The Department of Energy  gives grants to companies that produce clean energy. Recently the department gave nearly $1 million in grant funds to a battery company on the very day the company filed for bankruptcy. And where do the funds for the grant come? Your taxes.

The Heritage Foundation’s Lachlan Markay, investigative reporter for Heritage’s Center for Media and Public Policy, explains this grievous waste of taxpayer dollars was given to the battery making company, A123 Systems Inc.

The DOE agreed to give the company a $249 million clean energy grant, of which, as Lachlan explains: “As of November 14, $115.8 million of the A123’s grant remained outstanding.”

Reuters uncovered the alarming  facts about this irresponsible use of tax-payer dollars:

The company, which makes lithium ion batteries for electric cars, filed for Chapter 11 bankruptcy protection last month after a rescue deal with Chinese auto parts supplier Wanxiang Group fell apart.

That same day, October 16, A123 received a $946,830 payment as part of its $249 million clean energy grant from the Energy Department, the company said in a letter, obtained by Reuters, to Republican Senators John Thune and Chuck Grassley.

In the letter, dated November 14, A123 said the October payment was the most recent disbursement it had received from the government, with an additional $115.8 million still outstanding on the grant.

Thune and Grassley have pressed the Energy Department for more details about its funding of A123 as the company has faltered.

“The Department of Energy needs to answer for why it appears to put federal grants on auto-pilot to the detriment of U.S. taxpayers,” Senators Thune and Grassley said in a statement. “This can’t stand.”

The DOE responded to the Reuters article by explaining that the grant program continues to reimburse the company for “work they complete toward the goal of the project.”

Investing so much money in a company such as A123 represents just one of the ways the government is misusing taxpayer money. As Heritage’s Rachael Slobodien and Elinor Renner estimate:

123’s “bad bet” cost for government—and taxpayers—at $377.1 million, including “state and federal tax credits, grants, loans, and incentives not listed.”

Do you think the government should put a stop to grants on “auto-pilot”?

Comments (2)

Bill - November 20, 2012

Dear Katie Nielsen,

I’m afraid I have to disagree with you about the money coming from taxes. It’s paid by deficit not by tax dollars. Currently all of the individual tax goes to just pay the interest on the debt, and that does even cover it. No, every person in the world that uses the Dollars is paying for the government spending thru the dollar devalutation. It is now my belief that their is no turning around. This will have to pay out to the death of the dollar. When it’s going to happen I don’t know. But , my bet is that it’s going to happen sooner than most people think.

BOBBY FINCH - November 24, 2012


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