on - 03 600 CONGRESS R CQNGRESSIONAL ‘ ESEARCH * - Universi .f Missouri - C v mbia . SERV"’E ||||||l||| ||| ITII II III lll llllmlllllllllllllllli , LIBRARY OF _ 010 1 8 T ENERGY FBOH SOLID WASTES AND BIOCONVERSION ISSUE BRIEF NUMBER IB7fl064 4 I AUTHOR: Rothherg, Paul Science Policy Research Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEABCE SERVICE MAJOR ISSUES SYSTEB — DATE ORIGINATED 95423413 DATE UPDATED Q2g_2__9_g_E_3__(_)_ FOR ADDITIONAL INFORMATION CALL 287-5700 0730 CRS- 1 IBUQOSQ UPDATE-07/29/80 ;§§§§-2§Elfll$lQE The 0.5. energy supply situation, coupled with rising prices for waste disposal and increasingly scarce landfill property, has stimulated investment in facilities that convert municipal solid wastes to energy. Numerous private and public organizations are currently working on approximately 57 demonstration and commercial-scale projects. These plants employ a variety of processes to convert wastes to such fuels as: process heat for industry, electricity for utility grids, steam for local energy systems, ' and refuse-derived fuel for coal- and oil-fired systems. Over the last ten years, this emerging industry has had its "learning problems" and has raced major institutional, technical, and financial I constraints. However, much experience and many advancements have been gained as a result of these early efforts. The Department of Energy, the Department of Commerce, and the Environxental Protection Agency are conducting programs designed to encourage and support the commercialization of new “energy from solid wastes" (ESW) projects and technology. ‘ Interest is also increasing in bioconversion -- technologies whereby energy trapped in biological materials or energy produced by biological reactions is captured and utilized. Combustion of wood, synthesis of methane gas from aanures and other waste materials, and the production of alcohol tom corn are three important examples. Several Federal agencies are supporting, research, development and demonstration of bioconversion processes. In the 96th Congress several legislative initiatives to accelerate the commercialization of ESW and bioconversion technologies are under consideration. Selected bills are summarized in the last section of this issue brief. I EAQKGROQND éED-2QLICY-AEéLX§l IUI Bugger Bnon SOLL2_flg§1ES éaiéi-Q§§§§iE:i92-Q£-:h§-I§2h£QLQQI “Energy from solid wastes” (ES?) processes recapture and utilize the organic or combustible portion of municipal solid wastes. The plants with the longest history of technical development simply burn the waste materials to produce steam that can be used for a variety of purposes, including electricity generation. Many plants use mechanical means to first separate the combustible portions of the wastes fron.materials that cannot be burned or converted into useful fuel. In these plants, the generalized process involves homogenization of the waste stream by size reduction (e.g., shredding or crushing) and separation of the materials by size, weight, ape, density, and other physical properties. Some form of air classification is generally used to separate the combustible materials from the non-combustible materials. The combustible portion, is called refuse—derived fuel (EDP). This fuel can be coefired with coal and cns- 2 In7uo6a UPDATE-O7/29/80 derivatives of this fuel can be co-fired with oil in certain utility or industrial boilers. some other plants do not produce RDF, but simply convert the combustible portion of the waste into gaseous or liquid products. Soi ESW plants also recover glass and metals from the waste stream, (i.e., the input of the plant). Thus, by using a variety of processes, municipal solid wastes can be converted into a variety of products, such as steam, solid fuel, gaseous, or liquid fuel, or electricity. Two of the five products -- steam and electricity -- are end-products and thus are iready for use in the marketplace. Steam is also an intermediate product when used to generate electricity. The solid, liquid, and gaseous fuels processed from wastes are raw materials that can be burned to produce either end-product (steam or electricity). Several different types of ESE processes are described in a later section. ' F §.<.e§211.r..§-T1.1a.t Convert !.1.u2;_<.=;2al Solid Wastes 22.222221 Several examples of the various processes that convert municipal solid wastes to energy are discussed as follows: 2 (1) Combustion Hunicipal solid wastes can be burned to produce steam in some modified coal-burning furnaces or in water wall incinerators. Steam can be used for heating and cooling buildings and industrial manufacturing. Over 250 plants are utilizing this technology in Europe; about 8 such plants are operating in the United States. Technically, steam recovery is the best-developed method for recovering the energy content of solid waste. But marketing steam is often a difficult task because steam cannot be stored for long periods, and can be transported only over short distances. An example of a "combustion—type" plant which now appears to be running successfully is the Thermal Transfer Corporation plant in Nashville, Tenn. This private not-for-profit