Statement of Senator Michael B. Enzi  on S. Amdt . 1628, Coal to Liquids 

June 19, 2007  

          Mr. President.  I rise today to express my strong support for Senate Amendment 1628, which was offered by my colleagues Senator Jim Bunning and Ranking Member Pete Domenici.  The amendment establishes a fuel mandate program for coal-to-liquid fuel that is identical to the renewable fuel standard, which we are implementing with this legislation.  

          I have listened for the past week as my colleagues have discussed the importance of domestic fuels.  They argue that it is essential for us to reduce our dependence on foreign energy barons and that the mandate that this bill lays out for 36 billion gallons of biofuels is an important step in becoming energy independent.   

          I agree with my colleagues in their assessment that we need to produce more domestic fuel, and the amendment that I am speaking in support of does just that.  By mandating that we use 6 billion gallons of fuel derived from coal, we will use our nation’s most abundant energy source to help break America ’s “addiction to oil.”  

          Coal to liquids technologies are not new.  The technology has been around since the 1940s and there is no question that it can be used today in transportation markets that currently exist.  It can be transported in pipelines that currently exist.  And, because it comes from coal – our nation’s most abundant energy source – it can be produced at home by American workers.  

          Coal to liquids plants are being developed in China .  They are being developed in other major industrialized nations, but they are not being developed in the United States .  I am concerned that, as we sit on the sidelines, other nations will take advantage of our inaction and our economy will suffer.   

         That is why I am speaking today in support of the amendment offered by my colleagues from Kentucky and New Mexico .  The amendment they have introduced is the right approach to moving this issue forward in a way that will truly help the coal-to-liquids industry and, in doing so, will truly benefit the American people.  

         There is a competing proposal offered by my colleague from Montana that I will discuss in a moment, but I first want to discuss why this is the right approach if we are to spur investment in the coal-to-liquids industry.  Simply put:  if your goal is to create a market for a new energy source, mandates work.  We have seen it with the current renewable fuel standard.  Since passage of the RFS as part of the Energy Policy Act of 2005, we have seen a dramatic rise in the number of ethanol plants that exist in the nation and there is no sign of the industry slowing down. 

         We have an opportunity to do so today for the coal to liquids industry.  However, we will do so on a smaller scale requiring just 6 billion gallons of coal derived fuel as opposed to the 36 billion gallons mandated for biofuels in this bill, and we will do so with additional environmental standards.  Like the underlying legislation, we require the 20 percent lifecycle greenhouse gas reduction language.  However, unlike the underlying bill, the amendment requires coal-to-liquid plants to operate with technology to capture carbon dioxide emissions. 

          In general, I am not a fan of mandates and so I have struggled with this issue.  However, if our goal is to reduce our nation’s dependence on foreign energy sources and to produce more fuel domestically, the current renewable fuels mandate has proven that it is an approach that works.   

         In direct contrast to the success of a mandate is the failure of the loan guarantee program, which has issued exactly zero loans almost two years after the program was created in the Energy Policy Act.   The Senator from Montana ’s approach of a direct loan program is different than the approach taken in the Energy Policy Act.  Although that is the case, I am concerned that his legislation will simply create another loan program that does not work.  A direct loan program requires that the federal government loan taxpayer money to private companies to move forward.  In the very tight appropriations climate we are currently experiencing, my colleagues are kidding themselves if they think we will spend the kind of money it takes to build one of these plants through a direct loan.  

        In addition to my concerns about the loan program, I am also concerned that the Senator from Montana ’s amendment sets forth environmental standards that are technologically unachievable.  We have devoted an entire title of this bill – title III – to the research and development of carbon sequestration technologies.  I have faith that this research will help us to advance carbon sequestration efforts, but I do not believe we are there yet.  As such, the Tester amendment’s requirement for 75 percent sequestration seems unreasonable.  

         I am not a technical expert, and so I have spoken to the people who are planning coal-to-liquids facilities.  None of the developers whom I have questioned have suggested that they can achieve the 75 percent mandated by the Tester amendment.   

         Both of the Democratic and Republican proposals will reduce greenhouse gases in a major way.  Both of these amendments require a 20 percent improvement.  But the Democratic proposal goes too far and sets standards that are not technologically achievable.  

         My colleagues are faced with a choice.  The amendment offered by Senators Bunning and Domenici takes a proven approach of mandating that we use a domestic fuel.  It adds responsible and reasonable environmental standards, and it will work to spur development of a domestic coal to liquids industry.     

         If we truly want to see coal to liquids plants built in the United States , only one of the approaches before the Senate works.  That approach is the one offered by my colleagues Senators Bunning and Ranking Member Domenici. 

I yield the floor.