Tuesday, May 30, 2006

Taxpayers Pay the Bill for H.R. 5453

Last year the U.S. began offering tax credits for the development of alternative fuels such as corn-based ethanol and biodiesel made from vegetable oils. Rep. John Shimkus (IL-19), a member of the U.S. House Energy and Commerce Committee since voters mistakenly elected him to Congress in 1996, hopes to ride that wave and give the bill to the taxpayers.

He introduced H.R. 5453 last week. It amends the 1986 Internal Revenue Code extending the existing alternative fuel mixture excise tax credits for certain liquid fuel derived from coal. The current expiration date is September 30, 2009. The new expiration date would be December 31, 2020.

The technology process transforms coal into diesel, jet, and other liquid petroleum fuels. His constituents in the coal-producing states support this legislation because they want more funding to pay for developing the coal liquefaction plants. He has received over $80,000 and then some from energy and natural resources PACs to do their bidding. It is interesting to note that the production would be economical as long as oil prices remain above $45 per barrel, and there are no taxpayer cost estimates for the alternative fuel mixture excise credit.

The 50 cents per gallon tax credit is part of the Highway Reauthorization and Excise Tax Simplification Act. According to the oil and gas constituents, diesel fuel from coal should help lower fuel prices, America’s dependency on foreign oil, and harmful emissions. He also thinks that his legislation would specifically benefit parts of Central Illinois. Many tons of coal are located in IL-19 (e.g., Christian and Montgomery Counties).

According to the Illinois Coal Association, the U.S. holds approximately one-quarter of the world's coal reserves. It has more coal than any other fossil fuel, and Illinois has the largest reported volume of bituminous (i.e., soft) coal. Currently, there are no U.S. coal-to-liquid production facilities in existence due to not being cost-effective and having environmental concerns. The Fischer-Tropsch process dates from the 1920s. Nazi Germany was the first country to use it. Currently, it is widespread around the world – especially in South Africa.

In the U. S., Waste Management and Processors, Inc., will begin construction on a coal-to-liquid facility in Pennsylvania later this year to redeploy this archaic technology. The company would produce an estimated 5,000 barrels of diesel fuel each day. Rep. Shimkus would like to see a facility that producing 80,000 barrels daily or 15 million tons annually. Consider three things:

  1. The cost: five years and $7 billion
  2. The market: the aviation industry and the U.S. Defense Department
  3. The result: It will free some oil for only a fraction of total U.S. oil consumption because it exceeds 20 million barrels a day.
Jim Ross, manager of the Illinois Environmental Protection Agency's Division of Air Pollution Control, notes that this technology will fail in existing U.S. processing plants (e.g., the coal-fired power plants in Illinois). Therefore, they cannot perform the gasification and liquefication processes necessary to produce this kind of fuel.

In addition to the cost, there are the environmental concerns. Typically, the conversion process strips away many impurities. The companies store the mercury in landfills which sometimes leads to underground water contamination. Also, some of the mercury and carbon dioxide remain. Illinois already has high levels of mercury emissions that end up in the food chain through contaminated fish producing adverse health effects for humans – especially women and children.

Coal gasification is a better alternative although coal will not solve America's energy problem in a clean way no matter who uses what process. Here are more facts to remember:
  • There is no such thing as zero-emission coal or clean coal.
  • Some part is always waste that going to a landfill.
  • There is no away.
  • There is no such thing as cheap gas.
  • Taxpayers need more innovation not another bill for services rendered.
Jared Diamond's most recent book, Collapse: How Societies Choose to Fail or Succeed, reminds the U. S. of the outdated notions of past abundance.
[. . .] The idea that Easter Island had lots of trees, for example, persisted until they were all cut down. Greenland once had enough grass to support cattle, so Viking settlers stubbornly stuck with pasturage even when the Little Ice Age drastically cooled the climate.

Our own folly is cheap fuel. The United States once had large oil reserves, and they made us rich and powerful. Ergo, cheap fuel--oil, coal, nuclear, or whatever--is seen as being key to our continued prosperity and future security. This gusher mentality deforms our society and economy. It leads the United States to sabotage international efforts to combat global warming, tolerate a huge trade deficit that has destroyed millions of manufacturing jobs, and keep military bases in the Middle East, where they serve as rallying points for terrorists. And it's why the U.S. auto industry continues to promote size and performance over safety and efficiency.

Help the oil industry, argues the cheap-fuel lobby, and the price will go down. So Congress grants enormous subsidies to wealthy oil companies, which turn our wild places into industrial zones, foul our air and water, and poison our communities. Others say that the oil industry (or the OPEC cartel) is price-gouging. Stop profiteering and cheap energy will return is their mantra. [. . .]

But our energy problem has less to do with price than with waste and inefficiency. Large amounts of petroleum are lost in drilling, transportation, and refining. Of every gallon that reaches the gas pump, only a few spoonfuls are needed to move the passenger's body -- the rest is used to move the weight and bulk of the car itself. Better engineering could reduce this waste by half; smaller and lighter vehicles could lower fuel needs to a quarter of our present, profligate levels. If cars got 100 miles per gallon -- as they could -- who would care about paying $5 a gallon at the pump?

Similarly, of every pound of coal torn from the mountaintops of Appalachia, more than eleven ounces' worth of electricity is lost at the power plant. Further losses occur in the transmission and distribution systems, and in the wasted heat from incandescent bulbs. Less than two ounces provide the actual lumens of light. If we got three times as many lumens per ton of coal mined -- as we could -- electricity bills would plummet even if coal prices soared.

But our governing folly paralyzes us, and we continue to focus on price instead of waste and inefficiency. Last year, Congress threw billions of dollars in new subsidies at the oil industry, but gas still rose to $3 a gallon. Airlines went bankrupt. Homeowners chose between paying for heat and buying food. And the Bush administration and congressional leadership very nearly succeeded in opening the Arctic National Wildlife Refuge to drilling, even though its reserves would represent only a drop in our oil bucket.
There is a better way (an alternative to the Land of Oz): Choose success over failure.
  • Expand renewable sources.
  • Promote energy efficiency.
  • Break the stranglehold of carbon fuels.
IL-19 constituents need to remember that anything that will benefit the Republican money spigot gets top priority on the John Shimkus agenda while other issues closer to home remain ignored. It is in their best interests to return the bill (amount to be named later) to their very lackluster legislator.

November 07, 2006 -- IL-19 voters need to vote him out of office and Dan Stover (D-Centralia) in.


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