corporation, began operation of an ESE facility to produce steam in February 1974 and to chill water for heating and cooling downtown buildings in may 1974. The energy is provided by a waterwall incinerator fueled primarily, except for emergency situations, by municipal solid waste. Steam and chilled water are being sold at prices that are said to result in substantial savings to customers. fioreover, Nashville dumps its waste at the plant and pays an annual disposal fee roughly equivalent to $9/ton. The City is responsible for disposing of the residue. The plant and steam distribution loops are reported to have cost $24.5 million. As of I CRS- 7 IB74064 UPDATE-07/29/80 gfiarch 1979, the plant had disposed of more than 500,000 tons of mixed refuse and, in the process, saved the equivalent of about 32 million gallons of fuel oil. (See HCRR Bulletin in REFERENCES section.) The plant is currently processing about #00 tons of waste daily. Another example of an ESE plant that uses direct combustion is Hheelabrator-Frye's project located in Saugus, Bass. Since opening its doors in Oct. 1975, this plant has processed over 1 million tons of solid wastes, has generated over 6.7 billion pounds of steam, and recovered over 50,000 tons of iron. Currently serving 13 Bay State communities plus parts of Boston, this plant is helping to reduce the volume of solid waste requiring disposal- Wheelabrator—Frye has assumed responsibilities for project design, construction, financing, and long-term ownership and operation of the plant. Small communities or larger industrial facilities are using specially designed combustion units, capable of processing 10 to 100 tons of municipal solid wastes daily. These special units, sometimes called incinerators, can consist of several modules designed for use in a variety of applications with different processing requirements. (See Carroll Hughes statement in REFERENCES section.) 0 (2) EDP and ECO-Fuel Hunicipal solid wastes can be processed into RDF, which is an organic material that can be used to supplement fossil fuels in existing or newly designed combustion units. The major potential markets for RDF are utility. boilers, industrial steam and steam-electric boilers, and district heating 1d cooling facilities. The largest and most readily available boilers are electric utility boilers. Because most of these boilers are suspension-fired (the fuel burns in mid-air in a residence time of one or two seconds), the solid waste must be reduced in size (by shredding, milling, or pulping) so that it can be burned in the boilers‘ short residence time. Burning RDF as a supplement to coal in an existing utility boiler has been demonstrated in St. Louis, Ho. These boilers must be capable of handling ash-both bottom ash s and fly ash. All boilers designed to burn coal have ash-handling equipment. Although many coal-burning boilers were subsequently retrofitted to burn oil or gas, the ash-handling equipment is still operable in most cases. Several State and local governments are either participating in or sponsoring plants that produce BDF. Two examples of these projects are cited t below. Ehe state of Maryland and Baltimore County each provided one half the total capital required -- $8.5 million (in 1974 dollars) -- for the maryland Resource Recovery Facility at a landfill in Cockeysville, Ed. The input of this plant is neighborhood garbage, including dinner scraps, newspapers, and waste metals. The output includes metals that can be sold to steel plants, glass, and RDF (which is sold at approximately $27 per ton to the U.S. Air Force). The Connecticut Resources Recovery Authority, Combustion Equipment Associates, and OK! Resource Recovery Associates have constructed a ?“00—ton—per—day facility designed to yield ECO-FUEL II (a refuse-derived L aered fossil fuel substitute), ferrous metals, glass, and aluminum from trash obtained from Bridgeport, Conn., and nine area towns. At full design capacity, fuel from the plant could replace as much as 650,000 barrels of oil a year. A $53 million State agency bond «issue is providing part of the CBS- 8 IB74064 UPDATB—07/29/80 financing for this plant. The plant was ctnpleted in 1979. Currently the plant is undergoing shakedown (removal of problems). The fuel produced at this plant will be sold to a utility and co-fired with oil to produce ste that will be used to generate electricity. According to EPBI, utilities are reluctant to use RDF because, "the risks are high and the return, in terms of an inexpensive reliable fuel supply in large quantities, is small or nonexistent." EPRI noted that burning RDF could make a utility's operation less efficient, and that utility managers argue that technical uncertainties of RDF could jeopardize their ability to provide reliable electrical service to customers. However, as the price of fuel oil increases, a larger number of utilities may consider burning EDP. (3) Pyrolysis of Organic Materials to Gas, Liquid, and Solid Fuels Pyrolysis, the thermal decomposition of materials in the absence -- or near absence -- of oxygen, can be used to produce a variety of fuels. Pyrolysis is comducted in a closed