[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1091 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1091

    To establish a Federal incentive program as part of a national 
gasification strategy to stimulate commercial deployment of integrated 
  gasification combined cycle and industrial gasification technology.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 20, 2005

  Mr. Salazar introduced the following bill; which was read twice and 
       referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
    To establish a Federal incentive program as part of a national 
gasification strategy to stimulate commercial deployment of integrated 
  gasification combined cycle and industrial gasification technology.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Gasification Strategy Act 
of 2005''.

SEC. 2. PURPOSE.

    The purpose of this Act is to establish a Federal incentive program 
as part of a national gasification strategy to stimulate commercial 
deployment of integrated gasification combined cycle and industrial 
gasification technology in order to--
            (1) develop gasification as a gas supply option that 
        provides the energy equivalent of 1,500,000,000,000 cubic feet 
        of natural gas;
            (2) promote the use of domestic coal, biomass, petroleum 
        coke, and other domestic fuel resources;
            (3) reconcile coal use and environmental protection;
            (4) reduce the demand pressure on domestic natural gas 
        prices and supply by promoting the use of gas derived from 
        domestic coal and biomass and other domestic fuel resources for 
        electric generation and industrial use;
            (5) provide affordable and reliable electricity and gas 
        supply;
            (6) promote the position of the United States as a global 
        leader in advanced gasification technology and carbon capture 
        and storage technology; and
            (7) accomplish the goals described in paragraphs (1) 
        through (6) while minimizing the burden on the Federal budget.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Biomass.--
                    (A) In general.--The term ``biomass'' means--
                            (i) an animal, agricultural, or plant 
                        waste; and
                            (ii) forestry materials, including wood 
                        wastes, forest thinnings, and the residuals and 
                        byproducts of wood harvest or conversion.
                    (B) Exclusion.--The term ``biomass'' does not 
                include paper that is commonly recycled.
            (2) Carbon capture ready.--The term ``carbon capture 
        ready'' means, with respect to a project, having a design that 
        is determined by the Secretary to be capable of accommodating 
        the equipment likely to be necessary to capture the carbon 
        dioxide that would otherwise be emitted in flue gas from the 
        project.
            (3) IGCC project.--The term ``IGCC project'' means an 
        integrated gasification combined cycle project with respect to 
        which, during the term of the loan guarantee under the program 
        for the project or, in the case of a grant, the useful life of 
        the project, as determined by the Secretary--
                    (A) except as provided in section 4(c)(4), coal 
                will account for at least 75 percent of annual heat 
                input; and
                    (B) electricity will account for at least 75 
                percent of annual useful energy output.
            (4) Industrial gasification project.--The term ``industrial 
        gasification project'' means a project with respect to which, 
        during the term of the loan guarantee under the program for the 
        project or, in the case of a grant, the useful life of the 
        project, as determined by the Secretary--
                    (A) coal, biomass, or petroleum residues, in any 
                combination, may account for annual fuel heat input; 
                and
                    (B) electricity will account for less than 75 
                percent of annual useful energy output.
            (5) Natural gas combined cycle power plant.--The term 
        ``natural gas combined cycle power plant'' means a system 
        that--
                    (A) comprises 1 or more combustion turbines, heat 
                recovery steam generators, and steam turbines; and
                    (B) combusts at least 90 percent natural gas for 
                the annual fuel heat input of the system for any year.
            (6) Program.--The term ``program'' means the Federal 
        incentive program established under section 4(a).
            (7) Project.--The term ``project'' means--
                    (A) any combination of equipment located at a 
                specific site for an IGCC project or industrial 
                gasification project that is used--
                            (i) to gasify coal, biomass, or petroleum 
                        residues;
                            (ii) to remove pollutants from the 
                        resulting gas;
                            (iii) to use the resulting gas for 
                        industrial purposes or burn the resulting gas 
                        in a turbine to generate electricity; and
                            (iv) to remove pollutants from the 
                        resulting flue gas;
                    (B) a combined cycle power plant refueled using the 
                equipment described in subparagraph (A) that is in 
                existence on the date of enactment of this Act; or
                    (C) an industrial gasification project that uses 
                the equipment described in subparagraph (A).
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (9) Total plant investment.--The term ``total plant 
        investment'' means, with respect to a project, the aggregate 
        amount of--
                    (A) engineering, procurement, and construction 
                costs;
                    (B) costs incurred by the owner of the project in 
                developing and starting up the project;
                    (C) construction financing costs; and
                    (D) any contingency reserves.

SEC. 4. FEDERAL INCENTIVE PROGRAM.

