The political hand-wringing and posturing over the bankruptcy of the California solar-cell maker Solyndra, which received a $535 million federal loan guarantee in 2009, is both predictable and misplaced.

It is not surprising that one of the many renewable-energy projects supported by loan-guarantee programs and the 2009 federal stimulus bill—which budgeted $45 billion for energy—would fail. The U.S. Department of Energy's loan guarantees program is designed to fund innovative, cutting-edge companies. Such companies are risky, and some inevitably fail, as any venture capitalist can tell you (hence the need for a federal guarantee in the first place). Even more predictable is that the downfall of Solyndra is being held up by politicians and some in the media as an excuse to question federal support for clean energy.

Witness yesterday's hearings held by the House Energy & Commerce Committee on "Solyndra and The DOE Loan Guarantee Program" and the ensuing mainstream media reports, including ones in the Wall Street Journal on "House Probes Solyndra Loan," the New York Times on "Furor Over Loans to Failed Firm," and Bloomberg Businessweek on how White House aides "pressured White House budget officials to complete a review" of the loan. Of course, it all comes down to a stream of endless e-mails. The smoking gun? Apparently, some in the White House were anxious for a decision on Solyndra. It is, some say, SolarGate.

Luckily, the Washington Post confidently assures us, despite the fishy nature of the Solyndra loan, the company's failure doesn't mean that federal support for energy R&D is a bad thing, or that solar is "doomed." And, according to the New York Times blog, "Solar Is Not Dead, Says Prominent Investor." Or as the blog somewhat snarkily adds, "at least that is what John Doerr" says. How silly can it get?

The backlash against federal support for energy projects fails to identify the fundamental policy mistake that produced the Solyndra debacle.

As we warned readers in these pages in June 2009, just months after the stimulus legislation passed, the real problem with the bill was that it conflated two objectives: creating jobs and building a clean-energy infrastructure. As we pointed out, both are very important and worthwhile, but they are very different and require very different policies.

By its nature, stimulus spending needs to be fast and immediate. The switch to clean energy will take decades of work and investment. The development of new energy sources will take patience and thoughtful investments. By conflating job creation with technology objectives, the stimulus bill made a Solyndra almost inevitable. Of course, decisions on funding were made in a hurry; spending the money quickly is the whole point of a stimulus bill. Unfortunately, evaluations of technologies do not lend themselves to rush jobs.

As Daron Acemoglu, an economist at MIT, warned our readers at the time about the stimulus package for energy projects:

"It's very much like pork-barrel politics," he says. As a result, it's hard to properly evaluate the different spending programs. And, he suggests, "when you make investments in bad projects under the name of stimulus and in the name of technological investments, you're doing damage in a number of ways. First of all, you're not helping; second, you're confusing matters; and third, you're poisoning the well for the future."

Elsewhere, the 2009 article points out:

Not only could the federal spending support uneconomical energy sources (as has been the case with ethanol), but the resulting backlash could discourage policy makers, investors, and the public from embracing newer, more efficient technologies. As the stimulus runs its course in two to three years, pressure to reduce the federal budget and cut government spending could make such a backlash even worse.

One renewable sector that could be particularly vulnerable in such a scenario is the solar industry.

The downfall of Solyndra does point to some fundamental mistakes made in conflating job creation and clean-tech development. But the lesson has nothing to do with the importance of federal support of energy innovation. That's as important as ever.

Solar developers are breathing a sigh of relief this morning as they wake up to news that the House passed a big tax cut and stimulus bill last night, sending it on to the President for his signature, which is expected this afternoon. The bill, which extends Bush Era tax cuts, extends unemployment benefits, and cuts social security taxes, also extends a popular renewable energy grant program.

Yesterday evening, Lyndon Rive, CEO and founder of a solar financing, installation and maintenance company, Solar City, told me that the if the renewable energy program, which provides grants that cover 30 percent of the cost of solar installations, weren't extended, "it would be a catastrophe for the entire industry."

The U.S. Partnership for Renewable Energy Finance has been calling for the extension of the grant program since this summer, when it became clear that the recession would make it hard for solar projects to get financing under a related tax credit program.

The Section 1603 Treasury Grant program was enacted by Congress in 2009 as part of the American Recovery and Reinvestment Act to help address the impact of the financial crisis on the emerging U.S. renewable energy sector. Specifically, by providing tax grants in lieu of credits for qualifying renewable energy investments, the Treasury Grant Program has addressed a critical barrier to the continued flow of capital to renewable energy projects throughout the U.S. at a time when the economic downturn had begun to severely limit the use by investors of the tax credits that have traditionally played a central role in U.S. renewable energy policy incentives . . .

"If the Treasury Grant Program is allowed to expire in 2010, the level of capital that is available to finance renewable energy is anticipated to decline by more than 50%, jeopardizing the installation of clean renewable power projects throughout the US and our international competitiveness," said Neil Auerbach, Co-Managing Partner of Hudson Clean Energy Partners.

Rive says that the tax grants are particularly important now that state incentives are starting to wind down, such as a California program that offsets the cost of rooftop solar installations. Under that program, the state aid decreases as sales of solar systems increase. He says that the decrease in incentives has been faster than the decrease in the cost of buying and installing solar panels.

On Tuesday both the United States Vice President's office and the nonpartisan Congressional Budget Office issued separate reports about the impact of the Recovery Act of 2009.

In general the CBO report was favorable. Its estimates of how much the Recovery Act will increase deficits over 10 years increased by some $27 billion compared to its original estimates (issued when the law was passed), but it concluded that the economy would be worse off without the stimulus package. It also estimates that the law increased gross domestic product by between 1.7% and 4.5% in the most recent quarter (from April to June). And that the law lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points and increased the number of people employed by between 1.4 million and 3.3 million.

The Vice President's report was even more positive. It claimed, for example, that because of Recovery Act investments the US is on track to cut the cost of solar power in half by 2015. It also claimed that, "With $8 billion dollars in funding, the Recovery Act is beginning to make high-speed rail reality across the country." That might be a stretch. High-speed rail will require billions more in non-federal investment to become a reality.

The Recovery Act has indeed helped kick start significant research projects and led to the groundbreaking on several factories for advanced energy products. But to meet its long-term goals of creating a strong and vibrant economy based on clean energy, what's most important is not necessarily what's happened so far, but what will happen in the next couple of years. Will the investments started with the Recovery Act continue? Or will they dry up under budgetary pressures? What's more, will incentives be put in place, such as a price on carbon, help drive market adoption of new green technologies?

For a close analysis of the impact of the Recovery Act, check out this review in the current issue of Technology Review magazine.