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Show . Western Resources Outcome of syn-fuels conference ...HeleneC. Monberg .niton The Administration '.sessional leaders have set "ledate for enacting into law f 8 billion synthetic fuels :'jng bill (S 932), but don't last action to implement it. son is simple. "Can you .Republicans in Congress President Carter to make the appointments under this without delaying action until ,er?" a key industry ,'an asked Western Resources j(WRW) on June 6. original legislation passed last year. But the Senate-t,nferees Senate-t,nferees did not reach a ten-agreement ten-agreement on its many ,s until May 21, and they are filled to ratify the report until i Committee staff is still draf-De draf-De key language in the bill. It E one of the largest and longest :(es on record, with haggling b for many months, is another unusual aspect to ;!ation. It is partially already The 1980 Interior Energy rations Act (PL 96-126) in-i;9 in-i;9 billion for the production of ;ve fuels, of which $2.2 billion ide available immediately to jduction of alternative fuels, syn-fuels made from coal, oil d tar sands, but also biomass, ;te and other alternative fuels, taey was to be used by the ;ent of Energy (DOE) to do iity studies and to build ration and other small-scale U test technologies. This fund ( into the bill by Senate stic Leader Robert C Byrd, D-. D-. as chairman of the Senate Energy Appropriations Sub-w. Sub-w. illy, the new program sets up a it entity called the U.S. Syn-Fuels Syn-Fuels Corporation, which is d to be isolated from political k that federal syn-fuels bs have been subject to in the jocularly from Byrd. Kic concern of many long-time Its of federal syn-fuels research hlopment (R&D) programs is by have spawned "political" hn scientific-technical R&D, sir value is highly suspect. i'r federal government has been.. I is sucti programs in one form since World War II, there is not i commercial synthetic fuels i operation in this country. ETIC FUELS CORPORATION kw legislation creates the U.S. pc Fuels Corporation to provide it assistance to industry to technology which may result in fmercial production of syn-fuels M from coal, lignite and peat, oil pt sands including heavy oil, F'gen. If syn-fuels development Msful, it will reduce our depen-ln depen-ln imports of petroleum. I which would be eligible for f include those used solely to mixtures of coal and l-ni for direct fuel use ; for the rial production of hydrogen ater, and any MHD or shydrodynamic topping cycle polely for the commercial Ft of electricity as well as the 'Wventional syn-fuels retorts pcessing facilities. 1 Corporation would have $88 ' spend over a 12-year period to 'syn-fuels development. The n would have authority to funds until Sept. 30, 1992, and it S out of business on Sept. 30, he U.S. Treasury designated minister outstanding contracts operation in 1997. The cor-would cor-would have $20 billion N under this legislation s already been appropriated e 1980 Interior-Energy Ap-tions Ap-tions Act). f installments would be !ed up to a maximum of $68 joint Congressional ;10n. subject to later ap-J10. ap-J10. The funding is to be used ! United, States producing wrrels of crude oil equivalency 1W, and 2 million barrels yi992 from syn-fuels projects. .Corporation has been for-'toprovide for-'toprovide a substantial degree roence to its operations, while the integrity of the federal y Process," according to the tnergy panel. fumade up of seven members ld of Directors. The policy-j policy-j CorPorate Board is to be ap- the President and confirmed nate for seven-year staggered ( Tk!"6 Cnairman must serve (eiJ other six could serve I Corporation would have H of Up to 300 full-time sna's, and annual ap-i ap-i of $35 million to cover rative expenses and $10 Pay for contract studies. rate board would have a j&er Advisory Committee made up of the Secretaries of h trterior. Defense and ine Chairman of the Energy I, " Board (another new ,and e Administrator of the Environmental Protection Agency In practice, some lower-ranking official in each agency will be active on the Adivisory Committee and thereby keep each agency head informed of the work of the Advisory Committee and the Synthetic Fuels Corporation. FINANCIAL ASSISTANCE Within four years after enactment of the Corporation into law, it must develop and submit to Congress "a comprehensive strategy for the achievement of the national synthetic fuel production goals." No more funds will be provided for the Corporation (over and above the $19 billion voted by Congress last year) until the strategy is in place. It must be designed to meet the Congressionally established goals of 500,000 barrels of crude oil equivalency per day by 1987 and 2 million barrels a day by 1991, emphasize em-phasize private sector responsibilities, outline limitations on federal involvement, in-volvement, and consider national defense fuel requirements. Congress would approve of the comprehensive strategy by joint resolution. The resolution approving the strategy could also carry the additional ad-ditional $68 billion budget authority to carry out the $88 billion syn-fuels federal pump-priming program. Or later resolutions could provide all or part of such authority up to the $88 Diinon maximum. Congress must act within 90 days on such joint resolutions. The Corporation is empowered to provide financial assistance to the private sector for commercial synthetic syn-thetic fuels project in the following order of decreasing priority: 1) Purchase agreements, price guarantees and loan guarantees up to 75 percent of the project costs; 2) Loans up to 49 percent of initially estimated project costs unless such limits would prevent the financial viability of the proposed project, in which case up to 75 percent would be authorized; 3) A minority equity interest, under partnership law, in a joint venture (where the government could provide up to 75 percent of the project costs) for commercial modules prior to approval of the comprehensive strategy. Multiple forms of financial assistance could be provided if required to make a project viable. Special provisions cover cost-overruns. In the event that no private industry were willing to test certain technologies utilizing significant domestic resources, the Corporation could construct such projects itself up to a total of three. BUT it could only do so on a "Last resort basis" after private industry had indicated a lack of interest; in-terest; such a project must be constructed con-structed and operated by a private contractor; and the corporation could not do so after the comprehensive strategy had been approved by Congress. Such projects would be owned by the Corporation. Financial assistance would also be available up to two synthetic fuels projects located in the Western Hemisphere under carefully specified conditions, including that fuel produced from such plants "will be available on equitable terms to users in the United States." And under the 1980 amendments to the 1950 Defense Production Act, the President has the authority to offer either thru the Department of Defense (DOD) or other federal agencies including in-cluding DOE purchase agreements, loan and loan guarantees up to $3 billion to stimulate synthetic fuel developments develop-ments to meet national defense needs before the Synthetic Fuels Corporation if fully operational. After it becomes operational, the conference report provides such authority becomes "standby." Any synthetic fuels acquired by the Corporation must be offered 1 first to DOD for national defense needs beiore being offered to other agencies or sold. Funding provided to DOE under the 1980 Interior-Energy Funding Act and under the Defense Production Act is counted against the $88 billion provided by Congress to pump-prime syn-fuels into production. |