Why are we subsidizing Russian companies on energy?

posted at 8:02 pm on July 6, 2009 by Ed Morrissey
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The Obama administration and the Democrats insist that the money the government gets from cap-and-trade will benefit the creation of clean-energy initiatives in the US, making us the world leader.  If so, someone should tell Senators Evan Bayh and Dick Lugar.  The two have partnered on earmarks that will subsidize a Russian company in the engineering and production of lithium-ion batteries:

The Indiana lawmakers have secured $6.5 million in congressional earmarks for Ener1, Inc., and have talked up the company’s efforts to secure a slice of nearly $3 billion in two Energy Department programs offering grants and loans as part of President Obama’s stimulus package.

Their pitch sounds as American as apple pie: The New York-based company would create much-needed jobs in the nation’s heartland and help jump-start production of energy-efficient hybrid and electric vehicles.

But there’s one detail they don’t mention.

Ener1 has substantial financial ties to Russian industrialist Boris Zingarevich, a wealthy timber magnate and longtime business associate of Russian President Dmitry Medvedev. Mr. Zingarevich is frequently listed among the powerful and influential businessmen known in Russia as oligarchs.

According to federal records, Mr. Zingarevich is the “provider of substantially all of the funding” for Ener1 and its wholly-owned subsidiaries. The companies he owns, controls or is associated with – including Bzinfin SA, an off-shore firm that holds 66 percent of the shares of Ener1’s parent company – have the potential to exercise substantial sway over Ener1’s operations, documents filed with U.S. securities regulators state.

Rep. Duncan Hunter points out that this may have security implications as well.  Battery technology will play an important part of military readiness as the US moves away from fossil fuels.  Having the US fund the development of such technology through the hands of foreign firms may put us at a technological disadvantage on future battlefields.

Unfortunately, that may be the default position.  All of Ener1’s competition also has foreign controlling interests.  Whether we subsidize Russia (Ener1), China (A123 Systems, Valence Technology), South Korea (LG Chem LTD), or France (Saft Advanced Power LLC), the money and the technology will at least come under partial control of foreign companies.  At least with South Korea and France, though, the partners are solid allies with the US, and not autocracies bent on marginalizing the US.

Congress should take another look at the Ener1 earmark.  If this is an example of what we can expect from cap-and-trade, then it’s just another reason to stop it cold.

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