II 

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘National Gasification 

5 Strategy Act of 2005’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to establish a Federal in8 centive program as part of a national gasification strategy 
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1 to stimulate commercial deployment of integrated gasifi2 cation combined cycle and industrial gasification tech3 nology in order to— 

4 (1) develop gasification as a gas supply option 

5 that provides the energy equivalent of 

6 1,500,000,000,000 cubic feet of natural gas; 

7 (2) promote the use of domestic coal, biomass, 

8 petroleum coke, and other domestic fuel resources; 

9 (3) reconcile coal use and environmental protec10 tion; 

11 (4) reduce the demand pressure on domestic 

12 natural gas prices and supply by promoting the use 

13 of gas derived from domestic coal and biomass and 

14 other domestic fuel resources for electric generation 

15 and industrial use; 

16 (5) provide affordable and reliable electricity 

17 and gas supply; 

18 (6) promote the position of the United States 

19 as a global leader in advanced gasification tech20 nology and carbon capture and storage technology; 

21 and 

22 (7) accomplish the goals described in para23 graphs (1) through (6) while minimizing the burden 

24 on the Federal budget. 
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1 SEC. 3. DEFINITIONS. 

2 In this Act: 

3 (1) BIOMASS.— 

4 (A) IN GENERAL.—The term ‘‘biomass’’ 

5 means— 

6 (i) an animal, agricultural, or plant 

7 waste; and 

8 (ii) forestry materials, including wood 

9 wastes, forest thinnings, and the residuals 

10 and byproducts of wood harvest or conver11 sion. 

12 (B) EXCLUSION.—The term ‘‘biomass’’ 

13 does not include paper that is commonly recy14 cled. 

15 (2) CARBON CAPTURE READY.—The term ‘‘car16 bon capture ready’’ means, with respect to a project, 

17 having a design that is determined by the Secretary 

18 to be capable of accommodating the equipment likely 

19 to be necessary to capture the carbon dioxide that 

20 would otherwise be emitted in flue gas from the 

21 project. 

22 (3) IGCC PROJECT.—The term ‘‘IGCC project’’ 

23 means an integrated gasification combined cycle 

24 project with respect to which, during the term of the 

25 loan guarantee under the program for the project or, 
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1 in the case of a grant, the useful life of the project, 

2 as determined by the Secretary— 

3 (A) except as provided in section 4(c)(4), 

4 coal will account for at least 75 percent of an5 nual heat input; and 

6 (B) electricity will account for at least 75 

7 percent of annual useful energy output. 

8 (4) INDUSTRIAL GASIFICATION PROJECT.—The 

9 term ‘‘industrial gasification project’’ means a 

10 project with respect to which, during the term of the 

11 loan guarantee under the program for the project or, 

12 in the case of a grant, the useful life of the project, 

13 as determined by the Secretary— 

14 (A) coal, biomass, or petroleum residues, 

15 in any combination, may account for annual 

16 fuel heat input; and 

17 (B) electricity will account for less than 75 

18 percent of annual useful energy output. 

19 (5) NATURAL GAS COMBINED CYCLE POWER

20 PLANT.—The term ‘‘natural gas combined cycle 

21 power plant’’ means a system that— 

22 (A) comprises 1 or more combustion tur23 bines, heat recovery steam generators, and 

24 steam turbines; and 
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1 (B) combusts at least 90 percent natural 

2 gas for the annual fuel heat input of the system 

3 for any year. 

4 (6) PROGRAM.—The term ‘‘program’’ means 

5 the Federal incentive program established under sec6 tion 4(a). 

7 (7) PROJECT.—The term ‘‘project’’ means— 

8 (A) any combination of equipment located 

9 at a specific site for an IGCC project or indus10 trial gasification project that is used— 

11 (i) to gasify coal, biomass, or petro12 leum residues; 

13 (ii) to remove pollutants from the re14 sulting gas; 

15 (iii) to use the resulting gas for indus16 trial purposes or burn the resulting gas in 

17 a turbine to generate electricity; and 

18 (iv) to remove pollutants from the re19 sulting flue gas; 

20 (B) a combined cycle power plant refueled 

21 using the equipment described in subparagraph 

22 (A) that is in existence on the date of enact23 ment of this Act; or 
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1 (C) an industrial gasification project that 

2 uses the equipment described in subparagraph 

3 (A). 

