Overview

• Bill creates comprehensive federal program to promote coal-to-liquid (CTL) fuel production through Fischer-Tropsch technology
• Targets facilities producing at least 10,000 barrels per day of transportation fuel from domestic coal
• Status: Introduced January 10, 2007; referred to House subcommittee on Energy and Air Quality

Who does this affect?

• Main groups: Energy companies building CTL facilities, coal industry, military (potential fuel users), taxpayers funding incentives
• Who benefits: Coal producers gain new markets; energy companies receive federal financing; military gets domestic fuel source
• Who loses: Taxpayers bear financial risk of loan guarantees; environmental groups oppose increased coal use and carbon emissions
• Teen impact score: 4/10 (indirect impact via energy policy and climate; teens don't directly interact with industrial fuel production)

What This Bill Does

• Loan guarantees: Amends Energy Policy Act of 2005 to authorize loan guarantees for up to 10 CTL projects, capped at 100,000 barrels/day total production capacity. Individual projects limited to 20,000 barrels/day for full guarantee coverage.
• Direct loans: Establishes $200 million loan program (up to $20 million per project) for planning, permitting, and construction services. Recipients must provide dollar-for-dollar match with non-federal funds. Loans must be repaid within 5 years.
• Tax credits: Creates 20% investment tax credit for CTL facilities, with total program cap of $2 billion in qualified investment across 10 projects. Certificates issued during 10-year period starting October 1, 2007.
• Expensing provision: Allows immediate tax deduction (expensing) for CTL equipment costs instead of depreciation over time. Applies to facilities with binding construction contracts between 2007-2011, placed in service by January 1, 2016.
• Alternative fuel credit extension: Extends existing alternative fuel tax credit for coal-derived Fischer-Tropsch fuels through September 30, 2020 (other alternative fuels expire September 30, 2009).
• Enhanced oil recovery credit: Increases credit from 15% to 50% for projects using carbon dioxide from CTL facilities for oil/gas recovery or carbon sequestration. Applies to projects beginning after December 31, 2007 through December 31, 2020.
• Strategic Petroleum Reserve: Authorizes storing coal-to-liquid products in reserve (up to 20% of total), requires feasibility study within 1 year, allows construction of storage facilities near pipelines and military bases.
• Federal land use: Directs Secretary of Energy to create regulations supporting CTL facility development on federal land, including military bases and closed installations.
• Air Force funding: Authorizes $10 million for Air Force Research Laboratory to test and qualify synthetic coal-based jet fuel.
• Defense contracts: Allows Department of Defense to contract with private companies to build CTL facilities on/near military installations; extends contract length from 1 year to up to 25 years.
• Emissions study: Requires research program evaluating Fischer-Tropsch fuel emissions for diesel and jet engines, with interim report at 180 days and final report at 1 year.

Legislative Status

• Introduced in House on January 10, 2007 by Rep. Geoff Davis (R-KY) with 20 cosponsors
• Referred to four committees: Energy and Commerce, Ways and Means, Science and Technology, Armed Services
• Latest action: Referred to Subcommittee on Energy and Air Quality on February 2, 2007
• No further action taken; bill died in committee

In short

• Bill offers $2.2 billion in federal financial support (loan guarantees, loans, tax credits) to jumpstart coal-to-liquid fuel industry
• Targets large facilities converting domestic coal into transportation fuel through Fischer-Tropsch process
• Includes provisions for military use, Strategic Petroleum Reserve storage, and carbon capture incentives
• Requires dollar-for-dollar private matching funds and sets production capacity limits
• Never advanced beyond committee referral in 2007

Why should I care?

This bill represents a major energy policy choice with long-term consequences. Converting coal to liquid fuel could reduce dependence on foreign oil, but it's expensive and carbon-intensive. The federal government would shoulder significant financial risk through loan guarantees—if projects fail, taxpayers cover losses. For military families, domestic fuel production could enhance energy security. For everyone else, the climate implications matter: coal-to-liquid fuel produces more greenhouse gases than conventional gasoline unless carbon is captured and stored, which adds cost. The bill's failure to advance suggests Congress found these tradeoffs unappealing, but similar debates continue today around energy independence versus environmental protection.