When the government-backed Solyndra filed for Chapter 11 bankruptcy, policymakers supportive of the loan-guarantee program said variations of the following: “If this were a venture capital firm and only one out of 10 projects failed, they would be a great success.” That would be fine if it were private money, not taxpayer money. But now a second company is going under. Reuters reports:

Beacon Power Corp filed for bankruptcy on Sunday, just a year after the energy storage company received a $43 million loan guarantee from a controversial Department of Energy program.

The bankruptcy comes about two months after Solyndra—a solar panel maker with a $535 million loan guarantee—also filed for Chapter 11, creating a political embarrassment for the administration of President Barack Obama, which has championed the loans as a way to create “green energy” jobs.

Beacon Power drew down $39 million of its government-guaranteed loan to fund a portion of a $69 million, 20-megawatt flywheel energy storage plant in Stephentown, New York.

It’s clear that in the instances of Solyndra and Beacon, both stimulus loan guarantee recipients, the lack of financing for these projects was not a result of a market failure that necessitated preferential financing from the government. They were economically uncompetitive ventures and failed even with help from the government.

These are only two of 28 loan guarantees that the Department of Energy distributed as part of the stimulus loan guarantee program, and it is too early to tell which companies will succeed and if any others will fail. Two kinds of companies seek loan guarantees: economically uncompetitive companies, such as Solyndra, which need the guarantees to survive, and potentially competitive companies, which use the loan guarantee to pad their bottom lines. Neither case can be justified.

Late Friday, the White House announced it was launching a 60-day review of the Department of Energy’s loan portfolio. Rather than looking at the loan guarantee portfolio, the Administration should take a critical look at the merit of the program itself. Banks and venture capitalists, not the government, should assess risk and determine which investments make economic sense. The Department of Energy is not a bank, and it should not act like one.

But the Administration is unlikely to back away from its support for “clean energy” investments. White House Chief of Staff Bill Daley said in a press release last Friday:

The president is committed to investing in clean energy because he understands that the jobs developing and manufacturing these technologies will either be created here or in other countries. And while we continue to take steps to make sure the United States remains competitive in the 21st-century energy economy, we must also ensure that we are strong stewards of taxpayer dollars.

Proponents of “keeping up in the clean energy race” often point to the huge sum of investments that China has made in wind and solar. That doesn’t tell the whole story, but my colleague David Kreutzer does:

Getting hung up on commoditized solar-panel or wind-turbine production ignores the phenomenal increase in coal-generated power in China—an increase that swamps that country’s installed wind and solar production. From parity with the U.S. around 2005, China’s CO2 emissions will grow to roughly double America’s in 2012.

Here’s the kicker: Market-driven energy choices are cutting more tons of CO2 in the U.S. than have been cut by wind and solar—even with their billions of dollars in subsidies.

Natural gas-fired electricity generation has grown from 15.8 percent of America’s power generation in 2000 to 24.1 percent in the most recent 12-month tally from the Energy Information Administration. That 8.3 percent increase is enough to cut 120 million metric tons of CO2 per year compared to coal.

Over the same span, wind- and solar-generated power grew to 2.75 percent of total power generation. That would cut CO2 by 108 million metric tons per year compared to coal power. So over the past decade, hugely subsidized wind and solar have done less to cut CO2 emissions than market-driven natural gas production.

In summary, for those who obsess about CO2 emissions and want to have a race, we are whipping China handily. And the market has done more to cut CO2 than all the subsidies, mandates, and regional CO2 agreements combined.