In order to facilitate the rapid scale-up of alternative liquid fuels production capabilities in the U.S., regulatory changes are necessary. Standardizing, simplifying and expediting the permitting process for manufacturing/processing facilities, mines, agricultural operations, and necessary infrastructure is crucial. The “not in my back yard” mentality, often accompanied by costly, time consuming litigation and anti-commercial environmentalist obstructionism, needs to be countered with legislation and leadership. Below are a few recommendations in this very important area. More will be forthcoming, especially recommendations for states.

• Standardize, simplify and expedite permitting and siting with joint federal, state and local processes, policies and initiatives
• Make appropriate federal, state and local government sites available for alternative liquid fuels manufacture, including Base Realignment And Closure (BRAC) military sites
• Exempt initial alternative liquid fuels processing facilities from New Source Review (NSR) and National Ambient Air Quality Standards (NAAQS) offset requirements
• Encourage local leadership to modify approaches to zoning and other land use and business regulations, to accommodate the strategically important new activities of alternative energy harvest and manufacture.
• Prioritize, expand and promote the impressive reforestation work being done to dramatically accelerate the rate of tree growth by creating optimal soil conditions at reclaimed mine sites.

Stockpiling crude oil in a centralized location has its limitations. Crude oil needs to be refined to be useful. The logistics of moving SPR crude to refineries having available capacity, and then transporting the refined products to locations in need, is cumbersome and takes time (time being of the essence in a crisis). There are only four centrally located SPR storage sites in the U.S.—two in Texas and two in Louisiana. All four sites are centrally situated on the hurricane-prone Gulf Coast, making them vulnerable to natural disaster and also to enemy attack.

Recommendations :

Congress should examine the feasibility of purchasing and storing “finished” alternative fuel products such as diesel fuel, jet fuel and heating oil at a number of locations strategic dispersed throughout the U.S., as an extension of the SPR program. Fischer-Tropsch (F-T) wax produced from coal, biomass, and perhaps even oil shale, may be an ideal product for this purpose. The F-T process is capable of making a biodegradable wax as an alternative to producing diesel and jet fuels. This wax has a very long shelf life, and can be upgraded to superior quality fuels much more quickly and inexpensively than crude oil. In general, a variety of alternative fuels could be purchased by the SPR under long-term contract to control costs, and to help establish a vibrant, rapidly expanding alternative fuels industry.

Congress should authorize sale of up to 50% of the crude oil currently in storage on the open market to fund available alternative liquid fuel purchases.

The capture and use of the CO 2 from alternative liquid fuel plants can greatly expand domestic oil production from existing oil fields, and enhance methane recovery from coalbed methane operations. To lower the barriers to expanded use of CO 2 from alternative liquid fuels plants we recommend:

• Exclusion of oil and coalbed methane production from the Alternative Minimum Tax (AMT).
• Increase the investment tax credit to 50%
• Provide Federal royalty and severance relief until the investment in CO 2 injection is recovered
• Provide State royalty and severance tax relief until the investment in CO 2 injection is recovered
• Provide access to Federal and State lands for construction of CO 2 pipelines