Making gas from coal focus of hearing
Senators consider effect of federal incentives
By NOELLE STRAUB
Gazette Washington Bureau
billingsgazette.net
WASHINGTON -- As energy prices continue to soar, a Senate hearing on Monday examined up-and-coming technologies that would turn coal into gas and the effect that federal incentives passed last summer have had on speeding the development of such gasification projects.
The Senate Energy Committee delved into the economic and environmental aspects of converting coal into synthetic gas, which could then be used as a substitute for natural gas or to produce liquid fuels or electricity.
Energy Under Secretary David Garman testified that gasification technology "is poised to make a revolutionary impact" on the marketplace both in the U.S. and abroad. But he said the business risks of the first new plants remain greater than for conventional power plants, and so federal assistance is required.
Industry officials and a scientist from an environmental group testified that the new technologies would have significant environmental benefits, if technologies are used to trap the pollutants that would otherwise be released into the atmosphere.
Testimony also focused on two provisions in the 2005 Energy Policy Act intended to speed the development of gasification technologies.
Despite some glitches in the application process, the deadline for special tax credits to develop coal gasification projects approaches quickly.
The act that passed last summer included $350 million to provide tax credits for qualifying industrial gasification projects. The deadline for applying for the credit is June 30. The Energy Department will make recommendations on the applicants, but the decision on awarding the credit rests with the Treasury Department.
Garman said final decisions should be made by November.
The bill also included a federal loan guarantee provision to speed development of the technologies. The department will be able to accept applications for self-pay loan guarantees by Oct. 1, Garman said.
Garman said the Energy Department has established an office for the loan guarantee program and is recruiting a permanent director and establishing a credit review board.
But he insisted that the department cannot make any loans unless Congress authorizes it to do so in a funding bill, ensuring that the agency can cover all the costs.
At the hearing, Sen. Craig Thomas, R-Wyo., advocated for locating facilities using the new technologies where the coal is found, mostly in Wyoming and Montana.
He said half the electricity in the U.S. is generated by coal but that the percentage should be higher.
"Our greatest source of future fossil fuels is coal," he said. "What we need to do is find ways to use that coal in more environmentally sound ways, sounder than we have in the past if we can."
Four officials with companies that hope to take advantage of the federal incentives for the new technologies also testified, as did a staff scientist from the environmental group the National Resources Defense Council.
The industry officials lauded the federal incentives but expressed concern about the way they are being implemented.
They said federal agencies, especially the IRS and Treasury, have not responded to questions on application requirements and the information needed. They said they could not submit applications until the agencies responded.
Some of the officials also wanted the application requirements to be broadened to include more industries or end uses for the fuels.
NRDC scientist Antonia Herzog said gasification technologies can help reduce the pollution created by coal but that more focus must be put on sequestration technologies, which would remove pollutants such as the greenhouse gas carbon dioxide and reuse them or trap them underground.
"Coal use and climate protection do not need to be at odds with each other," she said. "We need to get this carbon capture and disposal technology out there as soon as possible and we need incentives to do so."
After the hearing, Thomas said the testimony showed that coal gasification technology is closer to reality than many people think, but that the government must act faster.
"I think we learned that our policy that we put in to move in this direction needs to be implemented more quickly," he said.
Published on Monday, May 01, 2006.
Last modified on 5/1/2006 at 8:33 pm
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