    (a) Establishment.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall establish a Federal 
incentive program under which the Secretary shall provide loan 
guarantees and grants for projects selected in accordance with this 
Act.
    (b) Eligible Projects.--The owner of a proposed project that seeks 
to receive a loan guarantee or grant for a project under the program 
shall submit to the Secretary, in accordance with such procedures as 
the Secretary shall establish by regulation, an application that 
demonstrates that the project--
            (1) if the proposed project is an IGCC project, will be--
                    (A) a new power plant;
                    (B) a repowering of an existing coal-fired power 
                plant; or
                    (C) a refueling of an existing natural gas combined 
                cycle power plant;
            (2) will comply with enforceable emission limitation 
        requirements, in addition to any other applicable Federal or 
        State emission limitation requirements, that the project attain 
        at least--
                    (A) total sulfur dioxide emissions in flue gas from 
                the project that do not exceed 0.04 lb/mmBtu;
                    (B) a 95-percent removal rate (including any fuel 
                pretreatment) of mercury from the coal-derived gas, and 
                any other fuel, combusted by the project;
                    (C) total nitrogen oxide emissions in the flue gas 
                from the project that do not exceed 0.05 lb/mmBtu; and
                    (D) total particulate emissions in the flue gas 
                from the project that do not exceed 0.01 lb/mmBtu;
            (3) will be carbon capture ready;
            (4) in the case of an application for a loan guarantee, 
        will have an assured revenue stream and other credit 
        enhancements that provide credit and Federal budget scoring 
        that is acceptable to the Secretary and the Office of 
        Management and Budget (in accordance with the purpose and goals 
        described in section 2); and
            (5) has obtained--
                    (A) approval by the appropriate regulatory 
                commission of the recovery of the cost of the project; 
                or
                    (B) a power purchase agreement, or a letter of 
                intent relating to such an agreement, that has been 
                approved by the board of directors or appropriate 
                oversight authority of, and executed by, a creditworthy 
                purchasing party, as determined by the Secretary.
    (c) Selection of Projects.--
            (1) In general.--The Secretary shall--
                    (A) establish, by regulation, review and approval 
                criteria and procedures for selecting a proposed 
                project to receive a loan guarantee or grant under the 
                program; and
                    (B) select projects for receipt of loan guarantees 
                and grants in accordance with those criteria.
            (2) Diversity.--In applying the review and approval 
        criteria to each proposed project, the Secretary shall ensure, 
        to the maximum extent practicable, that the portfolio of 
        projects for which loan guarantees or grants are provided under 
        the program will result in--
                    (A) gasification of a diversity of coal types 
                (including subbituminous coal) and other fuel types; 
                and
                    (B) a geographic diversity of projects.
            (3) Limitation.--The Secretary shall issue a loan guarantee 
        for a proposed project only if the loan guarantee for the 
        project under the program has a budget score under the Federal 
        Credit Reform Act of 1990 (2 U.S.C. 661 et seq.) that, as 
        determined by the Office of Management and Budget, does not 
        exceed the product obtained by multiplying--
                    (A) an amount equal to the total plant investment 
                in the project; and
                    (B) such percentage level for budget scoring as 
                shall be established by the Office of Management and 
                Budget in accordance with the purpose of this Act.
            (4) Certain igcc projects.--The Secretary may select under 
        this subsection not more than 2 IGCC projects with respect to 
        which, during the term of the loan guarantee under the program 
        for the project or, in the case of a grant, the useful life of 
        the project, as determined by the Secretary, biomass or 
        petroleum residues may account for at least 75 percent of 
        annual heat input.
    (d) Commencement of Construction.--The Secretary shall require 
construction on a project for which a loan guarantee or grant is 
provided under the program to commence not later than the date that is 
3 years after the date of issuance of the loan guarantee or grant.
    (e) Provision of Loan Guarantees and Grants.--
            (1) Loan guarantees.--Each loan guarantee provided for a 
        project under the program shall--
                    (A) cover up to 80 percent of the total plant 
                investment in a project selected under subsection (c), 
                on the conditions that--
                            (i) the owner of the project provides 
                        equity investment in the project of at least 20 
                        percent of the total plant investment; and
                            (ii) for purposes of applying the 
                        percentage requirements under clause (i), the 
                        amount of the total plant investment shall be 
                        reduced by the dollar amount of any Federal 
                        grant provided for the project under the 
                        program;
                    (B) apply to the long-term debt obligations for the 
                project, which obligations--
                            (i) may, at the discretion of the 
                        Secretary, be nonrecourse obligations; and
                            (ii) shall have a term of up to 30 years; 
                        and
                    (C) be backed by the full faith and credit of the 
                United States.
            (2) Grants.--
                    (A) In general.--Each Federal grant provided for a 
                project under the program shall--
                            (i) be provided for a project only to the 
                        owner of the project, in whole or in part, that 
                        is a Federal, State, or local governmental 
                        entity or rural electric cooperative; and
                            (ii) cover not more than 20 percent of the 
                        portion of total plant investment contributed 
                        by the Federal, State, or local governmental 
                        entity or rural electric cooperative for the 
