Coal Gasification Program Needs Clarity

A technology that could provide raw materials for chemicals and fertilizers or hydrogen and fuels is ready for commercial deployment, but Congress needs to help if potential projects are going to gain momentum, an industry leader told lawmakers on May 1.

Testifying before the Senate Energy & Natural Resources Committee, J. Brian Ferguson, chairman of the board and chief executive officer of Eastman Chemical, said provisions in the Energy Policy Act of 2005 that provide incentives and loan guarantees for industrial-scale coal gasification projects require clarification.

"I'm confident that there are projects that will be ready to go as soon as this process is clarified,??? Ferguson remarked. ???But we need to start with active dialogue.???

The comprehensive energy bill passed by Congress last year includes federal loan guarantees and investment tax credits to aid potential industrial gasification projects. But Ferguson said the application process has been hampered by confusing application requirements and insufficient guidance on selection criteria.

"It's imperative that implementation of the industrial gasification tax credits be more transparent and based more on the substantive merits of potential projects than we have seen so far," he testified.

Department of Energy Undersecretary David K. Garman told the committee that his department is working to put a loan guarantee program in place. But he said additional approval from Congress is needed before DOE can begin offering financial support.

"It is our view that the Federal Credit Reform Act contains a requirement that prevents us from issuing a loan guarantee until we have an authorization ??? in an appropriations bill," Garman said. The 1990 law tightened requirements to prevent defaults on federal loan guarantees.