By
the time we spoke a month later, Chu seemed to have survived the
experience, though not without some bitterness; the hearing, he told
me, “was not the high point of what I wanted to do with my time.”
Still, the whole affair had cast a harsh light on a scientist turned
policymaker for whom things had not gone as planned, even before the
Solyndra bankruptcy. The president who brought him to Washington three
years ago had promised nothing less than an environmental revolution,
and Chu was supposed to be at its center, presiding over the most
dramatic expansion of the clean energy industry the federal government
had ever attempted. Now Chu may have no choice but to preside over its
similarly dramatic retreat.
“OK,
SO!” CHU SAID, taking a deep breath before plunging back in. We were
sitting in his office, in front of a bank of windows opening out
across the National Mall, and Chu was halfway through an impromptu
lecture on the economics of converting the long-haul trucking industry
to liquefied natural gas. I couldn’t remember how we had arrived
here—I had asked a fairly narrow question about his department’s
funding—but we were where we were. “You can go six hundred and fifty
miles without refueling,” Chu was saying, “so you might want a station
every three hundred miles.” He rattled off the cost of liquefied
natural gas ($2 per gallon equivalent, give or take), the cost of the
machine you use to liquefy the gas ($1 million to $3 million), the
typical annual mileage of a long-haul truck (80,000 miles), and,
running all these numbers in his head, how many years it would take
for a company to recoup its investment on a truck (two).
Several
minutes later, Chu’s press secretary reminded us of the time. “I’ll be
shorter,” Chu said, a bit apologetically. But he wasn’t—and, honestly,
I wasn’t sure that he could be. I had met Chu briefly before, at a
reception hosted by a magazine that I worked for at the time. I had
asked him then about a trip he’d made to China and ended up listening
for several minutes as Chu expounded upon new developments in advanced
battery technology. “He doesn’t lose track of the details,” says
Holger Müller, a Lawrence Berkeley physicist and longtime
collaborator.
This
was the one thing that everyone knew about Barack Obama’s energy
secretary when he took office in January 2009: that Steven Chu was
smart. He was “possibly the smartest man in the federal government,” Washington
Post science reporter Joel Achenbach wrote,
“if not the known universe.” Obama, when he mentions Chu, rarely fails
to bring up his Nobel Prize. “He likes to kid around about the rocket
scientist thing when they’re together,” says a veteran Democratic
operative who is close to the president. “There’s a little bit in
Obama who’s like, ‘Holy shit, I can’t believe I hired this guy!’”
Chu’s
life outside of the office often seemed indistinguishable from his
life in it. After he and his wife, Jean, who is also a physicist,
bought a six-bedroom gray colonial in Chevy Chase, Chu spent what
spare time he had weatherizing it himself and rode his bike to work as
his schedule and weather allowed. On long plane trips, he would unwind
by puzzling over physics problems, and he continued publishing
original research, batting late-night e-mails back and forth with
collaborators at Lawrence Berkeley.
There
was a winning self-awareness to Chu’s geek-out-of-water routine. When
he appeared on “The Daily Show” in July 2009, Chu handed Jon Stewart a
t-shirt commemorating his honorary membership in the Nerds of America
Society. “You’re, I think, the first Cabinet member I’ve met from the
Obama administration that seems ... alive,” Stewart told him, a note
of genuine affection in his voice.
Climate
change was a problem that could have been custom-designed for Chu. The
middle son of academics who had emigrated from China during World War
II, Chu attended graduate school at the University of California,
Berkeley, where he studied experimental physics. From there, he went
on to Bell Laboratories, where his work would later earn him the
Nobel. It also earned him a reputation as a fiercely competitive
researcher with an appetite for daunting challenges and a tendency to
focus on them to the exclusion of all else.
A
2009 Nature profile
recounted how Chu’s first wife, Lisa Chu-Thielbar, would sneak their
elder son, Geoffrey, into Chu’s lab hidden in her coat so he could see
his father. “He was always a scientist first and a father second,”
Chu’s younger son, Michael, told Nature.
The germ of Chu’s Nobel-winning idea occurred to him while he was
working alone one night after a blizzard had engulfed the Bell Labs
campus in Holmdel, New Jersey. Everyone else had gone home before the
storm.
Teaching
at Stanford in the late ’80s and ’90s, Chu began to expand his
academic horizons, extending his own research into biophysics and
calling up colleagues for tutorials in subjects that were further
afield. “He saw the world of science as not having traditional
boundaries,” his younger brother, Morgan, an intellectual property
lawyer in Los Angeles, told me. Climate change was, in this sense, the
perfect challenge. Its solutions would be found not by the
experts in any particular field but by intellectual omnivores who knew
how to connect the dots between them.