                        project.
                    (B) Exception.--The limitation described in 
                subparagraph (A)(ii) shall not apply to any portion of 
                investment or operating costs relating to the capture 
                and storage of carbon dioxide.
            (3) Limitations.--The Secretary may provide, or certify an 
        eligible project to receive, loan guarantees or grants for a 
        project if the aggregate scored value (as determined by the 
        Office of Management and Budget) of incentives made available 
        to IGCC projects and industrial gasification projects does not 
        exceed--
                    (A) $200,000,000 for each project receiving 
                incentives under this title; and
                    (B) 20 percent of the total plant investment of 
                each project receiving incentives under this title.
    (f) Regulations.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall issue regulations to carry out the 
program, including, at the discretion of the Secretary, regulations 
that establish--
            (1) conditions for the disbursement of funds for loan 
        guarantees or grants provided under the program;
            (2) procedures and requirements for monitoring and 
        reporting the status of projects, or of research, development, 
        demonstration, or commercial deployment under projects, for 
        which loan guarantees or grants are provided under the program;
            (3) procedures for taking actions to restrict the impact on 
        the Federal budget in the event of foreclosure of a project 
        provided a loan guarantee or grant under the program; and
            (4) application, insurance, and other fees, including 
        schedules for the payment or collection of the fees, to cover 
        administrative costs incurred, and the burden placed on the 
        Federal budget, in carrying out the program.
    (g) Authorization of Appropriations.--
            (1) Carbon capture and demonstration projects.--
                    (A) In general.--Subject to subparagraph (B), there 
                is authorized to be appropriated for providing loan 
                guarantees or grants for projects involving the capture 
                or storage of carbon dioxide under the program--
                            (i) $250,000,000 for fiscal year 2006;
                            (ii) $150,000,000 for each of fiscal years 
                        2007 through 2009; and
                            (iii) $100,000,000 for each of fiscal years 
                        2010 through 2012.
                    (B) Specific projects.--Of each amount made 
                available under subparagraph (A) for a fiscal year--
                            (i) \1/3\ of the amount shall be used for 
                        providing loan guarantees or grants for 
                        projects involving research, development, and 
                        demonstration of technology for--
                                    (I) the capture and storage of 
                                carbon dioxide;
                                    (II) biomass gasification; or
                                    (III) gasification of subbituminous 
                                or lignite coals; and
                            (ii) \2/3\ of the amount shall be used for 
                        providing loan guarantees or grants to support 
                        the commercial deployment of technology for 
                        capture and storage of carbon dioxide from 
                        projects for which loan guarantees or grants 
                        are provided under the program.
            (2) IGCC and industrial gasification projects.--
                    (A) Authorization of appropriations.--Subject to 
                subparagraph (B), there is authorized to be 
                appropriated for providing loan guarantees or grants 
                for IGCC projects and industrial gasification projects 
                under the program--
                            (i) $500,000,000 for fiscal year 2006;
                            (ii) $300,000,000 for each of fiscal years 
                        2007 through 2009; and
                            (iii) $200,000,000 for each of fiscal years 
                        2010 through 2012.
                    (B) Specific projects.--Of each amount made 
                available under subparagraph (A) for a fiscal year--
                            (i) not more than 50 percent shall be used 
                        for providing loan guarantees for industrial 
                        gasification projects; and
                            (ii) the remaining amount shall be used for 
                        providing loan guarantees or grants for IGCC 
                        projects, of which--
                                    (I) at least \1/3\ of the amount 
                                shall be used for providing loan 
                                guarantees or grants for IGCC projects 
                                that involve existing natural gas 
                                combined cycle power plants refueled 
                                using gasification of coal, biomass, or 
                                petroleum residues; and
                                    (II) not more than $30,000,000 may 
                                be used for providing Federal grants 
                                for IGCC projects.

SEC. 5. INTEGRATED WESTERN COAL/HIGH ALTITUDE CARBON MINIMIZATION-
              SEQUESTRATION ENERGY SYSTEM.

    (a) In General.--Subject to the availability of appropriations, the 
Secretary shall provide financial assistance (including grants and loan 
guarantees) for a project to produce energy from coal mined in the 
western United States using appropriate advanced integrated 
gasification combined cycle technology, including repowering of 
existing facilities, that minimizes and offers the potential to 
sequester carbon dioxide emissions.
    (b) Specifications.--The project--
            (1) may be built in stages;
            (2) shall have a combined output of at least 100 megawatts;
            (3) shall be located in a western State at an altitude 
        greater than 4,000 feet; and
            (4) shall use coal with an energy content of not more than 
        9,000 Btu/lb.
    (c) Federal Share.--The Federal share of the cost of the project 
shall not exceed 50 percent.
    (d) Technical Criteria.--Technical criteria for a project under a 
clean coal power initiative carried out by the Secretary shall apply to 
the construction of the project.
    (e) Fees.--The Secretary may establish by regulation application, 
insurance, and other fees, including schedules for the payment or 
collection of the fees, to cover administrative costs incurred, and the 
burden placed on the Federal budget, in carrying out this section.
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