It’s coal vs. oil as lobbying heats up Hill

Lawmakers generally have two goals when it comes to energy policy: cutting oil imports and curbing greenhouse gas emissions.

One problem in meeting both is that they can conflict — as is the case, critics say, in the process by which coal is converted to gasoline.

Environmental groups oppose the “coal to liquid,” or CTL, process because they say it will pump more carbon dioxide, a greenhouse gas, into the atmosphere. A number of Democrats and Republicans nevertheless are supporting the technology, as a new lobbying effort launches tomorrow to push an extensive (and expensive) wish list to lawmakers.

Several members from coal-producing states, including House Resources Committee Chairman Nick Rahall (D-W.Va.) and Energy and Commerce Energy and Air Quality Subcommittee Chairman Rick Boucher (D-Va.), are expected to attend the news conference announcing a new CTL coalition of coal producers, energy developers and labor groups.

Backers say a vibrant CTL industry has the potential to create thousands of jobs, significantly cut oil imports, and reduce energy costs.  

The National Mining Association, which represents coal companies and is on the defensive with the recent push to limit greenhouse gas emissions, is leading the new group.

“We believe there is a real opportunity to move legislation through the 110th Congress,” said Corey Henry, a spokesman for the new coalition.

Environmental groups oppose CTL. “If you make gasoline or diesel out of coal, you double global warming pollution from cars and trucks,” said David Friedman, a renewable-fuels expert at the Union of Concerned Scientists.

Backers say the carbon could be removed from the CTL process and stored before it can be released into the atmosphere, a process known as sequestration.

Henry said the carbon could be injected into oil fields to push up oil that’s in hard-to-reach places.

Friedman said, however, that even if sequestration proves to be a reliable way to capture and store carbon dioxide emissions, CTL gasoline and diesel would still emit more CO2 than traditional gasoline. Pumping money to develop the industry runs counter to efforts to reduce greenhouse gas emissions, Friedman said.

Industry insists there is an environmental benefit to CTL gasoline. But its real selling point lies in its ability to displace foreign oil in American gas tanks.

A study by the Southern States Energy Board, a group comprised of lawmakers from Southern states and industry representatives, found that by 2030 CTL could replace 30 percent of the oil imported to the United States.

There’s a big hurdle beyond any doubt among the environmental stalwarts on Capitol Hill. Coal-to-liquid plants can cost $8 billion apiece, Henry said. With no history of success in the United States, Wall Street hasn’t rushed to help with the financing.

Enter Congress. The coalition is pushing a plan to provide tax incentives and loan guarantees to CTL plants. Supporters also want Congress to enable the Defense Department, which is interested in developing homegrown fuel sources, to enter into contracts of up to 20 years, a further sign to Wall Street about the stability of the CTL industry.

Supporters on Capitol Hill include Democratic presidential candidate Sen. Barack Obama, whose home state of Illinois rests on a large coal bed but who also is backing a tough global warming bill in Congress. Along with Sen. Jim Bunning (R-Ky.), Obama is co-chairman of the coal-to-liquid congressional caucus.

Sasol North America, a division of the company that produces CTL fuel in South Africa, paid the Livingston Group $320,000 last year to lobby Congress for help for building CTL plants in the United States.

With congressional Democrats and the White House both promising to promote alternative fuels, a number of other alternative-fuel companies have joined Sasol in hiring firms to lobby for tax breaks and other incentives to ease their entrance into the market dominated by oil companies.

For example, E3 Biofuels, a Kansas-based ethanol producer, hired Richard Gephardt’s firm, the Gephardt Group, to lobby for tax credits and other incentives for ethanol production. Organic Fuels Holdings, meanwhile, hired Wigglesworth Co. to lobby on tax matters related to renewable fuel development, according to Senate lobbying records posted online last week.

More evidence trade groups are shifting their political giving in favor of Democrats: The National Association of Broadcasters (NAB) announced Monday that it had hired Anne Brady, a former deputy western finance director for the Democratic Congressional Campaign Committee, to run its political action committee (PAC).

In 2004, NAB’s PAC gave more than 63 percent of its money to Republicans and 37 percent to Democrats. In 2006, broadcasters again gave more to Republicans, although the numbers were slightly closer: Republicans got 59 percent of NAB’s contributions, versus the 41 percent Democrats received.

“Like other trade associations, NAB recognizes there’s been a shift in power. And it tends to support the party in power,” one industry source said. 

Already, NAB has given 80 percent of its campaign donations in the 2008 cycle to Democrats. But that’s misleading: the group has distributed only $10,000 total so far this year, according to PoliticalMoneyLine.