vessel under high temperatures. This condition causes the organic material to break down to: (a) gas that consists primarily of hydrogen, methane, and carbon monoxide; (b) tar or oil that is liquid at room temperature and includes organic chemicals such as acetic acid, acetone, and methanol; (c) char that consists of almost pure carbon, plus any glass, metal, or rock that.may have been processed; or (d) a combination of oil, gas, and char, and slag. Studies on the pyrolysis of organic wastes have been conducted in the United States, Europe, and Japan. »Laboratory and pilot-plant units have beer constructed and operated, and these units have demonstrated, with varying degrees of success, the technical feasibility of the pyrolysis of municipal refuse. However, it is generally recognized that much additional research, development, and demonstration work remains to be done on this process. EPBI states that pyrolytic processes have high operating and capital costs. i The largest commercial demonstration of the pyrolysis process is a 1,000-ton per day plant in Baltimore, Md., which uses the Monsanto "Langard system." At this plant, solid waste is pyrolyzed and the resultant gas is burned to produce steam for use in heating and air conditioning. The plant was originally expected to convert half the city's solid waste to fuel gas and to recover magnetic metals and crushed glass. The $30 million project received a $7 million grant from the Environmental Protection Agency, $4 million from the State of Md., $12 million from Baltimore vcity, $4 million from industry, and $3.1 million from the Department of Commerce. Monsanto was unable to eliminate jamming in the system that fed garbage into the heating container. Subsequently, Monsanto withdrew from the plant and the City of Baltimore took over operations. The city modified the plant in several areas, such as eliminating the metals recovery components. The plant has recently been processing roughly 600 tons per day on an intermittent basis. (See Francis Kuchta statement in REFERENCES section.) Because of operating problems, work on a pyrolysis project in San Diego, Ca., was suspended several years ago. This plant, also partially supported by the Environmental Protection Agency, uses a process developed by the Garrett Research and Development Company that recovers combustible, oil-like, liquid fuel, glass, and magnetic metals from mixed municipal waste. The system is an outgrowth of approximately four years of intensive research into methods of producing synthetic fuels. The system contains all operations necessary for receiving, handling, shredding, and sorting of solid waste; for CRS- 9 IB7fl064 UPDATE-07/29/80 separation of magnetic metals and glass; pyrolyzing the organic fractions of the waste; and for the recovery of oil and char generated during the pyrolysis step. Laboratory tests indicate that the pyrolysis reactor can be Jperated either to produce liquids or gases. It has been claimed ‘that over one barrel of oil (with an energy value of 10,500 Btu per pound) per ton of input refuse can be produced in the liquefaction node; roughly 6,000 standard cu.ft. of gas with a heating value of 800 Btu per cu. ft. can be produced by gasifying a ton of waste, without relying upon additional fuel sources. This small development plant, which cost roughly $1u.5 million, was designed to process 200 tons of municipal solid waste per day. During 1977-78 the plant operated with much difficulty and failed to isustain operations for sufficiently long periods to provide valid operating data to determine costs. Further possible funding and modifications are being cosidered. (Q) Chemical Reduction of Organic Materials to Oil Organic materials can be subjected to elevated temperatures and pressures and converted to oil. The process, called hydrogenation, or more aptly I de-oxygenation, was developed by the Bureau of Mines‘ Pittsburgh Energy Research Center. Like pyrolysis, the process can be applied to all organic wastes. It does not, however, produce: gas yand char. Under optimum conditions, as much as 99% of the carbon content is converted to oil -- about 2 barrels per ton of dry waste. In practice, about 85% conversion is normally obtained. Because some of the oil must be used to provide heat and carbon monoxide for the reaction, the net yield is about 1.25 barrels per ton of dry waste. The energy value of the oil is about 15,000 Btu per pound- For comparison, the widely used No. 6 fuel oil, has an energy value of about '8,000 Btu per pound. The energy value of the raw waste varies from 3,000 to 4,000 Btu per pound. (5) Biological Processing of Solid Wastes toénethane In 1975, DOE (formerly EBDA) awarded Waste Management, Inc. a contract to design and construct a “proof-of-concept" experimental facility to demonstrate the biological gasification of municipal solid wastes and sewage sludge to produce methane-rich gas. This facility, named REFCOH, processes between 50 and 100 tons per day of the organic fraction of shredded wastes. Plant start-up was completed during 1978, and the experimental program will be 2 to 4 years‘ duration. During this