Washington (Platts)--14Jun2007

A measure that would have established a Fischer-Tropsch demonstration project
and offered incentives to build coal-to-liquid refineries failed to garner
enough support to be added to the energy bill being debated on the Senate
floor on Wednesday.

But in a reversal of fortunes, several coal amendments were successfully added
to energy legislation in a House energy committee.

The main goal of the doomed Gas Price Act, sponsored by Republican Senator
James Inhofe of Oklahoma, was to increase construction of new CTL and
cellulosic ethanol refineries or expand existing plants. It would have
required the Environmental Protection Agency to establish a demonstration
project to assess the use of Fisher-Tropsch diesel and jet fuel as an emission
control strategy and provided financial incentives for building the facility
at a closed Base Realignment and Closure site or on Indian land. 

The amendment called for streamlining the permitting process, providing states
with technical and financial resources to assist in permitting, establishing
deadlines for permit approval and classifying fuels. 

In a heated debate, the former chairman of the Environment and Public Works
Committee argued the amendment was necessary to increase refining capacity
while current Chairman Barbara Boxer, Democrat-California, called it a
"giveaway to big oil."

"These plants cost upwards of $3 billion to $4 billion and the money goes to
the same people that are charging close to $4 per gallon [in California] and
making record profits," Boxer said.

Inhofe argued the money wouldn't go to the oil companies, but to the Economic
Development Administration that is charged with creating industry and jobs in
distressed areas through grants.

Boxer argued several environmental rules like the Clean Air and Clean Water
acts would be waived in the streamlined permitting process to get these
refineries built.

Inhofe told senators that organizations like the Environmental Council of
States and the National Association of Counties support the amendment because
it gives local governments more say in the siting process and how the land it
used.

"Anyone who votes against this amendment forfeits their right to complain
about the lack of production in this country," Inhofe said.

In a statement after the vote, Inhofe said that the Democrats voted down an
amendment that would have "significantly reduced the cost of gas at the pump ?
an issue sure to dominate in the 2008 presidential election." 

The National Mining Association, which supported the measure because it would
have enabled the US to use its coal resources in the production of CTL fuels,
was disappointed.

Luke Popovich, spokesman for NMA, told Platts that he knew it would be an
uphill battle getting CTL amendments passed in a Congress operating in a
partisan atmosphere and dealing with clashing issues like global warming and
energy security.

-- Regina Johnson, regina_johnson@platts.com

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