KENTUCKY GOES FOR THE IDEA THAT LOST WWII

In World War II, both Germany and Japan were at a disadvantage due to a lack of domestic oil supplies and both instituted coal-to-liquid fuel programs to compensate. Despite abundant coal supplies and ample slave labor, neither country was able to produce enough fuel to adequately serve their purposes.

A recent RAND study suggests coal, when used in a 50%-50% production process with biomass and an effective carbon-capture-and-sequestration process (which does not yet exist at commercial scale) can reduce greenhouse gas emissions to the equivalent of what is produced when burning oil.

Lawmakers ask special session on energy
John Stamper, August 17, 2007 (Lexington Herald-Leader)

WHO
Kentucky legislative leaders (Senate President David Williams, R-Burkesville; House Speaker Jody Richards, D-Bowling Green;
Kentucky Gov. Ernie Fletcher, Peabody Energy,

Seems like a good enough idea on the face of it. (click to enlarge)

WHAT
The Kentucky House and Senate leaders were urging Gov. Fletcher to call a special legislative session for August 20 to push through an energy bill which, bowing to pressure by Peabody Energy, provides incentives for coal-to-liquid fuel plants.

WHEN
The energy bill is expected to pass as soon as the vote is taken, in a special session August 20 or, in the normal course of events, by August 24.

WHERE
- Kentucky’s state capital is Frankfort.
- Peabody Energy’s corporate headquarters is in St. Louis, Missouri.

WHY
- If Kentucky wants Peabody Energy’s proposed $3 billion coal-to-liquid fuel plant built in the state, it will have to pass legislation providing the incentives. Though it has not been announced what the new agreement precisely is, the first proposals were for $300 million in tax breaks to plants like the one Peabody would build over 25 years ($600,000 to $800,000/full-time employee). It reduces or eliminates (1)sales tax on materials used in plant construction, (2) Peabody’s income tax, (3) severance tax on coal used at the plant and (4) employees’ income tax.

It's actually a very old idea, very complicated, energy intensive and impractical. (click to enlarge)

- People opposed to the company’s special treatment and environmental groups oppose. Richards says the measure protects the environment and Williams says the plant must conform to regulatory standards.
- The proposed legislation includes grants and incentives to fuels from renewables such as biomass, cellulose and corn. It also requires efficiency measures, grants tax benefits to companies who reduce energy consumption a minimum of 15% and forgives student loans to college graduates needed by the energy industry.

QUOTES
- Williams: "This bill is not worth anything to any particular company…"
- Richards: “[The bill is] a comprehensive energy policy for the future."