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September 2005


HARRISBURG — Governor Edward G. Rendell today said Pennsylvania is taking a frontrunner position in addressing the country’s dependence on foreign oil by supporting the nation’s first-ever waste-coal-to-diesel plant and creating a fuel consortium that will purchase nearly all of the cheaper, cleaner diesel fuel that will be produced at the Schuylkill County facility.
“Every day we see the necessity for a national policy to address America’s energy needs,” Governor Rendell said. “We only have to look at rising fuel prices to feel the impact. Working with the private sector, Pennsylvania is going to build its own energy and keep the money it now spends on foreign energy to make investments here.
“Three years ago, I said we were going to do things differently in Pennsylvania.  We were going to lead, not follow.  Today we are delivering on that commitment with an innovative energy solution that will mean cleaner, cheaper diesel fuel, more than 1,600 jobs and the use of acres of waste coal that now threaten our environment,” the Governor added.
“We are going to be part of changing how America produces its fuel. We are going to ensure Pennsylvania has a long-term supply of clean, secure and affordable energy. Not only will Pennsylvania be the first state to build such a plant, we also will be the first state to use its purchasing power to lead a consortium to purchase some 40 million gallons of this Pennsylvania produced fuel.”
The Governor announced the creation of a fuel consortium that will purchase nearly the full output of cheaper, cleaner diesel fuel to be produced by the nation’s first-ever waste-coal-to-diesel plant planned for Mahanoy City, Schuylkill County. The plant, which is being built by Waste Management and Processors Inc. (WMPI) of Gilberton, Schuylkill County, will use waste coal to produce as much as 40 million gallons of clean-burning diesel annually.
Pennsylvanians now spend some $30 billion per year on imported energy fuels. However, using and developing home-grown energy sources and supplies has a multiplier effect in local and regional economies that can yield significant economic benefits.
“I am determined to start bringing our independence back as a country,” Governor Rendell said. “We are going to keep our own energy dollars and put our own citizens to work by supporting innovative ideas. The market is ripe for investments in major energy projects that stabilize prices, promote domestic employment and economic development, and improve the environment --- all while reducing our dependence on foreign energy imports.”
“What Governor Rendell is doing to support this project is simply unprecedented in this country,” WMPI President John Rich said. “He is creating hundreds of high-quality, high-paying jobs while taking an extremely meaningful step toward reducing our dependence upon foreign oil. No other state in this country can make that claim.”
Construction of the Mahanoy plant will create as many as 1,000 jobs. Operating the plant will produce another 600 permanent high-paying positions. The company expects to break ground and start construction as early as spring of 2006.
At the Governor’s direction, the state has worked with potential partners to ensure a long-term, viable market for this innovative project and others like it.  The buyers’ consortium is led by the commonwealth and private sector businesses that include Worley & Obetz Inc. and Keystone Alliance, a fuel purchase group for the trucking industry.  Nearly all of the plant’s output, which can be refined for use as diesel, jet fuel and home heating oil, is locked up in principle in purchasing agreements.
Recently, representatives from the U.S. Department of Defense (DoD) met with Governor Rendell and WMPI to discuss their interest in these fuels and the production facilities, which are much less vulnerable to attack or supply disruption. The U.S. Department of Defense has taken strong interest in Governor Rendell’s initiative, and Dr. William Harrison, senior advisor of DoD’s Clean Fuels Initiative in the Office of the Secretary of Defense, joined the Governor for the announcement in Harrisburg.
“Construction of this plant will transform the way America produces its own fuel,” Governor Rendell said. “For too long, OPEC and energy imports have ruled and threatened us. In Pennsylvania we are beginning to do something about that.
“The pioneering work of this buyers’ consortium will send a powerful message to the investment community that there are customers out there ready and willing to make long-term purchase commitments in exchange for a secure supply of affordable energy,” Governor Rendell added. “This will provide the economic driver we need to encourage more of these plants to come on line.”
