Anatomy of a Bill

I am a resident of the great state of Indiana. Honestly, I do love the state, but it can be an extremely frustrating place to live for someone that loves the environment. Our state legislature had over a dozen or so bills authored during this session that were related in some way to the environment. Personally, I was tracking 14 different bills, for the record, I was in favor of 10 of them. Know how many actually passed and were signed into law? One, that’s right one. Ok, to be fair, there was one more that was passed, but has not been signed into law yet, so call it two.

The bill that passed? SB 423 – Substitute Natural Gas (SNG). Yes, the one bill that was passed and signed was for COAL! We are addicted to that stuff. In layman’s terms, substitute natural gas is made by processing coal and turning it into “natural gas” that can be used to generate power. My understanding is that it is cleaner because the CO2 is removed, as are the metals such as mercury. However, as is the case in non-sustainable processes the CO2 is buried (carbon sequestration) and the metals are disposed of with the coal slag. Now, both of those seem like problems to me. Let’s bury it. If we can’t see it, there must not be a problem. Does anyone remember Tennessee?

But, this is not about the merits (or lack thereof) of SNG. This is about dissecting the history of a bill that raises a lot of questions about our legislative process. Even if you aren’t from Indiana, my guess is that games like this are played throughout this country of ours.

Our story begins in 2007, with Leucadia, a multi-national speculative venture corporation that was looking to finance a SNG plant. Indiana passed legislation that would pass on the majority of the costs for the construction and operations of the plant to the Indiana ratepayers. What a deal! Where can I find an investment that provides a great rate of return AND somebody else has to make the original investment? So what did Leucadia give us Hoosiers in exchange for our generosity? They promised to build the plant in Indiana, thereby potentially creating Indiana jobs, and they promised to use Indiana coal.

In 2008, Leucadia was having a hard time nailing down the necessary land contracts for the site. They also failed to locate any Indiana coal contracts. Never fear, our Legislature is here! Legislation was passed to allow the plant to be built outside of Indiana and to remove the Indiana coal requirement. Now this is the good part, the tax abatements were left in place and the Indiana ratepayers still get to pay for it all and assume all the risk.

But our story doesn’t stop there. As 2009 dawned, the three Indiana Natural Gas Utilities had all backed out of negotiations with Leucadia to buy any of their SNG. What’s a company to do? They are getting ready to make a product that NOBODY WANTS TO BUY! But wait…that’s right, there STILL is the Indiana General Assembly. Let’s see what THEY can do. Now get this, what do they do? They create a new entity, the Indiana Finance Authority. They give this entity the authority to enter in a THIRTY year agreement to buy SNG from Leucadia, they require the same natural gas companies that didn’t want the SNG to deliver it, and yes, the ratepayers get to pay for it all.

So here we sit, the only state in the Midwest without a renewable energy standard, and we are putting millions into SNG to promote a product that no one wanted to buy in the first place. Before you know it we will be redefining renewable energy to include “clean” coal…oh wait…