A high-profile clean-energy startup is running short on cash and may fail to obtain a $1 billion government loan promised by the Biden-Harris administration.
Monolith, a company that makes a tire-strengthening material called carbon black and ammonia for fertilizer using a low-emissions process, is running out of the money it needs to expand its facilities, The Wall Street Journal reported. Part of the problem is the rising costs for the company’s planned expansion, which is a key part of the company’s future.
The company is now in danger of running out of cash by the end of the year, according to company documents reviewed by WSJ.
Some existing investors are expected to give Monolith more than $100 million to keep it going, but it needs several hundred million to get the company a $1 billion loan from the Biden-Harris administration.
Of course, the government could still fund the loan even if Monolith doesn’t meet requirements, either in part or under different conditions. And given how Democrats regularly fund green-energy projects, it’s likely Monolith will still get its massive government loan.
Monolith Chief Executive Rob Hanson told WSJ that he expects to start raising the needed cash for the expansion early next year, and a government Loan Programs Office spokeswoman told the outlet that Monolith is making progress on the milestones it needs to obtain the government loan.
The deal to give Monolith a $1 billion government loan was made in December 2021 and was the first commitment from the Energy Department’s Loan Programs Office under Jigar Shah, himself a former clean-energy entrepreneur, the WSJ reported. Shah made a name for himself, working on green energy programs and advocating for solutions to climate change, both major leftist policies that have seen advocates become extremely wealthy without showing meaningful results.
Once Monolith received the government loan deal, it was able to raise more than $300 million the next summer from investors – including TPG and Decarbonization Partners, which is owned by BlackRock and Temasek in Singapore. In total, the company has raised around $725 million in equity.
As WSJ reported, Monolith is facing the same problems as similar companies, including a high-valued battery startup in Europe that has had to cut jobs and halt a factor expansion because people aren’t buying electric cars. The outlet noted that several climate startups have filed for bankruptcy in the past few months.
It’s similar to the green tech boom and failure of former President Barack Obama’s first term when his administration handed out billions to green energy companies that either filed for bankruptcy or didn’t live up to expectations. The most famous example of Obama’s presidency was Solyndra, which received half a billion government loans before filing for bankruptcy in 2011.
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