4 (8) SECRETARY.—The term ‘‘Secretary’’ means 

5 the Secretary of Energy. 

6 (9) TOTAL PLANT INVESTMENT.—The term 

7 ‘‘total plant investment’’ means, with respect to a 

8 project, the aggregate amount of— 

9 (A) engineering, procurement, and con10 struction costs; 

11 (B) costs incurred by the owner of the 

12 project in developing and starting up the 

13 project; 

14 (C) construction financing costs; and 

15 (D) any contingency reserves. 

16 SEC. 4. FEDERAL INCENTIVE PROGRAM. 

17 (a) ESTABLISHMENT.—Not later than 1 year after 

18 the date of enactment of this Act, the Secretary shall es19 tablish a Federal incentive program under which the Sec20 retary shall provide loan guarantees and grants for 

21 projects selected in accordance with this Act. 

22 (b) ELIGIBLE PROJECTS.—The owner of a proposed 

23 project that seeks to receive a loan guarantee or grant for 

24 a project under the program shall submit to the Secretary, 

25 in accordance with such procedures as the Secretary shall 
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1 establish by regulation, an application that demonstrates 

2 that the project— 

3 (1) if the proposed project is an IGCC project, 

4 will be— 

5 (A) a new power plant; 

6 (B) a repowering of an existing coal-fired 

7 power plant; or 

8 (C) a refueling of an existing natural gas 

9 combined cycle power plant; 

10 (2) will comply with enforceable emission limita11 tion requirements, in addition to any other applica12 ble Federal or State emission limitation require13 ments, that the project attain at least— 

14 (A) total sulfur dioxide emissions in flue 

15 gas from the project that do not exceed 0.04 lb/

16 mmBtu; 

17 (B) a 95-percent removal rate (including 

18 any fuel pretreatment) of mercury from the 

19 coal-derived gas, and any other fuel, combusted 

20 by the project; 

21 (C) total nitrogen oxide emissions in the 

22 flue gas from the project that do not exceed 

23 0.05 lb/mmBtu; and 
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1 (D) total particulate emissions in the flue 

2 gas from the project that do not exceed 0.01 lb/

3 mmBtu; 

4 (3) will be carbon capture ready; 

5 (4) in the case of an application for a loan 

6 guarantee, will have an assured revenue stream and 

7 other credit enhancements that provide credit and 

8 Federal budget scoring that is acceptable to the Sec9 retary and the Office of Management and Budget 

10 (in accordance with the purpose and goals described 

11 in section 2); and 

12 (5) has obtained— 

13 (A) approval by the appropriate regulatory 

14 commission of the recovery of the cost of the 

15 project; or 

16 (B) a power purchase agreement, or a let17 ter of intent relating to such an agreement, 

18 that has been approved by the board of direc19 tors or appropriate oversight authority of, and 

20 executed by, a creditworthy purchasing party, 

21 as determined by the Secretary. 

22 (c) SELECTION OF PROJECTS.— 

23 (1) IN GENERAL.—The Secretary shall— 

24 (A) establish, by regulation, review and ap25 proval criteria and procedures for selecting a 
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1 proposed project to receive a loan guarantee or 

2 grant under the program; and 

3 (B) select projects for receipt of loan guar4 antees and grants in accordance with those cri5 teria. 

6 (2) DIVERSITY.—In applying the review and 

7 approval criteria to each proposed project, the Sec8 retary shall ensure, to the maximum extent prac9 ticable, that the portfolio of projects for which loan 

10 guarantees or grants are provided under the pro11 gram will result in— 

12 (A) gasification of a diversity of coal types 

13 (including subbituminous coal) and other fuel 

14 types; and 

15 (B) a geographic diversity of projects. 

