Comparative Analysis of Loan Guarantee Authority

Differences between the generic loan guarantee features proposed by title IX of the Department of Energy's (DOE) 1979 authorization request and the existing loan guarantee authority contained in section 207 of the Department of Energy Act of 1978 were examined. Section 207 would give DOE authority to guarantee loans for the construction and start-up of commercial demonstration synthetic fuel projects. Title IX would authorize loan guarantees for projects demonstrating the feasibility of nonnuclear energy technologies, including solar and other renewable technologies. The most important feature in terms of congressional oversight and control, requiring that all loan guarantees over $50 million be reviewed and approved by Congress, is included in both authorities. Other existing legislation also authorizes DOE to use loan guarantees to demonstrate the commercial viability of new energy technologies. However, DOE officials believe that the existing authorities to guarantee loans are inadequate. The officials argue that title IX authority would enable DOE to use loan guarantees to stimulate the commercialization of solar technologies. Two basic issues need to be dealt with: (1) the relationship of title IX to existing legislation; and (2) the question of whether loan guarantees are the most effective and appropriate federal financial incentives for furthering the commercialization of solar technologies.