Senators Obama and Bunning Introduce Legislation to Expand Coal Use

Senators Obama and Bunning Introduce Legislation to Expand Coal Use

U.S. Senators Jim Bunning (R-KY) and Barack Obama (D-IL) today announced that they have introduced S.3325, the "Coal-To-Liquid Fuel Promotion Act of 2006." Joining this bipartisan legislation as original co-sponsors are Senators Conrad Burns (R-MT); Richard Lugar (R-IN); Mark Pryor (D-AR); and Lisa Murkowski (R-AK). This comprehensive piece of legislation creates tax incentives for coal-to-liquids (CTL) technology and the construction of CTL plants. If passed, this legislation will help create the infrastructure needed to make CTL a viable energy resource throughout America.

In the CTL process, coal is gasified, the gas is run through the Fischer-Tropsch process, and the resulting fuel is refined into diesel. The final diesel product is cleaner than conventional diesel because most of the sulfur and nitrogen is removed during the Fischer-Tropsch process. Currently, all the vehicles in South Africa run on fuels produced by Fischer-Tropsch.

Bunning said, "The bipartisan legislation I introduced with Senator Obama will help create the infrastructure needed to get coal-to-liquids technology off the ground. CTL technology offers America the chance to capitalize on an abundant domestic resource that is found in eastern and western Kentucky. With a heavy investment into CTL, America will wean itself off of foreign sources of energy, and at the same time create jobs for working families back home. CTL is a viable, environmentally friendly energy resource, and will help cure America's addiction to oil."

Obama said, "The people I meet in town hall meetings back home would rather fill their cars with fuel made from coal reserves in Southern Illinois than with fuel made from crude reserves in Saudi Arabia. We already have the technology to do this in a way that's both clean and efficient. What we've been lacking is the political will. This common sense, bipartisan legislation will greatly increase investment in coal-to-liquid fuel technology, which will create jobs and lessen our dependence on foreign oil. Illinois Basin Coal has more untapped energy potential than the oil reserves of Saudi Arabia and Kuwait combined. Instead of enriching the Saudis, we can use these reserves to bring a renaissance for Illinois coal."

The Coal-to-Liquid Fuel Promotion Act of 2006 is a three-part, comprehensive effort to create a vibrant domestic CTL fuel market. First, this bill enables the Department of Energy to provide loan guarantees for construction and loans for the necessary planning of CTL plants. Loan guarantees will encourage private investment and planning loans will help companies prepare a plant for construction. Second, this legislation will expand investment tax credits and expensing provisions to include coal-to-liquids plants and extend the Fuel Excise Tax credit. These tax incentives build on the loans and loan guarantees by offering tax breaks during the multiple-year construction phase and during initial production at the plant. Third, this bill provides the Department of Defense the funding to purchase, test, and integrate these fuels into the Strategic Petroleum Reserve.

http://obama.senate.gov/press/060607-senators_obama_and_bunning_introduce_legislation_to_expand_coal_use/index.html