16 (3) LIMITATION.—The Secretary shall issue a 

17 loan guarantee for a proposed project only if the 

18 loan guarantee for the project under the program 

19 has a budget score under the Federal Credit Reform 

20 Act of 1990 (2 U.S.C. 661 et seq.) that, as deter21 mined by the Office of Management and Budget, 

22 does not exceed the product obtained by multi23 plying— 

24 (A) an amount equal to the total plant in25 vestment in the project; and 
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1 (B) such percentage level for budget scor2 ing as shall be established by the Office of 

3 Management and Budget in accordance with 

4 the purpose of this Act. 

5 (4) CERTAIN IGCC PROJECTS.—The Secretary 

6 may select under this subsection not more than 2 

7 IGCC projects with respect to which, during the 

8 term of the loan guarantee under the program for 

9 the project or, in the case of a grant, the useful life 

10 of the project, as determined by the Secretary, bio11 mass or petroleum residues may account for at least 

12 75 percent of annual heat input. 

13 (d) COMMENCEMENT OF CONSTRUCTION.—The Sec14 retary shall require construction on a project for which 

15 a loan guarantee or grant is provided under the program 

16 to commence not later than the date that is 3 years after 

17 the date of issuance of the loan guarantee or grant. 

18 (e) PROVISION OF LOAN GUARANTEES AND

19 GRANTS.— 

20 (1) LOAN GUARANTEES.—Each loan guarantee 

21 provided for a project under the program shall— 

22 (A) cover up to 80 percent of the total 

23 plant investment in a project selected under 

24 subsection (c), on the conditions that— 
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1 (i) the owner of the project provides 

2 equity investment in the project of at least 

3 20 percent of the total plant investment; 

4 and 

5 (ii) for purposes of applying the per6 centage requirements under clause (i), the 

7 amount of the total plant investment shall 

8 be reduced by the dollar amount of any 

9 Federal grant provided for the project 

10 under the program; 

11 (B) apply to the long-term debt obligations 

12 for the project, which obligations— 

13 (i) may, at the discretion of the Sec14 retary, be nonrecourse obligations; and 

15 (ii) shall have a term of up to 30 

16 years; and 

17 (C) be backed by the full faith and credit 

18 of the United States. 

19 (2) GRANTS.— 

20 (A) IN GENERAL.—Each Federal grant 

21 provided for a project under the program 

22 shall— 

23 (i) be provided for a project only to 

24 the owner of the project, in whole or in 

25 part, that is a Federal, State, or local gov-
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1 ernmental entity or rural electric coopera2 tive; and 

3 (ii) cover not more than 20 percent of 

4 the portion of total plant investment con5 tributed by the Federal, State, or local 

6 governmental entity or rural electric coop7 erative for the project. 

8 (B) EXCEPTION.—The limitation described 

9 in subparagraph (A)(ii) shall not apply to any 

10 portion of investment or operating costs relat11 ing to the capture and storage of carbon diox12 ide. 

13 (3) LIMITATIONS.—The Secretary may provide, 

14 or certify an eligible project to receive, loan guaran15 tees or grants for a project if the aggregate scored 

16 value (as determined by the Office of Management 

17 and Budget) of incentives made available to IGCC 

18 projects and industrial gasification projects does not 

19 exceed— 

20 (A) $200,000,000 for each project receiv21 ing incentives under this title; and 

22 (B) 20 percent of the total plant invest23 ment of each project receiving incentives under 

24 this title. 
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1 (f) REGULATIONS.—Not later than 1 year after the 

2 date of enactment of this Act, the Secretary shall issue 

3 regulations to carry out the program, including, at the dis4 cretion of the Secretary, regulations that establish— 

5 (1) conditions for the disbursement of funds for 

6 loan guarantees or grants provided under the pro7 gram; 

8 (2) procedures and requirements for monitoring 

9 and reporting the status of projects, or of research, 

10 development, demonstration, or commercial deploy11 ment under projects, for which loan guarantees or 

12 grants are provided under the program; 

13 (3) procedures for taking actions to restrict the 

14 impact on the Federal budget in the event of fore15 closure of a project provided a loan guarantee or 

16 grant under the program; and 

17 (4) application, insurance, and other fees, in18 cluding schedules for the payment or collection of 

19 the fees, to cover administrative costs incurred, and 

20 the burden placed on the Federal budget, in carrying 

21 out the program. 