When
Chu moved to Lawrence Berkeley in 2004, he approached the director job
as a kind of experiment; he wanted to know if a cloistered research
institution could be transformed into an idea lab for the energy
system of the future. When I spoke with Paul Alivisatos, who succeeded
Chu as the lab’s director, he told me that, when Chu arrived at
Lawrence Berkeley, “people were stovepiped a bit” in various pure
science endeavors. Chu gathered the lab’s researchers for regular
spitballing sessions on climate change and energy research—“almost
like an open mic,” Alivisatos says. “Lawrence Berkeley was a lab that
a lot of people said was really in search of a mission,” explains
Michael Lubell, a lobbyist for the American Physical Society who has
known Chu for 30 years. “And [Chu] transformed it.”
AT
THE OUTSET of the Obama presidency, Washington was in the throes of
its second great love affair with renewable energy. The first, three
decades earlier, had ended in tears. Under Jimmy Carter, the
government had plowed billions into the quest to wean the United
States off foreign oil, much of it going to technologies like wind
turbines and solar panels. Poor program design had doomed some of
Carter’s ambitions; Ronald Reagan killed off the rest. By the end of
the ’80s, the clean energy industry had largely decamped for Europe.
But
the experience taught renewable energy advocates a great deal. The
biggest lesson was that government support would be most successful if
it created a level playing field—principally by regulating carbon
emissions—and helped clean energy start-ups clamber over the
formidable hurdles to entry, rather than support them in their
maturity.
At
Lawrence Berkeley, Chu had devoted most of his time to the first big
hurdle—the research and development of next-generation technologies in
solar energy, biofuels, and other areas. In 2007, as a member of an
expert panel convened by the National Academies, Chu had proposed the
creation of an office within the Department of Energy (DOE) called the
Advanced Research Projects Agency-Energy (ARPA-E). Inspired by the
Pentagon’s storied DARPA, the program would fund cutting-edge
technical research that could help the energy industry move away from
fossil fuels.
The
second, and larger, hurdle the industry faced was amassing capital. In
the 2000s, clean energy had attracted considerable interest from
venture capitalists, particularly Silicon Valley financiers who had
made their fortunes on the information technology boom. But even Palo
Alto’s biggest venture capital (V.C.) firms were too small to raise
the money—usually in the hundreds of millions of dollars—to propel a
start-up to the point at which it could attract heftier investments
from Wall Street. It was a financing gulf the industry referred to as
the “Valley of Death.”
In
2005, pro-nuclear Republicans in Congress had created a loan guarantee
program within the Energy Department to back projects that were too
untested in the marketplace to attract private equity investment. By
the last months of George W. Bush’s presidency, however, the program
still had not issued a single loan guarantee. Then the financial
crisis hit, wiping out Wall Street’s appetite for equity investments.
Suddenly, the Valley of Death looked more like a cliff—with nothing on
the other side.
But
the financial meltdown also provided the federal government with an
unprecedented opportunity. As congressional leaders drew up the $787
billion American Recovery and Reinvestment Act in the first months of
2009, they needed ways to sluice money through existing programs into
the country’s economy. Clean energy champions in the Democratic
leadership saw to it that hundreds of millions flowed into programs
like ARPA-E. More important, Congress authorized the Energy Department
to make $25 billion worth of loans to clean energy projects. “By a
stroke of his pen,” The
Atlantic’s Joshua Green wrote that summer, “President Obama
made a federal agency the world’s largest venture capitalist.” The man
in charge of figuring out where the money would go was Steven Chu.
DURING
THE first week of March 2010, the Energy Department hosted an
ARPA-E conference at the Gaylord National Hotel in National Harbor,
Maryland. The event’s speakers included Chu, Podesta, White House
energy and environment czar Carol Browner, and White House science
adviser John Holdren, but also Silicon Valley A-list venture
capitalists like John Doerr and Vinod Khosla, and G.E. CEO Jeffrey
Immelt. “This is the Woodstock of energy innovation!” Arun Majumdar, a
Lawrence Berkeley mechanical engineer whom Chu had hired to run
ARPA-E, proclaimed in his keynote address.
