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

Gao ID: EMD-81-128 August 17, 1981

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

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