Cronyism Continues

Company funded by major Democratic donor receives $4M award

Vinod Khosla
Vinod Khosla / AP
September 20, 2013

The Department of Energy recently awarded a multi-million dollar contract to a green energy company financed by a major Democratic Party fundraiser and supporter of President Barack Obama.

The $4,000,000 award for biofuel company LanzaTech came just months after one of its chief financiers and public advocates hosted the president at his Portola Valley home for a $32,400-a-head fundraiser for the Democratic Party.

The fundraiser took place in June. DOE announced the award for New Zealand-based LanzaTech, designed to support a gas fermentation system developed by the company, on Thursday.

DOE also awarded LanzaTech a grant worth more than $2.2 million in 2011 to develop biomass fuels.

One of LanzaTech’s most active investors is venture capitalist Vinod Khosla. He took part in three rounds of financing for the company worth a combined $77 million.

Khosla Ventures, Khosla’s venture capital firm, also backed Range Fuels, a biomass energy company that received more than $80 million in taxpayer backing before its refinery closed down.

Range defaulted on its DOE loan after repaying only $2 million. LanzaTech subsequently purchased the company for $5.1 million.

Range and LanzaTech are among nine companies in Khosla Ventures’ portfolio that have received taxpayer backing in some form.

A chief marketing executive at one of those companies, cellulosic ethanol producer Coskata, said his success was measured in part by the amount of "government money we attract."

Khosla called himself "one of those Republicans who is for Obama" in a 2008 interview. "I think Obama will be much stronger for clean tech," he explained.

Khosla served as the head of Obama’s India policy team at the time. He visited the president at the White House in 2011.

Khosla has donated nearly $1.3 million to Democratic candidates and groups since the 2008 interview, including a $1 million contribution to Democratic Super PAC Priorities USA Action in 2012, according to the Center for Responsive Politics.

Obama personally attended the June fundraiser at Khosla’s home. Sens. Michael Bennet (D., Colo.), Maria Cantwell (D., Wash.), and Amy Klobuchar (D., Minn.) were also present. The $32,400 per plate benefitted the Democratic Senatorial Campaign Committee.

"Government has a role in creating a regulatory structure that ensures that we’re encouraging the development of clean energy," Obama said at the event, according to a White House transcript of his remarks.

Obama would unveil an energy plan later that month supporting the controversial Renewable Fuel Standard, which mandates the use of biofuels in gasoline.

"Biofuels have an important role to play in increasing our energy security, fostering rural economic development, and reducing greenhouse gas emissions from the transportation sector," the plan states.

"That is why the administration supports the Renewable Fuels Standard, and is investing in research and development to help bring next-generation biofuels on line," it adds.

Neither Khosla nor DOE returned requests for comment.