Almost
overnight, the lowly Energy Department had become the center of the
energy technology universe. “I was struck by how many venture
capitalists were there,” Katie Fehrenbacher, an editor of the
technology news site GigaOM,
wrote later that year. “I shared a cab back to the airport with some
familiar Silicon Valley faces, and was told if your firm didn’t have a
dedicated person in Washington—in some circles they call them
lobbyists—maneuvering grant and loan programs, you weren’t able to be
competitive.”
Silicon
Valley’s new romance with Washington was heady—and sometimes
uncomfortably close. (It was hard not to notice the former congressmen
and government officials on the boards of high-profile start-ups and
V.C. firms.) In early 2010, the Energy Department extended a $465
million loan to the high-end electric automaker Tesla Motors. Six
months later, the company had gone public—the first U.S. automaker in
half a century to do so—with a $226 million IPO and was hawking a
Leonardo DiCaprio-endorsed limited edition Roadster.
Chu
had assembled a team of deputies from the West Coast’s top research
universities and V.C. firms—new recruits who had little Washington
experience but shared a confidence that government was basically a
logical enterprise like any other. “You look at this landscape out
here,” Majumdar told me, gesturing out his office window, “and you ask
the question, ‘How does the system work?’ If you’re driving a car, you
know how the car works: You don’t want to press your accelerator and
brake at the same time; it doesn’t get you anywhere. So, once you
figure it out—this is how the system works—you try to utilize it to
get your things done.” The question was whether Washington actually
resembled anything as rational as a car.
By
the spring of 2010, congressional appropriators were beginning to
suspect that Chu was taking the Treasury’s checkbook for granted. Two
weeks after the ARPA-E summit, Majumdar, Undersecretary for Science
Steven Koonin, and Office of Science Director William Brinkman were
called before a House appropriations subcommittee to testify about the
Energy Department’s budget request for the coming fiscal year. Chu’s
deputies spoke excitedly about their work, but they never managed to
answer the lawmakers’ fundamental questions about how the projects fit
together and why they were necessary. Congress would eventually slash
ARPA-E’s funding from $400 million to $185 million for the next fiscal
year.
When
I asked Majumdar about the hearing, he laughed ruefully. “Oh yeah,” he
said. “I think that hearing was a watershed moment in many ways.” The
2011 budget process was Chu’s last chance to establish a permanent
foothold for the programs that had been bankrolled by the stimulus
before the 2010 elections; that the department had let the moment slip
by suggested a leader who still had a few things to learn about
Washington. “We were far less coordinated internally than we should
have been,” another former senior department official says.
At
the same time, the political will to see through the sweeping energy
and environmental policy goals on which Obama had campaigned in 2008
was fast eroding. The Senate’s most promising attempt at a climate
bill, hammered out by John Kerry, Lindsey Graham, and Joe Lieberman,
fell apart in April, after it became clear that the White House,
exhausted by the battle over health care reform, had little appetite
for another major policy fight.
Chu
told me he didn’t consider the bill’s failure a death sentence for his
own aims. But the failure sent a strong message. The threat of climate
legislation had brought many big industry players to the table with
Democrats in 2009; absent that threat, there was little to keep them
there. “Big Energy often takes a ‘this, too, shall pass’ attitude
toward the Washington scene,” one department insider told me.
It
was a notion the White House did little to dissuade. When Obama made
his first major energy policy speech of 2011, at Georgetown University
last spring, he outlined sharply reduced ambitions: more use of
natural gas, more domestic oil drilling. Of the new plan’s proposals
that could plausibly pass Congress, only the continued funding of
ARPA-E was immediately recognizable from the grand vision of 2008.
BY
THAT POINT, the loan guarantee program was turning out to be a major
problem. Chu was a fervent believer in the economic promise of clean
energy, but it was a promise that lay in the future—in reclaiming the
vanguard of manufacturing industries the United States had ceded since
the 1970s. The stimulus, however, had freighted the loan program with
a less realistic expectation: that its investments could create jobs
fast enough to offset the 2.6 million that had been lost by the end of
2008. That meant Chu’s first at-bat had to be a home run.
Looking
for candidates in the early weeks of 2009, Energy Department officials
dusted off an application from a solar technology manufacturer named
Solyndra, which was seeking half a billion dollars to build a new
factory. That February, the department’s stimulus adviser wrote in an
e-mail that Solyndra was viewed by the administration as the “litmus
test for the loan guarantee program’s ability to fund good projects
quickly.” Chu approved it the following month.
