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Posted: 4:48 PM- By Jim Efstathiou Jr.

Bloomberg News

The U.S. Congress must not exclude fossil-based fuels, such as liquids extracted from coal, from proposed legislation to reduce gasoline use, said Alexander Karsner, assistant secretary for renewable energy at the Energy Department.

President George W. Bush wants Congress to require refiners, blenders and gasoline importers to use 35 billion gallons of renewable and alternative fuels, including synthetic fuel from coal, by 2017 as a way to help cut gasoline demand 20 percent in 10 years. Using coal as a feedstock to produce fuel can generate twice the greenhouse gasses that are produced when crude oil is refined into gasoline.

The Senate is debating legislation that would mandate the use of 36 billion gallons of biofuel by 2022. While the U.S. is estimated to have a 250-year supply of coal, the draft bill does not count liquids from coal because of environmental concerns.

"The President is the one who has a National Security Council report every morning that is driving his thinking on the urgency of displacing gasoline consumption," Karsner told a Senate panel today. "America should throw all of its resources at this problem."

Consumption of biofuels, such as corn-based ethanol and cellulosic ethanol from farm waste, will reach about 17 billion gallons in the U.S. by 2017, according to forecasts by Energy Department officials. To push the total toward 35 billion gallons, the administration bill counts hydrogen as a transportation fuel, plug-in hybrid cars which use electricity instead of gasoline, and synthetic fuel from coal.

Senate Bill Differences

The Senate bill, sponsored by Jeff Bingaman, the New Mexico Democrat who chairs the Energy and Natural Resources Committee, mandates that 8.5 billion gallons of renewable fuels be used by 2008 and 36 billion gallons by 2022. The measure would speed up the shift to biofuels compared with the energy bill enacted in 2005, which requires 7.5 billion gallons of renewable fuels by 2012.

"The broad goal here is to stimulate development of cellulose-based feedstocks for ethanol production," Bingaman said in an interview. "They obviously have some differences on details, but I'm confident the President would sign this bill."

The draft Senate bill is "more enlightened" than the Bush proposal because it excludes "dirty fuels" such as synthetic coal, Senator Bernie Sanders, a Democrat from Vermont, said at a hearing of the Senate energy committee. Bush's proposal also counts natural gas as an alternative fuel.

Coal Support

"Why, Secretary Karsner, would the administration promote a fuel, liquid coal, that according to the EPA has carbon emissions that are at best 3.7 percent worse than convention gas and at worst, double the carbon emissions of conventional gasoline," Sanders said.

Karsner said the development of liquid coal must go hand in hand with the development of technologies to capture carbon and store it. Coal supporters on the energy committee, such as Wyoming Republican Craig Thomas, said the Senate proposal overstates the environmental benefits of biofuels and under funds other alternative fuels.

"I'm for moving in this direction, but I think we are overlooking some of the things that we already know how to do," Thomas said. "All this progress and we have zero commercial scale coal to liquids. Why aren't we trying to fix that shortcoming in this bill?"

Mandatory Limits

Earlier this month, the U.S. Supreme Court ordered Bush administration environmental officials to reconsider their refusal to regulate greenhouse-gas emissions. Bush opposes mandatory limits on carbon emissions linked to global warming.

Environmentalists and 12 states, including California and Massachusetts, are seeking to force the U.S. Environmental Protection Agency to limit emissions from new cars and trucks. New York is leading a separate state effort to curb power-plant emissions.

"We don't support modifying this bill to include coal to liquids," Daniel Lashof, science director for the National Resources Defense Council said. "But if coal to liquid were to be used, it would certainly be more assuring if it were subject to a greenhouse gas performance standard."

Last week, a United Nations panel warned global warming will cause extinctions to increase, water shortages to spread and droughts and floods to become more frequent as man-made emissions of greenhouse gases cause the Earth to warm.

ConocoPhillips, USCAP

The report, the second of four to be issued by the Intergovernmental Panel on Climate Change this year, is aimed at informing policymakers of the known and predicted impacts of climate change, and of ways to adapt to global warming.

On Tuesday, ConocoPhillips Chief Executive Officer Jim Mulva became the first head of a major U.S. oil company to join the U.S. Climate Action Partnership, a coalition of business and environmental groups that have called for federal rules to reduce greenhouse gas emissions. London-based BP Plc, Europe's second- largest oil company, is one of USCAP's founding members and the only other major oil company in the group.