period, researchers will seek to, optimize the process reactions leading towards methane production. This project seeks: (a) to establish information concerning the gas product; (b) to evaluate process reliability and economics; (c) to determine optimum design and operation parameter values for each process stage and method of operation; (d) to establish a basis for comparing the process to other ESE processes; and (e) to establish the technological and economic bases for commercial utilization of this process. The facility has been processing waste and generating a mixed gas (50% methane, 50% carbon dioxide) on a daily basis since November 1978. The operability of the plant is still being studied. It is anticipated that commercial plants using this proces will cost at least $30,000 per ton of pacity per day Haste aanagement, Inc. estimates that by using this process less than 30% of the energy available in refuse will be recovered as gaseous 1 fuel. (See Peter Hare statement in REFERENCES section.) CBS-10 IE7406fl UPDATE-O7/29/80 Hunicipal solid wastes can also be converted into ethanol by biological and chemical means- This ’concept is sometimes known as "trashohol." E considerable amount of research, development, and demonstration work is sti; reguired before this process is ready for commercialization. (See Theodore A. Schwartz statement in REFERENCES section.) Technology is also available to recover methane-containing gas mixtures generated in landfills as a result of bacterial decomposition of solid wastes. In this system, collecting wells are drilled into a landfill and gas is pumped to the surface. According to the National Center for Resource Recovery, seven such projects are underway in the United States. Qene;:mee£_9£-§ner§x-Astizitie§ Conserning ESE.§len:§ DOE is currently supporting research, development, and demonstration of a variety of B83 processes. one of DOE's objectives is to support work that will provide technological options for planners so they may select an ESW system applicable to specific situations. For example, DOE has supported . work on the recovery of energy from sewage sludge, a project to explore the advantages of combining municipal waste and wastewater treatment, research on improving the unit operations of ESH projects, and work on the recovery and . use methane from landfills. In addition, DOE‘ has provided funding to 20 cities to conduct feasibility studies on E53 projects. 2 DOE is developing a near-and long-tern program plan to accelerate the commercialization of promising ESH technologies. As part of this effort, DOE has recommended several measures to improve its current program, including’ (a) research to develop a fundamental understanding of unit operations through pilot and full-scale testing so that equipment and plant design can be improved; and (b) additional support of the testing and evaluation of bag house filters for particulate emission controls. (See U.S. Department of Energy, Thomas Stelson statement in REFERENCES section.) ‘ The following table presents a summary of past DOE funding in this area.y 2Q§-Eg2din9-9f-:he-§e§e§r9hr_Qe1el222en:. end_2e29nstrati0n 0i.§§E-Te2h29l99ie§ Be92e§s-Jin.;illi92§L Enerenriefien.1in.2illi2n§L FY81 $10.9 FY80 $13.0 FY79 1 13.5 FY78 11.5 FY77 u.65 FY76 3.75 FY75 1.0 (transfered from the National Science Foundation) Currently, DOE's Urban Waste Technology Program has limited authority to use loan guarantees, cooperative agreements, contracts, price supports, and grants to support commercial demonstration efforts. Over the last few years, DOE has been formulating regulations to implement a program for the support of municipal ESH demonstration plants by loan guarantees and price supports. CRS-11 IB74064 UPDATE-07/29/80 Although these regulations are expected to be made final, there is no intent in the current Administration to implement these programs at this time. (See 0.3- Department of Energy, John nillhone statement in REFERENCES section.) Several observations can be made regarding the FY81 budget request for this program. (1) The FY81 request for DOE‘s Urban Haste Technology Program is $10.9 million. ln both actual and real dollars, this request represents a substantial decrease from the FY80 appropriation of $13 million. The FY81 request is also substantially less than both the FY79 and FY78 appropriations of $13.5 million and $11.5 million, respectively. Several witnesses testifying before Congress have recently stated that the DOE program is not adequately staffed or budgeted to carry out its assigned tasks. (See Robert D. Schmidt statement in REFERENCES section.) (2) many ESE plants have experienced an array of technical problems that * have impeded or delayed successful commercialization. It is generally recognized that there is a need to improve currently available technologies (as well as to develop new concepts). Specifically, much additional work would be required to eliminate or reduce material failure problems and to improve the performance and reliability of conventional ESE systems. DOE's program, as outlined in the current budget request, would allow only a modest level of work on