When
the auditing firm PricewaterhouseCoopers opened Solyndra’s books in
early 2010, however, it found the company had lost half a billion
dollars in its first five years and could soon be buried under a
looming avalanche of debt. The proximate cause of Solyndra’s problems
was the tumbling price of silicon imports from China, which rendered
the company’s own technology—a lightweight cylindrical module made out
of other minerals—uncompetitive. In June, the company pulled its IPO.
By
that summer, the loan guarantee program was taking fire from all
sides. Congress was frustrated with the slow pace at which the loans
were being issued. The Government Accountability Office criticized the
program’s lack of clear goals. And voices from within the
administration were questioning whether the Energy Department was up
to the task. In December 2009, a venture capitalist whose firm had
invested in Solyndra e-mailed Lawrence Summers, then the Director of
Obama’s National Economic Council, expressing surprise that the
unprofitable company had received a federal loan worth more than five
times its revenues. “I relate well to your concern the gov is a crappy
vc,” Summers wrote back, “and if u were closer to it you’d feel more
strongly.” The following October, Summers, Browner, and Joe Biden
Chief of Staff Ronald Klain sent a memo to Obama recommending a reboot
of the loan program.
By
December 2010, Solyndra was running out of cash. When one of the
company’s board members raised the subject of bankruptcy
procedures—hardly an unforeseeable development—department officials
reacted with surprise, according to the executive. “To me, it was
clear the DOE folks were somewhat caught off guard that we weren’t
going to bail out the company,” he wrote in an intracompany e-mail.
The
Energy Department cobbled together an eleventh-hour deal in February,
securing $75 million more in private investments in exchange for the
guarantee that private investors would be paid back before the
government in the event of a bankruptcy. But blood was in the water.
In September, Solyndra filed for bankruptcy, and Republican
investigators began subpoenaing White House documents and calling top
department officials to testify, including Chu.
FROM
THE BEGINNING of the loan guarantee program, it was assumed that
some of the department’s investments would fail—in fact, that was the
whole idea. What the industry most needed—what delineated the Valley
of Death—was investors willing to make high-risk, big-dollar bets that
could give unproved technologies a foothold in the marketplace. This
was the kind of investment that the government alonecould make.
The
assumption on which the idea rested was that politicians wouldn’t make
hay out of the occasional $100 million loss—an assumption that looked
entirely absurd by 2011. Among Republicans, climate change denial had
hardened into a catechism, and the ascent of the Tea Party had made
any association with the stimulus hazardous. “Steve assumes that
everyone’s like him—they’re going to be nice, they’re going to
understand,” says Lubell. “But the reality in Washington almost never
works that way.”
At
first, the Republicans’ case against Chu focused narrowly on the claim
that Solyndra was given preferential treatment on account of the fact
that an Obama campaign donor, the Oklahoma oil and gas billionaire
George Kaiser, was a principal investor in the company. When 180,000
pages of e-mails and other documents failed to produce a smoking gun,
the focus shifted to the argument that the Energy Department broke the
law by promising to repay investors before taxpayers. But Chu had
acted on the advice of the department’s own counsel, suggesting that
it was at least a murky matter of interpretation.
Investigations
into Solyndra’s conduct are still ongoing—including an inquiry by the
FBI—and the documents released so far have provided a litany of
embarrassments, not to mention a durable Republican line of attack.
(The conservative organization Americans for Prosperity has spent more
than $8 million on Solyndra-themed anti-Obama television ads since
November.) Even so, in their fixation with catching Chu red-handed,
lawmakers appear to have overplayed their hand. Even Chu’s opponents
found the crusade disappointing. “I think the Hill did a very poor job
of going after him,” one lobbyist and Chu critic told me. “Everyone
was like, ‘Fuck, they’re just going after a hide.’ They didn’t do the
research they should’ve done. Everything that I know about [Chu] is
that he is not a corrupt guy. He would not have done what they said he
did.” A Republican Senate staffer who was familiar with the loan
program agreed. “I don’t think it was necessarily a political thing,”
she says of the Solyndra deal. “I think this was their first big
demonstration of this idea, and they didn’t want it to flop.”
There
was also the fact that Congress had appropriated a $2.4 billion risk
reserve for the program, explicitly authorizing the Energy Department
to lose nearly five times what Solyndra had lost. And even Republicans
who had voted against the program’s 2009 expansion had clamored for
more federal funds to support wind farms, solar arrays, and nuclear
plants in their own districts. If anything, Chu’s department should
have been faulted for its caution: A Bloomberg Government report
released in December found that 87 percent of the $16 billion worth of
projects underwritten by the program were of minimal risk, not the
transformative loans the department was supposed to be making.
