A House subcommittee that usually stays on the fringes of national energy policy has quietly approved a bill that would provide up to $2 billion to subsidize the synthetic fuel industry.
Chairman William S. Moorhead (D Pa.) of the economic stabilization subcommittee championed the bill in an attempt to force the Carter administration to push American industry into large-scale production of synthetic fuels.
The president, under the legislation the subcommittee approved Thursday by voice vote, would use the $2 billion to make up the difference between the price of synthetic and natural fuels. The Pentagon, which uses about 500,000 barrels of fuel a day, would be a likely customer for the synthetic fuel.
One congressional source characterized the subsidy package as "a sleeper" that is the biggest step any subcommittee has yet taken toward a government-backed synthetic fuel industry.
If the $2 billion in subsidies failed to encourage industry to build synthetic fuel plants, the legislation would authorize the government to build them itself and then lease them to private operators.
Fuel produced by squeezing oil from shale would be eligible for subsidies, as would fuel produced by turning coal into gas or liquid fuel. Such processes have drawn fire in the past from enviromentalists on grounds they are unacceptably destructive.
Garry DeLoss, an energy specialist with the Environmental Policy Center, said yesterday he was not aware the subcommittee had approved the measure, adding that his organization is "in principle" against subsidies for producing oil from shale and coal.
Moorhead and his allies counter that the time has come for the federal government to engage in a bold program to lessen American dependence on foreign oil by stimulating synthetic fuel production.
The subcommittee amendments to the Defense Production Act, which expires Sept. 30, would direct the presient to achieve within five years "a national production goal of 500,000 barrels per day crude oil equivalent of synthetic fuels and synthetic chemicals feedstocks."
The newly approved bill also would allow the president to organize corporations to achieve that goal.
Fuel from coal gasification, coal liquefaction, conversion of shale, lignite, peat, solid waste "and the conversion of any organic material into fuel" would all by eligible for the federal subsidies.
Backers of the bill include Koppers Co. Inc. of Pittsburgh, which is in Moorhead's congressional district. The bill is expected to go before the parent House Banking Committee next week.
The Moorhead subcommittee amendments are likely to be challenged on jurisdictional grounds by House committees that traditionally handle energy legislation.