Mr Reagan wants to slash synfuels budget

Press, 19 May 1984, Page 6

Mr Reagan wants to slash synfuels budget

NZPA staff correspondent Washington

President Reagan is asking Congress to cut the Synthetic FueE Corporation budget by two-thirds — that E SUS9.S billion ($14.44 billion) — a move which would effectively end almost all large-scale development of alternative fuels in the United States. The corporation was set up by President Carter to aid research and development by private industry and started in 1980 with an appropriation of SUSI 9 billion. Since then, however, the price of oil has dropped and firms have abandoned most of the big projecE — often after sinking millions of dollars into them — because they could not see the producE being able to compete.

The biggest projecE involved coal gasification, coal-to-petrol planE and oil extraction from Er sands and shale rock. Other projecE involved methanol, ethanol, solar energy and wind energy. The corporation, in five years, has spent only SUSS billion of the SUSI 9 billion it started with, but had planned to commit SUSIO billion soon of the remaining SUSI 4 billion. President Reagan is also asking Congress to require the corporation to impose a market-oriented test that E likely to eliminate nine of the ten projecE now before the agency. The corporation’s board no longer has a quorum as a result of the resignation by the president, Mr Victor Thompson, a few days before the agency’s ethics

officer asked the Justice Department to investigate charges that he had mixed private business dealings with synfuels business. The White House is saying it will not appoint new directors (a move that would leave the corporation paralysed) unless the cuE are aproved.

The one project certain to survive the battle is the Great Plains gasification project in North Dakota which is backed by five big energy companies and has already received SUS2 billion in federally backed loans.

The project is almost complete, but its sponsors threatened recently to pull out, leading to a letter of intent from the corporation pledging a further SUS79O million.