Article published Jun 20, 2007

Baucus, Tester shaping energy bill debate

By FAITH BREMNER

Tribune Washington Bureau

WASHINGTON, D.C. — Montana's senior U.S. senator, Max Baucus, scored a political win Tuesday when the Senate Finance Committee, which he chairs, approved a $28.5 billion clean-energy tax-incentive package that he hopes to attach to the energy bill by the end of the week.

The bill would provide new tax incentives for installing residential wind generators and for buying plug-in hybrid vehicles.

It also would extend existing tax incentives for manufacturers of coal-to-liquid fuel, ethanol and biodiesel, and for those who generate electricity from renewable sources. Appliance manufacturers would get tax credits for building more energy-efficient dishwashers, clothes washers and refrigerators.

Although plug-in hybrids have a range of only about 40 miles per charge, Baucus predicted Montanans would take a liking to them. With the proper incentives, manufacturers will invest in more research to develop models that can run farther on a charge, Baucus said. The vehicles are not yet commercially available.

"This is a bill that's moving America into the 21st century and helping make us less dependent upon (the Organization of Petroleum Exporting Countries), increases our national security, addresses the problems of climate change and also does it in a way that helps states like ours with cellulosic ethanol, wind power and solar and renewables," Baucus said. "It will enable Montana to be a much bigger (energy) player and producer than we have been in the past."

While Baucus' proposal advanced Tuesday, Sen. Jon Tester's plan to turn Montana coal into gold failed, thanks to members of his own party who say turning coal into liquid fuel for vehicles is harmful to the environment.

The freshman Democrat was not discouraged by the 33-61 vote against his amendment to the energy bill. The amendment would have provided up to $200 million in grants to build new coal-to-liquid plants, with a priority for projects that would have captured much of the plants' carbon emissions and buried it deep underground. It also would have authorized $10 billion in loans to coal-to-liquid plants to help reduce emissions of greenhouse gases, which experts have linked to climate change.

Montana has the nation's largest coal reserves and, in 2004, ranked No. 6 in the nation for coal production, according to the Montana Coal Council. The coal industry provided 852 jobs in the state in 2004.

"It starts the discussion on clean coal," Tester said after the vote. "It will get people thinking about ways that we can move forward with our energy future and capture and sequester carbon and make the environment better and still meet our energy independence goals."

Environmental groups celebrated the amendment's demise.

"It is a misuse of public funds to subsidize a technology that increases global warming pollution, costs billions in taxpayer dollars, increases coal mining and uses massive amounts of fresh water," U.S. Public Interest Research Groups staff attorney Ben Dunham said in a statement.

But like it or not, coal is still going to be used in the near future, Tester said, so the U.S. might as well lead the way in developing technologies that would allow it to be used with minimal carbon emissions. About half of all electricity produced in this country comes from coal-fired power plants, he said. Every month, China builds two new 500-megawatt coal-fired power plants, he added.

"If we had the ability to capture and sequester carbon, we could be a world leader, create jobs and help stop this trade imbalance that we've got by exporting some of our technology for money and help the overall environment ... from a global-warming standpoint," Tester said.