An outside review of the Energy Department’s embattled green energy loan program calls for several steps to improve oversight but also provides lower estimates of taxpayer risk than an earlier federal forecast.

The White House quickly seized on the risk-finding to hit back against political attacks on the program, which has been in Republicans’ crosshairs following the collapse of Energy Department-backed solar company Solyndra last year.

The White House on Friday released the review, which was commissioned last October and conducted by Herb Allison, the former Treasury Department official who oversaw the Troubled Asset Relief Program.

{mosads}The report evaluated the roughly $23.8 billion portfolio of loan guarantees for green energy companies and power projects, as well as direct loans to automakers.

It calls on the Energy Department to establish an “early warning system” to identify problems with the loans.

The “Management Information Reporting System,” as the report calls it, would monitor market and regulatory trends that could affect the loans, as well as the status of “every loan, borrower, contractor and offtake party that can affect each project.”

Allison’s review calls for other improvements, too.

“DOE should clarify authorities and accountabilities of managers,” the report says. “Lines of authority are not sufficiently clear.” It also notes that key positions in the loan office are “either vacant or staffed by acting heads and rely heavily on consultants and contractors.”

In addition, the department should “develop explicit objectives and standards of performance for managing the Portfolio during the construction phase of the projects and beyond,” according to the report.

The report calls on the department to name a “Chief Risk Officer” who would head up a “Risk Management unit” charged with monitoring the loans.

---

It comes amid GOP criticism of DOE’s handling of the program in the wake of Solyndra, which collapsed last September after receiving a $535 million loan guarantee in 2009.

Solyndra’s demise has become the grist for election-year political attacks by President Obama’s GOP challengers and Capitol Hill Republicans, who have accused the administration of wasting taxpayer dollars.

At least one Republican sought to discredit the report Friday.

“This is less a report than an umbrella to deflect the criticism that’s pouring down on the Administration,” said Rep. James Sensenbrenner Jr. (R-Wis.).

But White House officials and several Democrats cast the report as a victory.

They noted the the finding that the amount of money considered at risk in the loan portfolio is almost $3 billion, which is less than an earlier Energy Department assessment of slightly more than $5 billion.

“The report confirms that the overall loan portfolio as a whole is expected to perform well and holds less than the amount of risk envisioned by Congress when they designed and funded the program,” said Eric Schultz, a White House spokesman, who said the Energy Department has been “judicious” in balancing risk.

“In fact, Mr. Allison identifies less risk for the overall portfolio than the Department’s analysis, and less than Congress estimated when it set aside a $10 billion reserve in anticipation of losses associated with funding these emerging industries,” he said.

The Obama administration vowed to implement the recommended reforms while defending the program overall.

“I will carefully review the thorough, thoughtful recommendations Mr. Allison has put forward and find the best way to use them to further strengthen the program,” Energy Secretary Steven Chu said Friday in a statement.

Lawmakers will have a chance to question Allison about the findings. Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) announced plans for a hearing in March.

“I look forward to having Mr. Allison come before the Committee next month to present his analysis and recommendations, once our Members have had a chance to read and consider today’s report,” Bingaman said in a statement.

Several top Democrats cheered the report, claiming that it disproved allegations of wrongdoing made by Republicans.

“The Allison report shows that the DOE loan program is working. It is promoting innovation, creating jobs, and helping U.S. companies compete with China,” said Rep. Henry Waxman (D-Calif.), the top Democrat on the House Energy and Commerce Committee.

“The report is a repudiation of the partisan attack on the program by congressional Republicans and the oil and coal industries,” he said.

Republicans on the committee have led the GOP probe of Solyndra and attacks on the green-energy loan program.

The review did not analyze the loan guarantees to Solyndra and Beacon Power. Beacon is an energy storage company that received a $43 million loan guarantee in 2010 and filed for bankruptcy last year.

Energy and Commerce Republicans are weighing whether to seek contempt charges against the White House, alleging an inadequate response to a subpoena for internal White House documents about Solyndra.

The loan program has spurred $40 billion in private investment and supports 60,000 direct jobs, Chu said.

“With the help of this program, American workers will build wind, solar, geothermal and nuclear power plants across the country that will power our economy for decades to come – and the next generation of automobiles that will reduce our dangerous dependence on foreign oil,” he said.

Chu noted that the loan program has always come with “inherent risks” as it was designed to support companies that might not be able to attract private financing. 

“[I]t is very likely that there will be other companies in the portfolio that won’t succeed, but the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest,” he said.

The new report notes that as of late November, $8.3 billion of the $23.8 billion in loans had been drawn. Allison notes that the Energy Department has tools at its disposal to reduce risks over time.

The report notes that “DOE can elect to withhold funds or to require more protections and/or equity participation to compensate in part for additional risk.”

— This post was originally posted at 2:06 p.m. and was last updated at 4:40 p.m.