Lawmakers, under pressure from the goal lobby, are proposing subsidies and guaranteed purchases for diesel fuel extracted from coal, according to this story in the New York Times. Prodded by intense lobbying from the coal industry, lawmakers from coal states are proposing that taxpayers guarantee billions of dollars in construction loans for coal-to-liquid production plants, guarantee minimum prices for the new fuel, and guarantee big government purchases for the next 25 years.
With both House and Senate Democrats hoping to pass “energy independence” bills by mid-July, coal supporters argue that coal-based fuels are more American than gasoline and potentially greener than ethanol.
“For so many, filthy coal is a dirty four-letter word,” said Representative Nick V. Rahall, Democrat of West Virginia and chairman of the House Natural Resources Committee. “These individuals, I tell you, have their heads buried in the sand.”
Environmental groups are adamantly opposed, warning that coal-based diesel fuels would at best do little to slow global warming and at worst would produce almost twice as much of the greenhouse gases tied to global warming as petroleum.
Coal companies are hardly alone in asking taxpayers to underwrite alternative fuels in the name of energy independence and reduced global warming. But the scale of proposed subsidies for coal could exceed those for any alternative fuel, including corn-based ethanol.
Among the proposed inducements winding through House and Senate committees: loan guarantees for six to 10 major coal-to-liquid plants, each likely to cost at least $3 billion; a tax credit of 51 cents for every gallon of coal-based fuel sold through 2020; automatic subsidies if oil prices drop below $40 a barrel; and permission for the Air Force to sign 25-year contracts for almost a billion gallons a year of coal-based jet fuel.
Coal companies have spent millions of dollars lobbying on the issue, and have marshaled allies in organized labor, the Air Force and fuel-burning industries like the airlines. Peabody Energy, the world’s biggest coal company, urged in a recent advertising campaign that people “imagine a world where our country runs on energy from Middle America instead of the Middle East.”
Representative Rick Boucher, a Virginia Democrat whose district is dominated by coal mining, is writing key sections of the House energy bill. In the Senate, champions of coal-to-liquid fuels include Barack Obama, the Illinois Democrat, Jim Bunning of Kentucky and Larry Craig of Wyoming, both Republicans.
President Bush has not weighed in on specific incentives, but he has often stressed the importance of coal as an alternative to foreign oil. In calling for a 20 percent cut in projected gasoline consumption by 2017, he has carefully referred to the need for “alternative” fuels rather than “renewable” fuels. Administration officials say that was specifically to make room for coal.
The political momentum to subsidize coal fuels is in odd juxtaposition to simultaneous efforts by Democrats to draft global-warming bills that would place new restrictions on coal-fired electric power plants.
The move reflects a tension, which many lawmakers gloss over, between slowing global warming and reducing dependence on foreign oil.
Many analysts say the huge coal reserves of the United States could indeed provide a substitute for foreign oil.
The technology to convert coal into liquid fuel is well-established, and the fuel can be used in conventional diesel cars and trucks, as well as jet engines, boats and ships. Industry executives contend that the fuels can compete against gasoline if oil prices are about $50 a barrel or higher.
But coal-to-liquid fuels produce almost twice the volume of greenhouse gases as ordinary diesel. In addition to the carbon dioxide emitted while using the fuel, the production process creates almost a ton of carbon dioxide for every barrel of liquid fuel.
Coal industry executives insist their fuel can actually be cleaner than oil, because they would capture the gas produced as the liquid fuel is being made and store it underground. Some could be injected into oil fields to push oil to the surface.
Several aspiring coal-to-liquid companies say that they would reduce greenhouse emissions even further by using renewable fuels for part of the process. But none of that has been done at commercial volumes, and many analysts say the economic issues are far from settled.
“There are many uncertainties,” said James T. Bartis, a senior policy researcher at the RAND Corporation, who testified last week before the Senate Energy Committee. “We don’t even know what the costs are yet.
With both House and Senate Democrats hoping to pass “energy independence” bills by mid-July, coal supporters argue that coal-based fuels are more American than gasoline and potentially greener than ethanol.
“For so many, filthy coal is a dirty four-letter word,” said Representative Nick V. Rahall, Democrat of West Virginia and chairman of the House Natural Resources Committee. “These individuals, I tell you, have their heads buried in the sand.”
Environmental groups are adamantly opposed, warning that coal-based diesel fuels would at best do little to slow global warming and at worst would produce almost twice as much of the greenhouse gases tied to global warming as petroleum.
Coal companies are hardly alone in asking taxpayers to underwrite alternative fuels in the name of energy independence and reduced global warming. But the scale of proposed subsidies for coal could exceed those for any alternative fuel, including corn-based ethanol.
Among the proposed inducements winding through House and Senate committees: loan guarantees for six to 10 major coal-to-liquid plants, each likely to cost at least $3 billion; a tax credit of 51 cents for every gallon of coal-based fuel sold through 2020; automatic subsidies if oil prices drop below $40 a barrel; and permission for the Air Force to sign 25-year contracts for almost a billion gallons a year of coal-based jet fuel.
Coal companies have spent millions of dollars lobbying on the issue, and have marshaled allies in organized labor, the Air Force and fuel-burning industries like the airlines. Peabody Energy, the world’s biggest coal company, urged in a recent advertising campaign that people “imagine a world where our country runs on energy from Middle America instead of the Middle East.”
Representative Rick Boucher, a Virginia Democrat whose district is dominated by coal mining, is writing key sections of the House energy bill. In the Senate, champions of coal-to-liquid fuels include Barack Obama, the Illinois Democrat, Jim Bunning of Kentucky and Larry Craig of Wyoming, both Republicans.
President Bush has not weighed in on specific incentives, but he has often stressed the importance of coal as an alternative to foreign oil. In calling for a 20 percent cut in projected gasoline consumption by 2017, he has carefully referred to the need for “alternative” fuels rather than “renewable” fuels. Administration officials say that was specifically to make room for coal.
The political momentum to subsidize coal fuels is in odd juxtaposition to simultaneous efforts by Democrats to draft global-warming bills that would place new restrictions on coal-fired electric power plants.
The move reflects a tension, which many lawmakers gloss over, between slowing global warming and reducing dependence on foreign oil.
Many analysts say the huge coal reserves of the United States could indeed provide a substitute for foreign oil.
The technology to convert coal into liquid fuel is well-established, and the fuel can be used in conventional diesel cars and trucks, as well as jet engines, boats and ships. Industry executives contend that the fuels can compete against gasoline if oil prices are about $50 a barrel or higher.
But coal-to-liquid fuels produce almost twice the volume of greenhouse gases as ordinary diesel. In addition to the carbon dioxide emitted while using the fuel, the production process creates almost a ton of carbon dioxide for every barrel of liquid fuel.
Coal industry executives insist their fuel can actually be cleaner than oil, because they would capture the gas produced as the liquid fuel is being made and store it underground. Some could be injected into oil fields to push oil to the surface.
Several aspiring coal-to-liquid companies say that they would reduce greenhouse emissions even further by using renewable fuels for part of the process. But none of that has been done at commercial volumes, and many analysts say the economic issues are far from settled.
“There are many uncertainties,” said James T. Bartis, a senior policy researcher at the RAND Corporation, who testified last week before the Senate Energy Committee. “We don’t even know what the costs are yet.
IREJN is Connecticut's Interfaith Power and Light. Visit us at www.irejn.org.
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