large-scale conventional technologies, devoting less than 20% of its funds for the improvement of these systems. (3) The current budget request does not provide funds to implement either the loan guarantee authority or the price support authority of P.L. 95-238. herefore, DOE's efforts to advance ESH processes will be primarily restricted to research, development, and demonstration activities. F (4) The FY81 budget will allow continued funding of the REFCOH facility at Pompano Beach, which converts municipal solid waste and sewage sludge to methane. Work at this facility has already provided information needed to optimize process dynamics. Successful demonstration of this process might convince potential investors of the economic and technological feasibility of this process. DOE's FY81 budget request wxnld also allow continued funding, although at a reduced level, of the U.S. Army Natick laboratory's research on enzymatic hydrolysis. If this research continues to advance, it could lead to the connercialization of new technologies capable of converting cellulosic materials to ethanol. ~ Qvervieg of EPA1§-A2§iz;§is§_§e9arfling ESE_2la2:§ For over ten years, EPA, and its predecessor organization in HEW, has assisted local communities in dealing with their solid waste management problems. About five years ago, EPA shifted its emphasis from technology development to that of encouraging and supporting the commercialization of ESE projects. EPA conducts a variety of programs which are summarized as follows. EPA helps communities overcome the various problems associated with fammercialization of E3? projects, and provides funds to urban areas to -dertake comprehensive planning efforts. As part of a 3-year program, EPA has thus far awarded financial assistance to about 66 communities. Funds under this program can be used to support project feasibility analysis, development of a procurement strategy, and the solicitation and selection of \ cxs—12 1374064 UPDATE-07/29/80 contractors to design and construct facilities. According to EPA, fully successful commercialization of these communities’ projects could save almost 6 million barrels of oil each year, resulting in an increase in ener; recovery from solid waste in the United States from the current 2% to almost 9% of the waste stream. EPA seeks to promote State, local, and even Federal agency efforts to commercialize ESH projects through its Technical Assistance Panels Program. This program provides staff and consultant expertise to help these organizations solve their resource recovery problems. During 1978 and 1979, over 160 communities received assistance through this program. EPA also encourages the States to take a more active role in the development of ESW projects. Under the Resource Conservation and Recovery Act, EPA provides the States with funds to develop comprehensive plans for dealing with all areas of solid waste management, including ESE projects. Planning requirements established by EPA include specific actions regarding the constraints facing resource recovery, e.g., removal of State laws which make project contracting difficult. EPA has drafted a guide explaining how the States can provide technical assistance, financial assistance, information dissemination, and other services to aid local communities in implementing ESH projects. In addition to providing direct assistance, EPA also conducts a program of information development and dissemination. This agency supports evaluations and studies of European and domestic ESE projects to generate factual, detailed data for use by decisionmakers and officials responsible for commercializing ESE projects, and conveys this information through Pits Resource Recovery Implementation Seminar Program and a newly developed "Resource Recovery management nodel.“' (See U-S. Environmental Protection Agency, Steffen Plehn statement statement in REFERENCES section.) Qzesziez of D0C~‘s Astivities §e9a.1;é1..i.I_19.§§!'.‘-3laI.y2.s. The Solid Waste Disposal Act is the principal Federal law authorizing the Department of Commerce's (DOC) role in promoting ESE projects. This law directs the Secretary of Commerce to locate and stimulate markets for recovered resources, such as ESW products, to provide guidelines for specifications for recovered resources, to promote and encourage commercialization of proven ESW technologies, and to obtain and exchange ‘economic and technical data relating to resource recovery. The National Bureau of Standards (NBS) of DOC is currently working on the characterization of BS? products. NBS researchers are studying raw refuse, which is the feedstock for waterwall incinerators, as well as several types of RDF. The objective of this research is to devise a means to sample the product statistically and, then to state as accurately as necessary its heat content, ash forming properties, moisture, propensity to pollute, propensity to corrode boilers under certain firing conditions, and its physical characteristics. This information is helpful to potential users of ESW products. (See U.S. Department of Commerce, Sidney Galler statement in REFERENCES section.) §A9-Li§!;92-9£-E.ei;§—:;el..P;99:22§ Pertaininq..to E§E Projege GAO has reviewed program elements in each of the Federal agencies cns—13 IB7uo64 UPDATE-07/29/80 concerned with ESE plants and found that Federal efforts appeared fragmented, uncoordinated, inadequately funded, uncertain in their priorities, and lacking in detailed overall strategy. More specifically, GAO found that: -- DOE and EPA planned their activities largely independently of each other in spite of their similar and overlapping authorities and their Hay 1976 agreement to coordinate planning and facilitate information exchange. - DOC's efforts to stimulate broader commercialization of prowen ESW technologies, develop materials specifications, and identify markets for ESE products had been stalled by lack of funds. - EPA had not committed the staff and financial resources required to carry out the overall resource recovery provisions of its mandate. - EPA and DOC budget requests for meeting their responsibilities under the Resource Conservation and_Eecovery Act of 1976 had frequently been cut and in some cases disallowed by the Office of management and Budget. ' *- DOE funded its urban vaste technology program at a level inconsistent with the high priority assigned this technology in its national plan for energy research, development and demonstration, and it lacked a specific strategy for the development and implementation of E5? processes. - Loan guarantee programs authorized by the Energy Conservation and Production Act of 1976 and the Department of Energy Act of 1978 had not been funded. At present, there are no Federal economic incentives designed specifically to encourage the use of ESE systems on a broad scale. Furthermore, GAO concluded that a more active Federal role is required if technologically and economically feasible ESW systems are to be commercialized on an accelerated schedule. (See U.S. General Accounting Office, H. Dexter Peach statement in REFERENCES section.) '§9n9£§§§-ané-§§2-£la22§ Congress has sought to promote the innovation of ESW systems. Three laws that contain provisions designed to aid the emerging ESE industry are: (1) gthe Resource Conservation and Recovery Act of 1976 (P.L. 9%-580), (2) the Department of Energy Act of 1978 -- Civilian Applications (P.L. 95-238), and (3) the Department of the Interior and Related Agencies Appropriations for Fiscal Year 1980 Act (P.L. 96-126). iP.L. 94-580 (sec. 8001) provided that the Administrator of the Environmental Protection Agency shall conduct and promote research, denonstrations, and studies related to (1) the production of usable forms of recovered resources, including fuel, from solid waste; and (2) the cns-1n In7uo6u UPDATE-07/29/80 advancement of technology for collecting and disposing of solid waste, and processing and recovering materials and energy from these wastes. P.L. 95-233 (Title IV) established a financial support program for municipal waste reprocessing demonstration facilities that would produce fuel and energy—intensive products. This law created a demonstration program for these facilities by authorizing grants, contracts, price supports, and cooperative agreements. The law specified that the Federal share for such a facility shall not exceed 75% of the cost and that not more than $uo million of Federal funds may be used for the construction of any one facility. P.L. 96-126 creates a special fund designated the Energy Security Reserve and appropriated $19 billion to this fund "to expedite the domestic development and production of alternative fuels and to reduce dependence on foreign supplies of energy resources." The law defines alternative fuels as "gaseous, liquid, or solid fuels and chemical feedstocks derived from solid wastes, coal, shale, tar sands, lignite, peat, biomass, unconventional natural gas, and other minerals or organic materials other than crude oil or any derivative thereof.“ ~ of the $19 billion, the following sums are appropriated to the Secretary of Energy: (a) $1.5 billion to carry out the provisions of the Federal Nonnuclear Energy Research and Development Act of 197a, as amended, for the purchase or production by way of purchase commitments or price guarantees of alternative fuels; (b) $708 million to support preliminary alternative fuels commercialization activities of which: (1) up to $100 million shall be available for project development feasibility studies; (2) up to $100 million shall be available for cooperative agreements with non-federal entities; (3) up to $500 zillion shall be available for a.reserve to cover any default; from loan guarantees issued to finance the construction of alternative fuels production facilities as authorized by the Federal Nonnuclear Energy Research. and Development Act of 1974, as amended, provided that the indebtedness guaranteed or committed to be guaranteed under this appropriation shall not exceed the aggregate of $1.5 billion. However, DOE does not expect that ESW projects using direct combustion will be supported with these funds to do feasibility studies or to participate in cooperative agreements. Lssisla£iIs_Q2si9n§-22-£;9a22§_2hs_§§E-lnd2§Lrx There is increasing interest in