If
the Solyndra investigation didn’t produce a scalp, however, it did
make one thing clear: The federal government’s foray into venture
capitalism was over. The loan guarantee program expired in September,
at the height of the Solyndra controversy; virtually nobody I talked
to in Washington or Silicon Valley believed it would be revived.
Brookings Institution scholar Mark Muro, an authority on renewable
energy policy, points to an array of programs due to sunset in the
next year that are unlikely to be renewed, some launched through the
stimulus and others dating back to the Bush-era Republican Congress.
They include not just the loan guarantees but also Treasury Department
grants, IRS-administered bonds for clean energy projects, and tax
credits for energy efficient appliances and new homes.
Some
of the high-tech research programs, particularly Chu’s own ARPA-E,
will probably survive. But absent unlikely congressional action, Muro
estimates that as much as 70 percent of the current federal funding
for clean energy could vanish by 2014. “I think we are going to exit
the clean-tech finance business as a nation,” he says.
THE
BULK OF THE wall-to-wall coverage of the Solyndra bankruptcy last
fall overlooked one salient detail: Washington’s second great
experiment with clean energy, for all its hiccups, seems to be
working. Bloomberg New Energy Finance reported in November that global
investment in renewable power plants had for the first time surpassed
investment in fossil-fuel-powered facilities. Clean energy technology
has proved to be a largely recession-proof, if still small, engine of
economic growth in the United States.
Energy
Department initiatives have also given U.S. companies a foothold in
the manufacturing of advanced batteries, a critical component in
electric cars that is projected to grow into a $100 billion industry
by 2030. “A lot of them got their start with money from ARPA-E, and
they’re chasing brilliant advances,” says Mike Danaher, a partner at
the law firm Wilson Sonsini Goodrich & Rosati who specializes in
clean energy technology and works with half a dozen such companies.
“The ferment that’s going to come out of this is like nothing anyone
could imagine.” If clean energy’s best days lie in the past, it will
say less about the flaws of federal policies than it will about the
government poised to pull the plug on them.
“I
think Steve made a pretty good try,” one of Chu’s former deputies told
me. “But this is hard. Subsidies, economics, regulations have to play
together with the technology. I think we all understand that much
better now.” Signs of retrenchment, meanwhile, have begun to crop up
in the fine print of the department’s work. In September, the
department published the results of its quadrennial technology review.
The report speaks mostly of bolstering America’s energy security and
competitiveness; climate change is mentioned on barely a half dozen of
its 152 pages.
This
fall, the department shifted the emphasis of its efforts to promote
carbon capture and storage—originally intended to reduce emissions
from coal-fired power plants—toward using the technology to extract
more petroleum from aging oilfields. “Steve’s a fairly realistic
guy—he has adapted his thinking to the policy scene,” the former
deputy says. “I think he’s responded to advice from many to focus on
what can get
done.”
During
our interview, I asked Chu if he intended to stay for a second Obama
term. “That we will leave up to—” he said, trailing off, before
finishing: “We’ll see what happens.” I asked if it bothered him that
Obama—a president who had once declared energy his top domestic
priority—had instead invested his political capital in health care
reform. “Would I have loved to have a big, global comprehensive energy
bill?” Chu replied. “You bet. But I still think there are so many
things that I can do in my position here and that we are doing. So I’m
not going to wring my hands over coulda, woulda, shoulda.”
But
I found myself thinking of something Chu had said a year and a half
earlier, as the ambitious first act of Obama’s presidency was drawing
to a close, in a commencement speech at Washington University in St.
Louis. As he had in Las Vegas in 2008, Chu ended his remarks by
invoking a famous photograph of the Earth, this time a digital image
taken by the Voyager 1
probe just before it exited the solar system for deep space in 1990.
If the Apollo 8
photograph offsets the precariousness of human life with the warmth of
a planet that is recognizably our own, the Voyagerimage
conveys only Earth’s isolation, the astronomically long odds of a
second chance for its inhabitants. The planet is a tiny blue pinpoint,
barely a tenth of a pixel in width, set against the immense
indifference of space.
The
late astronomer Carl Sagan was so moved by the photograph that he
dedicated a book to it, and Chu invoked his words to the graduating
students. “Our posturing, our imagined self-importance are challenged
by this point of pale light,” he told them. “Our planet is a lonely
speck. In all this vastness, there is no hint that help will come from
elsewhere to save us from ourselves.”