Red tape threatens coal-to-diesel plant, backers say
Sunday, June 17, 2007
BY BRETT LIEBERMAN
Of Our Washington Bureau
pennlive.com
WASHINGTON - With high gas prices stretching budgets, alternative energy and home-grown solutions to the United States' dependence on foreign oil are hot-button issues.
But supporters of plans for a Schuylkill County plant to turn coal into cleaner-burning diesel for half the cost of a gallon of gasoline are in jeopardy because of bureaucratic delays that could doom the deal.
Wall Street jitters and opposition from environmental groups are being blamed for holding up similar plants that would be built in other states with vast coal reserves.
A plan by coal-state lawmakers for as much as $10 billion in loan guarantees to help capture and store the greenhouse gases produced by these plants is expected to be debated in the U.S. Senate this week. Lawmakers are also pushing for federal price guarantees to pacify Wall Street concerns that these plants would be worthless if oil prices drop.
The bills face stiff opposition from Democrats, including Senate Majority Leader Harry Reid.
Frustrated supporters of the $800 million Schuylkill County project, which has been 13 years in development, suspect the oil industry might be behind the delays, which include a four-year wait for a $100 million federal loan guarantee.
Congressional leaders say their suspicion might be justified.
"We're dealing with bizarre behavior, especially considering the State of the Union" address last year, in which President Bush endorsed clean coal, said John W. Rich Jr., the president of Waste Management & Processors Inc. in Gilberton.
"This whole thing has been orchestrated against an alternative energy that is cheaper and cleaner," he said.
Among those who stand to benefit from coal-to-fuel plants' failures is the oil industry, whose prices could be undercut with oil in the range of $60 a barrel.
Coal-to-liquid plants would break even at around $35 a barrel, according to industry estimates.
"Just because you are paranoid doesn't mean they're not out to get you," said U.S. Rep. Tim Holden, D-Schuylkill, whose district would be home to the proposed plant.
WMPI received $7.8 million in federal money in 1999 for the plant that would turn waste coal and biomass into 5,000 barrels of fuel a day.
The Air Force has expressed interest in buying the product. Pennsylvania, which provided a $47 million tax credit that's yet to be drawn down, has committed to purchasing the finished product.
The company received the $100 million, no-interest loan guarantee in 2003, though the contract has yet to be finalized.
Holden has worked with Republican Sen. Arlen Specter and former Sen. Rick Santorum, also a Republican, since the mid-1990s to get start-up money and the loan guarantees. Holden said the process has been stalled by the Department of Energy's failure to establish environmental rules that must be in place before the loan guarantee and financing can be completed.
"I think that the whole process is going to have to be extended because of the Department of Energy's ineptness and their inability to do what Congress directed them to do," Holden said.
Besides waiting for environmental rules, which are expected to be issued by August, the Energy Department must resolve intellectual property issues with technology providers.
Holden and other lawmakers doubt the loan guarantee can be completed by the Energy Department's Dec. 31 deadline.
However, an Energy Department spokesman said the ball is in WMPI's court.
"We sent a letter out to Arlen Specter and to WMPI advising them that we were giving them until the end of the year to get their financing arranged, and that's where it stands right now," said department spokesman John Grasser.
Specter wrote to Energy Secretary Samuel W. Bodman that the Dec. 31 deadline doesn't work, but he hasn't received a response.
Supporters said they believe they are being set up to fail because the Energy Department knows the deadline can't be met.
The department has to sign off on the financials for the project, including the loan guarantee, but that can't be done until it finishes the environmental rules.
BRETT LIEBERMAN: 202-383-7833 or blieberman@patriot-news.com |
