House Legislation Passes

By: Bill Reid
Managing Editor

    The U.S. House of Representatives has passed a comprehensive energy bill (HR 6) by a vote of 247 to 175 that, among other provisions, will ensure continued development of clean coal technologies and availability of America’s most abundant energy source. The Senate Energy and Natural Resources Committee also began working on its version of an energy bill following Finance Committee approval of clean coal tax incentives.

Some of the provisions that have been accepted in HR 6 are as follows: 

R&D Provisions
• $2 billion over ten years for clean coal technology research and development (the Clean Coal Power Initiative – CCPI) along with provisions that relax post 2009 requirements that 80% of the clean coal funding is spent on coal gasification technologies.
• Authorization levels for fossil energy research, including requirements that 60% of any funds appropriated be directed toward coal research, were adopted as reported by the Science Committee. These funds do not include the annual $200 million separately authorized by the CCPI.

Coal Leasing Provisions
• Eliminate the 160 acre limit on life of mine lease modifications.
• Give the Secretary the needed discretion to allow the consolidation of leased coal reserves into a logical mining unit (LMU) and to establish the duration of the LMU, even if it would require more than 40 years to mine.
• Allow the Secretary to accept the payment of advance royalties in lieu of continued operation for a total of 20 years; allow the lessees to apply these paid royalties against actual production beyond the initial 20-year lease term; and simplify the methodology for computing advance royalties by using the average price for coal sold in the spot market for the same region to establish the value of the advance royalty.
• Eliminate bonus bid bonding requirements.
• Eliminate the three-year requirement for submission of an operation and reclamation plan following lease issuance.

Tax Provisions
• While the bill as passed does not include the clean coal tax incentives from the Whitfield/Boucher Bill, HR 1213, the Chairman of the House Ways and Means Committee, Bill Thomas (R-CA) did indicate in a House floor statement that the incentives will be made part of the bill in the upcoming conference with the Senate.
    “This legislation contains many positive provisions for mining and represents a major step forward in advancing the public policy agenda for our industry at the federal level,” said Jack Gerard, President and CEO, National Mining Association. “Perhaps most importantly it reflects the positive progress we are making in gaining acceptance on the part of lawmakers for the important role the mining industry plays and must continue to play in supporting the U.S. economy.” 

Energy Action in the Senate

    While HR 6 was moving through the House, two committees in the Senate were marking up the Senate version of the energy bill.

Energy and Natural Resources Committee
• $3.2 billion plan for hydrogen-powered technology that goes beyond President Bush’s $2 billion over five years for the FutureGen Project. The measure includes nuclear provisions.

Finance Committee
• The Committee approved the “Energy Tax Policy Act of 2003”, which provides $2.2 billion in production tax incentives for a maximum of 4,000 MW of existing capacity and production and investment tax incentives for a maximum of 4,000 MW of new advanced clean coal technologies. The Senate Energy and Natural Resources Committee is deliberating these portions of the energy bill that are under its jurisdiction. Proposals that have been dropped from the committee’s bill include the following:
• Climate change provisions were dropped from the bill, but will be discussed when the measure comes to the Senate floor.
• The “emissions avoided” proposal, which would have granted SO2 and NOX credits to nuclear power plants, was removed from the draft of the bill prior to committee consideration.
    The committee is scheduled to conclude its work on the energy bill in early May with full Senate deliberation scheduled prior to the Memorial Day recess. In achieving these results, the mining industry had a strong lobbying effort by staff of NMA, NMA members, and support from allied industries and coalitions including the Alliance for Energy and Economic Growth and CARE, the Coalition for Affordable and Reliable Energy. 

    “I want to thank everyone for the strong and unified mining industry effort that was made to get this bill through the House,” said NMA’s Jack Gerard. cl

FutureGen Alliance Formed

    Nine of the nation’s largest electric utilities and coal companies have formed an alliance to support President Bush’s FutureGen initiative which seeks the creation of a near zero emission power plant and hydrogen production facility with integrated carbon dioxide management.
    The facility will be a test bed for advanced coal based power generation technologies capable of producing electricity and hydrogen with near zero emissions. Provided that the results of an initial feasibility analysis are positive, the alliance members hope to forge a partnership with the U.S. Department of Energy to help facilitate design, construction, and operation of the facility.
    The industry effort is in response to an announcement by President Bush (See Coal Leader, March 2003) in which he shared his vision for a near zero emission coal fueled power plant. Dubbed “FutureGen”, powerplants of this design would produce electricity for consumers and businesses as well as hydrogen to power a fuel cell based transportation system. To support implementation of his bold vision, the President committed the federal government to a ten-year public-private partnership.

The working group companies in the alliance include:
• American Electric Power
• CONSOL Energy Inc.
• Kennecott Energy, a member of the Rio Tinto group
• The North American Coal Corporation
• PacifiCorp, a subsidiary of ScottishPower
• Peabody Energy
• RAG American Coal Holding, Inc.
• Southern Company
•TXU
    Formation of the alliance is being coordinated by Battelle, a non-profit R&D institution. The alliance members noted that the FutureGen initiative, “squarely targets three of the most critical long-term energy challenges facing the nation.”
• Ensuring the continued availability of low cost electricity
• Reducing the U.S. dependence on imported oil and limited U.S. natural gas reserves by advancing the production of hydrogen through the use of coal
• Managing the potential environmental and financial risks of climate change
    The U.S. has more than a 300-year supply of coal, therefore the effort to design near zero emission power plants promises to create a new way in which coal can power the economy with minimal environmental impacts. The alliance members look forward to substantive discussions with the U.S. Department of Energy’s Office of Fossil Energy and National Energy Technology Laboratory to work toward a public-private partnership. cl

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