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                                                       Calendar No. 356
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-158

======================================================================



 
 ALTERNATIVE SULFUR DIOXIDE REMOVAL MEASUREMENT FOR COAL GASIFICATION 
                             PROJECT GOALS

                                _______
                                

               September 17, 2007.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 645]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 645) to amend the Energy Policy Act of 
2005 to provide an alternate sulfur dioxide removal measurement 
for certain coal gasification project goals, having considered 
the same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                Purpose

    The purpose of S. 645 is to amend the Energy Policy Act of 
2005 to provide an alternative sulfur dioxide removal 
measurement for certain coal gasification project goals.

                          Background and Need

    The Clean Coal Power Initiative (``CCPI'') authorized in 
section 404 of the Energy Policy Act of 2005 (``EPACT''), 
Public Law 109-58, requires the Secretary of Energy to 
establish goals and milestones for emissions from such projects 
so that by year 2020 they will be able to remove, among other 
criteria pollutant reductions, at least 99% of sulfur dioxide 
from coal fired electricity generation. Thus, under current 
law, projects seeking CCPI funding are reviewed based on their 
ability to achieve 99% removal of sulfur dioxide regardless of 
the original levels of sulfur in their coal feedstock. Because 
western coals have significantly lower sulfur content than 
other coals, it is prohibitively more expensive to remove 99% 
of that sulfur than it is to do so for other coals that contain 
more sulfur to begin with. This bill provides an alternative 
goal based on emissions of sulfur dioxide per unit of energy to 
account for this variation in sulfur content. This alternative 
criterion for low sulfur coals will achieve an emission 
standard that is no less than and, in some cases, greater than 
that which is achieved with a 99% standard using other coals. 
This alternative is also consistent with language found in 
Internal Revenue Code section 48A(f)(1)(B).

                          Legislative History

    S. 645 was introduced by Senator Thomas on February 15, 
2007. During the 109th Congress, the Committee considered 
similar legislation, S. 4076. The Subcommittee on Energy held a 
hearing on S. 645 on May 22, 2007. At its business meeting on 
July 25, 2007, the Committee on Energy and Natural Resources 
ordered S. 645 to be favorably reported.

                        Committee Recommendation

    The Committee on Energy and Natural Resources, in open 
business session on July 25, 2007, by a voice vote of a quorum 
present, recommends that the Senate pass S. 645.

                      Section-by-Section Analysis

    Section 1 amends the Clean Coal Power Initiative emissions 
goals in Section 402 to add an alternative goal for emissions 
of sulfur dioxide of .04 pounds per million Btu, based on a 30-
day average.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

                                                   August 14, 2007.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 645, a bill to amend 
the Energy Policy Act of 2005 to provide an alternate sulfur 
dioxide removal measurement for certain coal gasification 
project goals.
    If you wish further details on this estimate, we will be 
pleased to provide them.
    The CBO staff contact is Megan Carroll.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

S. 645--A bill to amend the Energy Policy Act of 2005 to provide an 
        alternate sulfur dioxide removal measurement for certain coal 
        gasification project goals

    Through the Clean Coal Power Initiative (CCPI), the 
Department of Energy (DOE) provides financial support for 
projects to develop and demonstrate the use of clean coal 
technologies in facilities that generate electric power. The 
Energy Policy Act of 2005 specifies eligibility criteria for 
such projects, including requirements related to controlling 
emissions of pollutants such as sulfur dioxide. S. 645 would 
amend the Energy Policy Act of 2005 to allow an alternative 
measure of reductions in sulfur dioxide emissions. According to 
DOE, the proposed alternative would be slightly less stringent 
than the existing requirement.
    CBO estimates that implementing S. 645 would have no 
significant effect on the federal budget. Although the proposed 
change could affect the types of technologies used in projects 
that receive federal assistance through the CCPI, it would not 
affect total federal spending for such projects, all of which 
is subject to appropriation. Enacting S. 645 would not affect 
direct spending or revenues.
    S. 645 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 645. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 645, as ordered reported.

                        Executive Communications


   Statement of David R. Hill, General Counsel, Department of Energy

    Chairman Dorgan, Senator Murkowski, and members of the 
Committee, my name is David Hill, and I am the General Counsel 
of the U.S. Department of Energy (Department or DOE). I want to 
thank you for the opportunity to appear today and offer 
preliminary comments on five energy-related bills that Congress 
is considering. The bills before the Committee today each make 
valuable contributions to our national discussion on energy 
security, but in some cases could benefit from further review, 
discussion and modification. The Department looks forward to 
working with the Committee to resolve these issues. I would 
like to discuss elements of each bill, as well as present some 
of the DOE activities that are already underway in the areas 
addressed by the bills.


                                 s. 645


    S. 645 modifies the technical criteria in the Energy Policy 
Act of 2005 for the Clean Coal Power Initiative. The Department 
supports the proposed change because it would reduce a bias in 
the current requirement that favors a particular coal type, 
while still maintaining a stringent sulfur dioxide emission 
standard for the R&D; program. The practical effect of the 
change will be to allow slightly less strict SO2 
requirements for power plants burning low sulfur coals. 
Nevertheless, even with the proposed change, the SO2 
emission requirement for these lower sulfur coal-fueled power 
plants would remain as stringent, or more stringent, than the 
allowable emissions rate for higher sulfur coals.

           *       *       *       *       *       *       *


                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 645, as ordered reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                       ENERGY POLICY ACT OF 2005


              (Public Law 109-58; Approved August 8, 2005)


   AN ACT To ensure jobs for our future with secure, affordable, and 
                            reliable energy

    Be it enacted by the Senate and House of Representatives of 
the United States of America Congress assembled,

           *       *       *       *       *       *       *


SEC. 402. PROJECT CRITERIA.

    (a) In General.--To be eligible to receive assistance under 
this subtitle, a project shall advance efficiency, 
environmental performance, and cost competitiveness well beyond 
the level of technologies that are in commercial service or 
have been demonstrated on a scale that the Secretary determines 
is sufficient to demonstrate that commercial service is viable 
as of the date of enactment of this Act.
    (b) Technical Criteria for Clean Coal Power Initiative.--
          (1) Gasification projects.--

           *       *       *       *       *       *       *


  (B) Technical milestones.--

           *       *       *       *       *       *       *


                          (ii) 2020 goals.--The Secretary shall 
                        establish the periodic milestones so as 
                        to achieve by the year 2020 coal 
                        gasification projects able--
                                  [(I) to remove at least 99 
                                percent of sulfur dioxide;]
                                  (I)(aa) to remove at least 99 
                                percent of sulfur dioxide; or 
                                (bb) to emit not more than 0.04 
                                pound SO2 per 
                                million Btu, based on a 30-day 
                                average;

           *       *       *       *       *       *       *