22 (g) AUTHORIZATION OF APPROPRIATIONS.— 

23 (1) CARBON CAPTURE AND DEMONSTRATION

24 PROJECTS.— 
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1 (A) IN GENERAL.—Subject to subpara2 graph (B), there is authorized to be appro3 priated for providing loan guarantees or grants 

4 for projects involving the capture or storage of 

5 carbon dioxide under the program— 

6 (i) $250,000,000 for fiscal year 2006; 

7 (ii) $150,000,000 for each of fiscal 

8 years 2007 through 2009; and 

9 (iii) $100,000,000 for each of fiscal 

10 years 2010 through 2012. 

11 (B) SPECIFIC PROJECTS.—Of each amount 

12 made available under subparagraph (A) for a 

13 fiscal year— 

(i) 1 14 ⁄3 of the amount shall be used for 

15 providing loan guarantees or grants for 

16 projects involving research, development, 

17 and demonstration of technology for— 

18 (I) the capture and storage of 

19 carbon dioxide; 

20 (II) biomass gasification; or 

21 (III) gasification of subbitu22 minous or lignite coals; and 

(ii) 2 23 ⁄3 of the amount shall be used for 

24 providing loan guarantees or grants to 

25 support the commercial deployment of 
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1 technology for capture and storage of car2 bon dioxide from projects for which loan 

3 guarantees or grants are provided under 

4 the program. 

5 (2) IGCC AND INDUSTRIAL GASIFICATION

6 PROJECTS.— 

7 (A) AUTHORIZATION OF APPROPRIA8 TIONS.—Subject to subparagraph (B), there is 

9 authorized to be appropriated for providing loan 

10 guarantees or grants for IGCC projects and in11 dustrial gasification projects under the pro12 gram— 

13 (i) $500,000,000 for fiscal year 2006; 

14 (ii) $300,000,000 for each of fiscal 

15 years 2007 through 2009; and 

16 (iii) $200,000,000 for each of fiscal 

17 years 2010 through 2012. 

18 (B) SPECIFIC PROJECTS.—Of each amount 

19 made available under subparagraph (A) for a 

20 fiscal year— 

21 (i) not more than 50 percent shall be 

22 used for providing loan guarantees for in23 dustrial gasification projects; and 
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1 (ii) the remaining amount shall be 

2 used for providing loan guarantees or 

3 grants for IGCC projects, of which— 

(I) at least 1 4 ⁄3 of the amount 

5 shall be used for providing loan guar6 antees or grants for IGCC projects 

7 that involve existing natural gas com8 bined cycle power plants refueled 

9 using gasification of coal, biomass, or 

10 petroleum residues; and 

11 (II) not more than $30,000,000 

12 may be used for providing Federal 

13 grants for IGCC projects. 

14 SEC. 5. INTEGRATED WESTERN COAL/HIGH ALTITUDE CAR15 BON MINIMIZATION-SEQUESTRATION EN16 ERGY SYSTEM. 

17 (a) IN GENERAL.—Subject to the availability of ap18 propriations, the Secretary shall provide financial assist19 ance (including grants and loan guarantees) for a project 

20 to produce energy from coal mined in the western United 

21 States using appropriate advanced integrated gasification 

22 combined cycle technology, including repowering of exist23 ing facilities, that minimizes and offers the potential to 

24 sequester carbon dioxide emissions. 

25 (b) SPECIFICATIONS.—The project— 
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1 (1) may be built in stages; 

2 (2) shall have a combined output of at least 

3 100 megawatts; 

4 (3) shall be located in a western State at an al5 titude greater than 4,000 feet; and 

6 (4) shall use coal with an energy content of not 

7 more than 9,000 Btu/lb. 

8 (c) FEDERAL SHARE.—The Federal share of the cost 

9 of the project shall not exceed 50 percent. 

10 (d) TECHNICAL CRITERIA.—Technical criteria for a 

11 project under a clean coal power initiative carried out by 

12 the Secretary shall apply to the construction of the 

13 project. 

14 (e) FEES.—The Secretary may establish by regula15 tion application, insurance, and other fees, including 

16 schedules for the payment or collection of the fees, to cover 

17 administrative costs incurred, and the burden placed on 

18 the Federal budget, in carrying out this section.

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