June 13, 2007
Senate Democrats Propose Loans for Coal-Based Fuel Plants
By EDMUND L. ANDREWS
WASHINGTON, June 12 — As the Senate began debate Tuesday on a sprawling bill to reduce oil consumption, top Democrats were circulating a proposal to provide $10 billion in loans for plants that make diesel fuel from coal.
The proposal highlights the horse-trading involving powerful industry groups as Democratic leaders push for legislation that would require higher mileage in cars and a huge increase in the production of renewable fuels made from plants like switch grass.
But many environmental groups are flatly opposed. “We don’t think the federal government should be subsidizing liquid coal,” said Erich Pica of Friends of the Earth. “From a global warming and an environmental position, liquid coal is an unacceptable source of energy.”
The bill is being circulated by Senator Jeff Bingaman, Democrat of New Mexico, chairman of the Senate Energy Committee and the energy bill’s lead author. Until this week, Mr. Bingaman had opposed big subsidies for coal-based fuels, saying that each new production plant would cost billions of dollars and that the economic uncertainties posed risks for taxpayers.
But in what could be an effort to fend off demands from coal-state lawmakers for bigger subsidies, Mr. Bingaman’s draft proposal would offer up to $10 billion in direct government loans for coal-to-liquid plants.
Bill Wicker, a spokesman for Mr. Bingaman, said that the draft proposal was “not a Bingaman amendment per se,” but that coal-based fuel was of interest to many lawmakers.
The individual loans would be allowed to cover up to half the total cost of a new plant, and the plants would have to be capable of capturing and storing the carbon dioxide emitted during production.
Numerous companies have proposed coal-to-liquid projects, and industry supporters have said that a plant producing 50,000 barrels of fuel a day would cost at least $3 billion and probably more than $4 billion.
Coal industry supporters say coal-based liquids could replace millions of gallons of gasoline a day, reducing the country’s dependence on imported oil from the Middle East and other troubled areas.
Coal-state lawmakers are pushing for a wide array of government assistance to jump-start the industry. In the House, Representative Rick Boucher, Democrat of Virginia, has drafted a bill that would insulate coal-to-liquid plants from gyrations in energy prices by providing loans if oil prices dropped too low to make coal-based liquids profitable.
Other lawmakers have proposed letting the Air Force sign 20-year contracts to buy vast amounts of coal-based jet fuel at fixed prices. Still others have proposed including coal-based liquids in a government mandate to greatly expand production of alternative fuels.
“A group of us is working on it,” said Senator Byron L. Dorgan, Democrat of North Dakota and a strong supporter of liquefied-coal fuel. But Mr. Dorgan cautioned that Mr. Bingaman’s bill was “still a work in progress” and that Democratic leaders had yet to agree on what incentives to include in the measure.
Corey Henry, a spokesman for the Coal to Liquid Coalition, an industry lobbying group, said he was optimistic that the Senate would include some kind of support.
“You can definitely see that there’s a bipartisan effort to achieve a workable coal-to-liquid provision,” Mr. Henry said.
Lightning cracks the blackened sky,
Hear the thunder chariot ride
All brave men with hearts of war
Ride the path of mighty Thor