The innovation of the Mahanoy plant and Governor Rendell’s leadership in creating the buyers’ consortium were featured in Barron’s, one of the nation’s premier financial weekly magazines just last week.  The state’s leadership also was highlighted by Bloomberg in a national business story Wednesday.
The plant will be the first of its kind in the country and will use an energy source that otherwise would be a threat to the environment. Waste coal contributes to the problem of acid mine drainage, which is the leading water pollution problem in the commonwealth, and represents a public health hazard.  Fires that ignite waste coal contribute to poorer air quality. Rural communities and small coal mining towns are plagued by scarred lands.
Fuel prices continue to reach new highs, making investments in new technology imperative and alternative fuels more competitive. The price of diesel produced by the Mahanoy plant will be well below current market costs since the waste coal fuel source is essentially free, and the commonwealth will lock in the supply for some 10 years, the Governor explained.
Aside from being cheaper, the plant’s diesel will be cleaner. The fuel will burn with no sulfur emissions --- a contributor to acid rain and global climate change --- and burn with a high level of energy efficiency, making it more economical for drivers. The plant will use state-of-the-art control technology in its manufacturing process to control air emissions.
In addition, the waste heat from making the liquid fuels will be used to generate 41 megawatts of low-cost electric power that will be fed into the grid, a concept known as polygeneration. The waste heat is enough to power more than 40,000 homes.
Pennsylvania has offered significant financial incentives to make energy manufacturing a cornerstone of the state’s economic future, including $47 million in tax credits for the development of this project.  The U.S. Department of Energy has committed another $100 million in grants, and the recently passed federal energy plan singles out this project for a federal loan guarantee.
This is all part of Governor Rendell’s effort to promote advanced energy projects.  He has made sure the policies and financial tools are in place to promote the industry.  The Governor’s success and leadership in building a clean energy future was recognized recently by former President Bill Clinton at the inaugural Clinton Global Initiative, an international summit.
Pennsylvania is now home to one of the nation’s most progressive alternative energy portfolio standards, ensuring that in 15 years, 18 percent of all energy generated comes from clean, efficient sources.  Pennsylvania is one of only two states with a portfolio standard that includes energy efficiency.  Benefits include $10 billion in increased output for Pennsylvania, $3 billion in additional earnings and between 3,500 and 4,000 news jobs for residents over the next 20 years.
Governor Rendell’s Growing Greener II initiative provides significant resources to build on the success of other energy initiatives, including up to $10 million annually for the newly revitalized Pennsylvania Energy Development Authority. PEDA has available up to $1 billion to provide financing to help build clean power and fuel plants.
In June, PEDA awarded its first $10 million to finance 17 clean energy projects that promote applied energy research, provide financial incentives for the deployment of clean, alternative energy projects and encourage investment in Pennsylvania’s energy sector. These projects will create as many as 1,786 permanent and construction jobs in the commonwealth. In addition, the research projects, if successful, could net as many as 327 full-time jobs.
The Governor is actively promoting the development of a new manufacturing sector that focuses on advanced and renewable energy systems, energy efficiency and conservation, and clean advanced energy businesses, and encouraging companies that are located elsewhere to consider establishing manufacturing, sales, marketing and distribution centers in Pennsylvania.
The Pennsylvania Energy Harvest grant program funds projects that build markets for advanced and renewable energy technologies that use biomass, wind, solar, small-scale hydroelectric, landfill methane, energy efficiency, coal-bed methane and waste coal. The program has awarded $10 million and leveraged another $26.7 million in private funds since its inception in May 2003.
Governor Rendell also signed an executive order, “Energy Management and Conservation in the Commonwealth,” that ensures maximum efficiency in energy management and conservation in state facilities through the implementation of a centralized energy strategy. This measure will decrease energy consumption and energy costs and promote a cleaner environment.
More recently, Governor Rendell announced a plan to replace some 25 percent of the state’s vehicle fleet with hybrids by 2011.
For more information on these energy initiatives, visit the state’s Web site at, Keywords: "Alternative fuels" or "OETD."

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