIG, Wachovia and Lehman Brothers have all declared bankruptcy or are defunct. European banks might have been another option, but they too, are in deep financial straits and risk-adverse at this time and lastly, capital equity firms, which typically look for a 15% rate of return, whereas green energy projects mainly offer rates more in the range of 5% to 7%, Kauffman pointed out. Kauffman, recommended, as should come as no surprise, partnerships with military contracts as the next natural phase in financing green projects.

The strangest thing regarding the Vermont Clean Energy Summit, was not the proscribed inevitability of renewable energy as Vermont’s economic future. Rather, it was that Senator Bernie Sanders and Governor Peter Shumlin, both of which have been critical of large, multinational corporations and the military in the past, seem to have partnered up with them as Vermont’s future. They presented representatives of both as being the next best phase of Vermont. Perhaps, on the heels of their last partnership, with Lockheed Martin’s Sandia Corporation to monitor smart meter technology at UVM, this represents a new and different Sanders and Shumlin. Or, perhaps, they have both admitted that Republicans were right all along.