U.S. Sen. Jim Bunning and U.S. Rep. Geoff Davis earmarked $3.92 million in the defense spending bill signed into law Dec. 19 for American Freedom Fuels, a Lexington company owned by Robert Addington, who is also a major campaign donor.
Addington, who with his brothers founded and ran several large coal companies, has given about $35,000 in combined political donations since 2005 to Bunning and Davis, both Kentucky Republicans.
The earmark is just a small slice of the $636 billion defense spending bill, which included several billion dollars in pet projects added by members of Congress. Bunning alone sponsored or co-sponsored more than $32 million in earmarks, including this one.
In an interview, Addington said American Freedom Fuels will use the funds to further its research into "coal gasification," or the process that breaks down coal into its basic chemical components to turn into fuel, a cleaner process than just burning the coal.
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Although research into coal gasification is relatively common, it is expensive, and no one technology has been settled upon yet. The most successful example of coal-to-liquid fuel production at present is Sasol, a South African chemical company that boasts of a capacity equivalent to 150,000 barrels of oil a day.
American Freedom Fuels is pursuing its own specific method of gasification, which it calls HyMelt, that relies on molten iron to break coal's molecular bonds.
If the company succeeds with a pilot project, Addington said, it could offer a new transportation fuel without the foreign entanglements of imported oil, or the pollution of standard coal-fired power, because most pollutants would be removed during the gasification process.
"We believe that we have the most promising new technologies coming forward on this," Addington said. "Unless we produce our own energy in this country, we're never going to have a secure economy again."
Unfortunately, American Freedom Fuels has a difficult time finding private investors to put money into its research, Addington said. That's why he approached Bunning and Davis to ask for public aid, he said. In 2008, Bunning earmarked $3.2 million for American Freedom Fuels in that year's defense spending bill.
Another coal gasification research company in which Addington holds an interest, EnviRes, also based in Lexington, has won millions of dollars in grants and loan guarantees from the federal and state governments. Its chief proposed project to date — a $254 million plant in East St. Louis, Ill. — failed to happen because EnviRes couldn't secure funding, Addington said.
Leslie Paige, spokeswoman for Citizens Against Government Waste, a nonpartisan watchdog group, said earmarks reward top campaign donors who can bend the ears of congressmen, and they fund projects that were not requested by the government agencies that now must pay for them.
"There is nothing about earmarks that has to do with merit," Paige said. "It's all about power and access."
It's worrisome that Addington is unable to attract private investment but he keeps getting government aid, said Paige.
"If he can't get enough money in the private sector for his companies, it shouldn't be up to the members of Congress to step in and pick winners and losers using money that isn't theirs," Paige said. "That's why we have a free market, to decide which ideas will get capital."
'The right plan'
Addington denied that his political connections help his companies get public aid. Overall, he and his wife have given more than $144,000 in state and federal political donations in the last decade.
In addition, his family's companies have employed politicians including state House Speaker Greg Stumbo and state House Majority Leader Rocky Adkins, both Democrats.
"I support people who I think have the right plan," Addington said. "They do it because it's the right thing to do, and I help them because I like what they're doing."
Bunning spokesman Mike Reynard said the senator's interest lies solely in Addington's research. Bunning is known to be a champion of coal because he wants to support Kentucky's economy and reduce the country's dependence on foreign oil, Reynard said.
"If it's coal gasification, that would be his interest in it," Reynard said. "That's been a big thing for the senator."
In a prepared statement, Davis spokeswoman Alexandra Haynes said the congressman wants the military to be able to use coal as a transportation fuel.
"A $10-per-barrel increase in the price of oil adds $600 million a year to the cost of Air Force operations," Haynes wrote. "Development of a viable synthetic fuel has the potential to eliminate (the Defense Department's) historic reliance on costly petroleum from foreign sources."
Coal for transportation?
A Lexington-based scientist helping to research energy sources said the HyMelt process offers "exciting" potential.
In the future, coal realistically could replace oil as a transportation fuel, said Rodney Andrews, director of the Center for Applied Energy Research at the University of Kentucky.
Addington sits on the center's advisory board, and Andrews has collaborated with him on several proposals, although not directly on HyMelt.
"I don't want to say (coal gasification) is an immature technology, because it's a proven technology," Andrews said. "Obviously, it's not widely used in the United States for a variety of reasons, the volatile price of oil being one."
The National Academy of Sciences, in a report released last May, raised questions about the viability of coal as a transportation fuel.
It's not clear that enough coal reserves exist to support the U.S. demands for electrical power and transportation fuels, the academy said. And the coal gasification process ultimately produces about as much carbon dioxide as oil, it said.
Finally, coal-based fuels could be competitive with the price of gasoline only if oil prices stay high it said. If the federal government imposes new prices or caps on carbon-based energy, that also could make gasification less attractive.
The academy's report drew conclusions based on some worst-case scenarios, Andrews said. As for greenhouse gases, if the right sequestration-and-capture technology can be developed, coal gasification would be better for the environment than oil, he said.
"We can design our way around that problem, or at least significantly mitigate it," Andrews said.