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The Synthetic Fuels Corporation (SFC or Synfuels Corporation) was a U.S. federal government-funded
corporation A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
established in 1980 by the Energy Security Act (ESA) to create a financial bridge for the development and construction of commercial
synthetic fuel Synthetic fuel or synfuel is a liquid fuel, or sometimes Fuel gas, gaseous fuel, obtained from syngas, a mixture of carbon monoxide and hydrogen, in which the syngas was derived from gasification of solid feedstocks such as coal or biomass or by ...
manufacturing plants, such as
coal gasification In industrial chemistry, coal gasification is the process of producing syngas—a mixture consisting primarily of carbon monoxide (CO), hydrogen (), carbon dioxide (), methane (), and water vapour ()—from coal and water, air and/or oxygen. H ...
, that would produce alternatives to imported
fossil fuel A fossil fuel is a flammable carbon compound- or hydrocarbon-containing material formed naturally in the Earth's crust from the buried remains of prehistoric organisms (animals, plants or microplanktons), a process that occurs within geolog ...
s. With a seven-member
board of directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...
, the corporation received $20 billion in initial funding to be used in
joint ventures A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
with private firms, primarily
oil and gas companies The petroleum industry, also known as the oil industry, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The largest volume products ...
, to construct plants and help finance coal mines or transportation facilities.Anthony S. Campagna, ''Economic Policy in the Carter Administration'' (Greenwood Press, 1995), 143. It was one of six acts in the ESA legislation. SFC also researched and promoted the use of
alcohol fuel Various alcohols are used as fuel for internal combustion engines. The first four aliphatic alcohols (methanol, ethanol, propanol, and butanol) are of interest as fuels because they can be synthesized chemically or biologically, and they have ...
s,
solar energy Solar energy is the radiant energy from the Sun's sunlight, light and heat, which can be harnessed using a range of technologies such as solar electricity, solar thermal energy (including solar water heating) and solar architecture. It is a ...
, and the production of fuel from urban waste. Over its 6-year existence, the SFC only spent approximately $960 million (barely five percent of its initial 1980 budget) to fund four synthetic fuels projects, none of which survive today. The corporation was abolished in April 1986.


History


Creation

Initially proposed as the "Energy Security Corporation" in President
Jimmy Carter James Earl Carter Jr. (October 1, 1924December 29, 2024) was an American politician and humanitarian who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party ...
's malaise speech of July 15, 1979, the corporation's funding was allocated from income from the windfall-profits tax set up in April 1980 under the Crude Oil Windfall Profit Tax Act.Victor Bondi, ed. ''American Decades: 1980-1989'' (Detroit, Mi: Gale Research, 1996), 282. After long congressional conference sessions, due to heavy opposition from candidate Ronald Reagan and congressional Republicans, the ESA was finally passed in June 1980. Congress authorized over 12 years funding of $88 billion plus $35 million in annual administrative expenses (adjusted for inflation) for the SFC, with a maximum of three hundred full-time professional employees. The SFC's mandated goal was the production of at least of crude oil equivalent per day in synthetic fuels from domestic sources by 1987 and at least per day by 1992. The SFC was kept out of the Department of Energy and legislatively chartered to be free of normal government rules, regulations, and procedures. In September 1980, Carter nominated John C. Sawhill to be the SFC chair, but the
Senate A senate is a deliberative assembly, often the upper house or chamber of a bicameral legislature. The name comes from the ancient Roman Senate (Latin: ''Senatus''), so-called as an assembly of the senior (Latin: ''senex'' meaning "the el ...
Republicans refused to confirm Sawhill or any other board nominee. Signing
Executive Order In the United States, an executive order is a directive by the president of the United States that manages operations of the federal government. The legal or constitutional basis for executive orders has multiple sources. Article Two of the ...
12242, Carter assigned SFC responsibilities to the Department of Energy and
Department of Defense The United States Department of Defense (DoD, USDOD, or DOD) is an executive department of the U.S. federal government charged with coordinating and supervising the six U.S. armed services: the Army, Navy, Marines, Air Force, Space Force, ...
until the SFC could be declared operational. The DoD used this brief window to fund the Union Oil Parachute Creek and Colony/Tosco oil shale projects. In October, Carter was forced to make recess appointments of Sawhill and four others. Pursuant to the ESA, the corporation had to issue its first solicitation for synthetic fuel projects by the end of December 1980; the proposal deadline was set for March 31, 1981. Sixty-one firms in 24 states submitted proposals, and of these, 19 were for coal liquefaction, 17 coal gasification, 14 oil shale, 8
tar sands Oil sands are a type of unconventional petroleum deposit. They are either loose sands, or partially consolidated sandstone containing a naturally occurring mixture of sand, clay, and water, soaked with bitumen (a dense and extremely viscous ...
oil production, and 3 for other fuels.


Industry response

Wall Street was eager to begin investing in the synfuels industry. In July 1979, a report called ''Helping Insure Our Energy Future: A Program for Developing Synthetic Fuel Plants Now'' was published by the
Committee for Economic Development The Committee for Economic Development of The Conference Board (CED) is an American nonprofit and nonpartisan public policy think tank. The board of trustees consist primarily of senior corporate executives from a range of U.S. industries an ...
(CED), an independent research and educational organization of 200 business executives and educators, made the case for the urgent need for synfuel industry development. Industry lobbyists in Washington formed the National Council on Synthetic Fuels Production headed by Walter Flowers, a former Alabama congressman. No less than three trade magazines were launched — ''The Synfuels Report'', ''Synfuels Weekly'', and ''Synfuels''. Two industry-insider books were quickly published, ''The U.S. Synthetic Fuels Program'' and ''Synfuels Handbook: Including the YELLOW PAGES of Synfuels''. In the run up to the ESA's passage, the executive committee of the Ad Hoc Coalition on Synthetic Fuels hosted a reception in honor of congressmen and conference committee staff on June 19, 1980, funded by four American natural resources companies: Ashland Oil, C.-E. Lummus, Tosco, and
Tenneco Tenneco, Inc. (formerly Tenneco Automotive and originally Tennessee Gas Transmission Company) is an American automotive components original equipment manufacturer and an aftermarket ride control and emissions products manufacturer. It is a ''F ...
. These firms had significant investments in synthetic fuels projects.


