Senators concerned that DOE budget doesn't fund Energy Policy Act

Washington (Platts)--10Feb2006

Several Senate leaders expressed concern that proposed funding in the Dept. of
Energy's 2007 budget doesn't reflect promises made in the Energy Policy Act of
2005, particularly those aimed at coal.

At an Energy and Natural Resources Committee hearing on DOE's budget Thursday,
Chairman Pete Domenici, R-N.M., focused on the loan guarantees for the Clean
Coal Power Initiative.

"We need an explanation of why it was reduced," Domenici said. "The Energy
Policy Act provided incentives for it. We set specific goals and loan
guarantees. We need those incentives started; without it various projects
can't be funded."

The energy bill, signed by President Bush last year, established an Energy
Loan Guarantee Fund to cover 80% of new clean-energy projects that would spur
technologies like carbon capture and sequestration projects and coal
gasification. It also established three investment tax credits for clean-coal
facilities, a 20% tax credit for integrated gasification combined-cycle
projects, a 15% credit for advanced coal-based projects and a 20% credit for
industrial gasification projects. 

The budget didn't reflect the coal gasification opportunities available to the
country, said Sen. Craig Thomas, R-Wyo.

"We have some real opportunities to make some conversions and we've got people
in the industry ready to do some of those things and they need some financial
assistance. I'm not talking about FutureGen. I'm talking about doing something
in the next 2-3 years to convert coal to gas and yet there's not much support
for that in this budget," Thomas said.

"Basically in the Energy Policy Act, [Congress] and the administration agreed
to fund certain projects. Now this budget shows we're not doing that," Sen.
Jeff Bingaman, D-N.M., said. "The levels of funding in [DOE's budget] will not
allow the bill to be implemented properly."

Bingaman gave Secretary of Energy Samuel Bodman what he called a "cross-walk"
comparison between the authorizations in the energy bill and the president's
budget request for 2007. Bingaman asked that Bodman and his staff review the
comparison to help him understand the relationship between the energy bill and
the budget.

"I would like to work with you, with the chairman and with our colleagues on
both sides of the aisle to see if we ultimately get more funds appropriated to
implement the Energy Policy Act of 2005 than was requested earlier this week,"
Bingaman said. "I don't think it's appropriate to be forced into some zero-sum
game on the DOE budget, where we have to rob Peter to pay Paul.The provisions
of the Energy Policy Act of 2005 are important enough to the country that we
should be working together to increase the bottom line for all energy programs
at DOE." 

"I would guess that your chart showing the levels of authorizations and how
the budget matches up to it is probably pretty accurate. But because something
is authorized does not necessarily mean it gets appropriated, and there is not
a requirement that the executive branch requests that appropriation," Bodman
said. "We tried to focus the spending, particularly the increases, in areas
that we feel we have a particular ability to really influence in a major way,
to transform the technology in and around these commitments."

At a press conference after the hearing, Sens. Maria Cantwell, D-Wash., Byron
Dorgan, D-N.D., and Ron Wyden, D-Ore., expressed their disappointment in the
bill.

Wyden told reporters the DOE budget was full of hot air because it did nothing
to actually move the United States away from dependency on foreign oil.

"We are going to try and turn this thing [budget] around," Cantwell said.

-- Regina Johnson, regina_johnson@platts.com

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