Three consultants hired by the Senate Budget Committee to advise it about government involvement in synthetic fuels production recommended yesterday a go-slow approach instead of the $88 billion crash program President Carter has proposed.
"Experience has shown that time constraints and political visibility consistently limit the ability of federally supported pioneer projects to promote the commercialization of new technologies," warned one of them, William Stitt of ICF Inc.
The president's plan would achieve "significant import reductions," Stitt added, but it "appears less likely to result eventually in a commercially viable synfuels industry."
Instead, Stitt suggested "an aggressive first phase" of developing synfuels production capacity while deferring any decision about what later capacity targets should be. President Carter proposed a goal of 2.5 million barrels daily in liquid fuels or their gas equivalent by 1990.
The consultants testified before a special Budget subcommittee on synthetic fuels that is supposed to report to the full committee by Sept. 15 on the budgetary impact of alternate proposals to achieve synfuel production.
Sen. Gary Hart (D-Col.), chairman of the subcommittee, said yesterday that the "key ingredients" of any federal program should have production goals "which provide reasonable flexibility to further develop synthetic fuels processes to make them economically competitive with conventional petroleum."
ICF, as well as the other consultants, Cameron Engineers, and Booz, Allen Hamilton, all questioned whether the administration's proposal had that kind of flexibility. They said they prefer a slower approach that would allow careful evaluation of new technologies so that successive plants could benefit from the mistakes and successes of the first group of plants.
Sen. Lawton Chiles (D-Fla.) questioned the consultants pointedly, declaring, "I'm not sure we have that kind of time. Do we have the time to go the old way? What are the risks?"
"Have you taken into account the OPEC (Organization of Petroleum Exporting Countries) gun at our head?" Chiles asked.
Bruce Pasternack, vice president of Booz, Allen & Hamilton, replied, "I don't believe we would get all that much more production 10 years from now with a crash program" than from the slower approach the consultants prefer.
Stitt of the ICF proposed a two-phase program under which the government quickly would enter into contracts for six synthetic fuel plants but wouldn't proceed automatically with more on an accelerated schedule, "based on what was learned in Phase I, a decision would be made on whether to aim for 2.5 million barrels a day of capacity in 1990 or 1995 and on what type of synfuels would be included," he said.
Under consideration are plants that would make liquid fuels from coal and oil shale, and gas from coal. The president proposed contracting for six full-scale synfuels plants by 1981 and another 20 by 1984, and subsidizing them with a variety of mechanisms ranging from loan guarantees to purchase agreements for the output.
Stitt went on to suggest another version of a two-phased approach in which there would be a decision in the second phase "on whether to proceed at all with further synfuel development or to reduce imports through other more-cost-effective measures."
The hearing will continue today with witnesses from the administration and the Congressional Budget Office.