Unresolved Issues Resulting From Changes in DOE's Synthetic Fuels Commercialization Programs

EMD-81-128: Published: Aug 17, 1981. Publicly Released: Sep 15, 1981.

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GAO examined the changes in the Department of Energy's (DOE) synthetic fuels programs for coal liquefaction, coal gasification, and oil shale.

DOE, under a congressionally sanctioned interim synthetic fuels program, has recently reached agreement to support three industry proposals aimed at commercial production of synthetic fuels. The Administration proposes to eliminate the DOE synthetic fuels commercialization activities and transfer the interim program to the U.S. Synthetic Fuels Corporation (SFC) which is consistent with the intent of the Energy Security Act of 1980. With the elimination of DOE commercialization activities, the Administration is relying on industry, with assistance from SFC, to develop synthetic fuels. In addition, the Administration proposes to eliminate DOE demonstration functions and cut back substantially on pilot plant activities. The Administration views the role of DOE in synthetic fuels as being limited to long-term, high-risk, and high-payoff research and development (R&D). However, GAO found that specific definitions do not exist for these terms. In the environmental area, GAO found that the DOE health and environmental research work associated with pilot and demonstration plants may also be reduced. Because SFC is required to approve the environmental and health-related emission monitoring plans, GAO believes that it has the ultimate responsibility for defining an acceptable monitoring plan. However, GAO believes that DOE and the Environmental Protection Agency (EPA) have a responsibility to officially communicate their needs for project emission data to the project sponsors and SFC. SFC has indicated that no policy matters will be dictated until it has a Board of Directors.

Recommendations for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should establish definitions for long-term, high-risk, high-payoff programs and direct that they be consistently applied to funding current and future R&D projects.

    Agency Affected: Department of Energy

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Chairman, SFC, should invite comments on the proposed guidance from all interested parties including DOE, EPA, and state environmental agencies.

    Agency Affected: United States Synthetic Fuels Corporation

  3. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Chairman, SFC, should publish final guidance, after confirmation of a Board of Directors, which considers the comments.

    Agency Affected: United States Synthetic Fuels Corporation

  4. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Chairman, SFC, should publish guidance for implementation of Section 131(e) of the Energy Security Act. This guidance should include: (1) who should initiate the contracts between the project sponsors and DOE, EPA, and state agencies; (2) when the initial contracts should occur; and (3) how the SFC will negotiate and reach agreement on acceptable environmental monitoring systems.

    Agency Affected: United States Synthetic Fuels Corporation

 

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