Coal-to-Liquid Provision Stalls

By Sholnn Freeman
Washington Post Staff Writer
Wednesday, June 20, 2007

The Senate yesterday rejected two additions to an energy bill that would have pumped billions of federal dollars into efforts to ramp up production of a coal-based fuel for cars and trucks, which proponents had called an important alternative to petroleum.

By a 61 to 33 vote, senators turned back one amendment that would have authorized $200 million to build coal-to-liquid plants and $10 billion in loans to pay for capturing and storing greenhouse gases from the plants. The second measure, defeated 55 to 39, would have created a fuel-mandate program requiring the production of 6 billion gallons of liquid coal fuel by 2022.

Environmental groups oppose coal-to-liquid programs because, they say, such technology produces twice as much greenhouse gas as petroleum-based motor fuels and would greatly expand coal mining.

Jonathan Lash, president of the World Resources Institute, called the proposed measures "a huge subsidy to the coal industry." He added, "If you were trying to choose some way to increase global warming emission, coal-to-liquid is what you'd choose."

Sen. Robert C. Byrd (D-W.Va.) argued for the measure, saying that the United States has the world's largest supply of coal, which is much cheaper than petroleum or natural gas. "It's right here, like acres of diamonds under our feet," he said.

Meanwhile, the Senate Finance Committee sent a $32.1 billion tax package to the floor that would create incentives for renewable fuels and alternative vehicles, and pay for them by tightening the tax rules on oil and gas companies.

Among the provisions is an extension of tax incentives for renewable electricity initiatives, including credits for solar, wind and microturbine energy projects. The package also has measures to encourage production of ethanol and other biofuels, increase refinery capacity and refine more fuel from oil shale and tar sands.

To pay for the package, a variety of tax rules would be strengthened, including repeal of a manufacturing deduction offered to major oil and gas companies that produce in the United States.

Beyond the Senate chamber, auto industry lobbyists continued to try to derail rigorous fuel-efficiency requirements being considered as part of the energy bill. A group led by Sen. Carl M. Levin (D-Mich.) has been seeking support for a competing amendment that would impose less-stringent standards.

Yesterday, Thomas W. LaSorda, Chrysler's chief executive, visited Capitol Hill to lobby against the tougher standards. General Motors sent Mark LeNeve, the automaker's top marketing executive. Mark Fields, president of Ford Motor for the Americas, met with about a half-dozen senators to discuss the bill. And dealers from all three auto companies met with lawmakers.

Levin and Sen. Debbie Stabenow (D-Mich.) also argued for the amendment during a party caucus lunch.

Some senators acknowledged that Levin and the auto industry were making headway. In a telephone conference yesterday, Sen. Richard J. Durbin (D-Ill.), who supports tougher fuel efficiency standards, predicted a "very close vote."

Durbin said vote counts by Democratic leaders in the Senate show the outcome could be decided by just a handful of senators, possibly by undecided Republicans if Democrats' support weakens.

"I think we have a good chance to win," Durbin said. "But we haven't given up. We are going to continue to press forward."

Sen. Thomas R. Carper (D-Del.), who is also a proponent of higher mileage standards, said, "Frankly, I don't think either side has momentum."

Durbin became the latest senator to accuse Detroit auto companies of having created their own problems. Noting that the automakers' principal objection to the Senate's proposed fuel standards is that they are not economically feasible, Durbin blamed the companies' weak financial positions on their lack of initiative in building more fuel-efficient vehicles.

"I feel very badly for the American auto industry," Durbin said. "I wish that my friends in Detroit would spend a little more time with their engineering department, rather than their legal department."

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