Reagan years

After
Ronald Reagan Ronald Wilson Reagan (February 6, 1911 – June 5, 2004) was an American politician and actor who served as the 40th president of the United States from 1981 to 1989. He was a member of the Republican Party (United States), Republican Party a ...
was elected president and Republicans took the Senate in the 1980 election, Reagan severely cut the SFC's funding, scaled it down, and finally phased it out. Constant reshuffling of members and congressional meddling succeeded in stifling the SFCs functioning. In January 1981, the board members submitted undated resignations to Reagan, and Reagan accepted them at the end of the month. Jack McAtee assumed the acting chair position. In April, Reagan nominated Edward Noble as chair in April. Edward Noble, a real-estate developer from
Atlanta Atlanta ( ) is the List of capitals in the United States, capital and List of municipalities in Georgia (U.S. state), most populous city in the U.S. state of Georgia (U.S. state), Georgia. It is the county seat, seat of Fulton County, Georg ...
with roots in the
Oklahoma Oklahoma ( ; Choctaw language, Choctaw: , ) is a landlocked U.S. state, state in the South Central United States, South Central region of the United States. It borders Texas to the south and west, Kansas to the north, Missouri to the northea ...
oil business, was a large financial backer of
The Heritage Foundation The Heritage Foundation (or simply Heritage) is an American Conservatism in the United States, conservative think tank based in Washington, D.C. Founded in 1973, it took a leading role in the conservative movement in the 1980s during the Presi ...
, which was very supportive of Reagan and paid the salaries of several SFC transition team members. In May, Reagan nominated four transition members, Robert Monks, Victor Schroeder, Victor Thompson, and Howard Wilkins, to the SFC board. After Noble was confirmed and sworn into office, McAtee resigned. In October, the other four board nominees were sworn in as members of the board. Finally, in February 1982, Reagan issued Executive Order 12346 proclaiming the SFC operational and officially open for business. In May, Reagan appointed two additional SFC board members, John Carter and Milton Masson, who were not sworn in until August. In August 1983, the SFC president and CEO, Schroeder, resigned his position but remained a board member. Over the course of several months, starting in January 1984, five members, Monks, Wilkins, Schroeder, Thompson, and Carter, resigned. Not until November were three replacements, Corcoran, MacAvoy, and Reichl, appointed and in December sworn in as board members. They were not confirmed by the Senate until June 1985. Hollowed out and neutered, the SFC instead became a place to repay political donors and friends with do-nothing job appointments. This was then used as a pretext to abolish the SFC. In December, Congress passed P.L. 99-190 which terminated SFC authority to award new financial assistance and set a 120-day time limit left to transfer projects to the Treasury department and to shut down. In April 1986, Congress passed P.L. 99-272 formally abolishing the SFC.


Assessment

The Great Plains coal gasification plant in
Beulah, North Dakota Beulah is a city in Mercer County, North Dakota, United States. The population was 3,058 at the 2020 United States census, 2020 census. Beulah is home to the Dakota Gasification Company. It is near the largest lignite mine in the United States, ...
, still producing natural gas and sequestering carbon in 2009, was built with the support of the Department of Energy and applied for further support by this corporation, partly as a result of efforts by Reagan's Energy Secretary James B. Edwards.NYTimes, ''North Dakota Utility to Buy U.S. Synthetic-Fuels Plant''. August 6, 1988
/ref>


See also

* Colony Shale Oil Project * Dakota Gasification Company * Synthetic Liquid Fuels Program


References


External links


"Glenn Beck: U.S. is a suicidal superpower"
CNN Cable News Network (CNN) is a multinational news organization operating, most notably, a website and a TV channel headquartered in Atlanta. Founded in 1980 by American media proprietor Ted Turner and Reese Schonfeld as a 24-hour cable ne ...

"Search for New Oil Sources Leads to Processed Coal"
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''
National Archives, Executive Order 12346 establishing the Synthetic Fuels Corporation

"Sustainable Energy for the 21st Century: A Market Perspective"
World Energy Council The World Energy Council is a global forum for thought-leadership and tangible engagement with headquarters in London. Its mission is 'To promote the sustainable supply and use of energy for the greatest benefit of all people'. The idea for the fo ...
* ,
The Heritage Foundation The Heritage Foundation (or simply Heritage) is an American Conservatism in the United States, conservative think tank based in Washington, D.C. Founded in 1973, it took a leading role in the conservative movement in the 1980s during the Presi ...

"Great Plains Biofuels Plant History from former Department of Energy employee"
Reason Foundation The Reason Foundation is an American Libertarianism in the United States, libertarian think tank that was founded in 1978. The foundation publishes the magazine ''Reason (magazine), Reason''. Based in Los Angeles, California, it is a nonprofit, ...
{{authority control Coal in the United States Corporations chartered by the United States Congress Energy companies of the United States Petroleum production United States federal energy legislation