Conversion plant could have huge impact

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June 12, 2008

By RONNIE ELLIS The Glasgow Daily Times Thu Jun 12, 2008, 12:33 PM CDT

FRANKFORT — Sen. Jim Bunning, R-Southgate, said a coal-to-diesel facility under consideration for construction near Paducah could “change the whole picture of energy in the United States.”

Bunning, during a conference call Tuesday with Kentucky reporters, said he’d known about tentative plans for such a plant “for a long time and I’ve kept my mouth shut.” The Paducah Sun’s Bill Bartleman recently re-ported that a consortium of five major companies is looking at constructing a $3.5 billion facility near Paducah, which could convert coal to diesel fuel.

Bunning said if the facility clears permitting hurdles, he will push federal legislation to provide incentives such as accelerated depreciation to help it get going.

“Large sums of money are available if in fact a private sector company comes to the federal government with a plan,” Bunning said. He has supported federal subsidies and incentives for coal-to-liquid conversion and he sees it as part of an overall plan for U.S. energy independence and a boon to Kentucky’s coal industry. Bunning would not identify any of the companies involved but said he’d met with their representatives.

“All I can tell you is they’ve been in my office telling me what they need, and I told them to go get ’em,” Bunning said. He said the plan calls for capturing up to 94 percent of the carbon emissions at the plant, which he called “unbelievable.”

Bunning said the U.S. must develop more of its own fuels by drilling for oil in the Arctic National Wildlife Refuge in Alaska and off the continental shelf. He said proposals for windfall profits taxes on oil company profits “just don’t make any sense” and will ultimately drive up the cost of gasoline at the pump.

“Get it through your head that if we put a so-called windfall profits tax on oil, we will have less oil and less gasoline and therefore the price will go up and not down,” Bunning said. He said there is “zero” chance such a bill will pass the current Congress because Republicans in the Senate can muster 41 votes for filibustering such a measure.

He said right now OPEC nations set the price of oil because they control 92 percent of the world’s oil supply. But he thinks prices at the pump will eventually come back down, perhaps to the $2.50 range, although it will “take a long time until we get our domestic production back up to speed.” Many analysts say higher gas prices are likely to be permanent.

Bunning said he’s concerned about the economy, a rise in the unemployment rate and failure of investment banking firms. “The economy over the next three to five months is going to be bad,” he said.

But he thinks presumptive Republican presidential nominee Sen. John McCain of Arizona won’t be tied to the unpopular policies of George W. Bush.

McCain’s likely Democratic opponent, Sen. Barack Obama of Illinois, often says McCain is running for a third Bush term and calls for the end of Bush tax cuts to wealthy tax payers. McCain once opposed those cuts but now supports them.

“The worst thing you can do in a bad economy is to raise taxes,” Bunning said. “And that is what Barack Obama is planning to do.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.

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