Congress and elsewhere to accelerate the research, development, demonstration, and commercialization of ESE systems- Several committees have held hearings on this subject and have received recommendations designed to promote the E33 industry. Such recommendations include: 1 ~ (1) Provisions for Front-End Development Expenses. The Federal Government could establish a loan program to assist jmunicipalities or public agencies in the development costs of ESH projects, which can be substantial. If the project becomes viable, the loan could be repaid to the Federal Government as part of the project capitalization. If the project proves unfeasible, for any of several reasons, the lending agency could forgive the loan. (See Russell Brenneman statement in REFERENCES section.) (2) sheltering the RSV Project from Unforeseeable or Unpredicatable Events. cms—15 In7uo6u UPDATE-07/29/80 The Federal Government could establish a variety of programs to reduce the adverse effects of unforeseeable or unpredictable events on ESW projects. Ihese include: (a) a loan program to provide financial assistance to projects that have completed construction but have been unable to complete start-up over some reasonable period of time; (b) exemptions from changes in environmental regulations which could require project abandonment or refinancing; (c) a Federal "reinsurance" program whereby if a project is required to invest substantial further monies as a result of changes in Federal laws or regulations enacted or adopted after plant construction, the additional costs could be refunded. Funding for this program could be derived from a premium paid by projects desiring such protection. (See Russell Brenneman statement in REFERENCES section.) (3) Revising the Internal Revenue Code to Provide additional Investor Incentives. A variety of changes in current tax law could promote thei commercialization of ESE projects. These dnclude extending the period during which the energy tax credit can be claimed for investment inia facility until Dec. 31, 1990, expanding the definition of the type of equipment for which an energy tax credit may be taken, and reducing the accelerated depreciation range for these projects from the present 8—to 12-year range to a range comparable for pollution control equipment» or five years. (See William Boardman statement in REFERENCES section.) (4) Coordination of EPA, DOE, and DOC Efforts. According to Eelvin Greenberg, an attorney who has worked on ESW proposals, the present regulatory framework contains a myriad of programs stemming from three Federal agencies, with resultant overlapping and duplication of effort which has at times cxnfused the» purpose, timing, and importance of Federal financial assistance to ESE projects. Greenberg suggests that- the complex management, legal, engineering and financial aspects of ESW projects requires coordination of Federal efforts. (See Melvin Greenberg statement in REFERENCES section.) 51QSQ§X§§§.£0N_9.E..Q§i.GANIC HAT-E3131-§ §£ief.2escription of the reghnelgsz Bioconversion is the process of extracting usable energy fro: plant and animal materials, called biomass. Bioconversion includes those processes that convert biomass into energy materials, substitute natural gas, alcohol fuels, and energy intensive products such as turpentines and resins. Examples of bioconversion include: converting wood and grain to methanol and ethanol, processing animal manures and forest residues to energy fuels, and digesting biomass by bacteria to produe carbon dioxide and methane. (Hethane is the major component of natural gas.) Processes which have been identified as having a high potential for‘ producing energy from biomass wastes within the next decade include: direct combustion, pyrolysis, gasification resulting in low-Btu gas, and fermentation producing a gaseous f“el of 500 to 700 Btu's per cubic feet heating value. Bioconversion is an attractive energy technology for several reasons. The technology can contribute to regional or local energy needs and it uses renewable energy sources. Several bioconversion systems have already been CBS-16 IB74064 UPDATE-07/29/80 commercialized and licensed internationally. For example, a process developed by Bio-Solar Research and Development Corporation is said to convert organic fibrous materials, such as wood waste, leaves, and grask into pellets that can then be burned directly like coal, or converted into synthetic gas, which can be burned to produce steam. Hany other bioconversion systens are still under development, and are likely to require years of intensive research and demonstration before they can be utilized in the marketplace. The potential of using biomass as an energy fuel is large. According to Dr. William Larson a soil chemist (as quoted in the Hay 1978 edition of Agricultural Research), "if all agricultural residues and by-products were collected, dried, and used as fuels, they could supply about 2 percent of the current U.S. energy demand." §e1ect9§ En!ironmeusal_§9n2srn§.§e9ar§;ng.§i9s2n1er§;e2 EBDA (now DOE) has detailed some of the environnental impacts of obtaining fuels from bioconversion- Their findings