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Chinese Communist business model featured in Indiana Senate Bill 423

Two of the classic features of communism are state control over business decisions while suppressing established free enterprise business models. The Indiana Senate is poised to do just that. Illustration of Senator Brandt Hershman with Chinese Flag by John Blair.



Is communist China’s business model one Indiana should follow? Most Hoosiers would say no but not two of the state’s leading Republican senators who have introduced a bill that could be right out of Mao Zedong’s Quotations of the Chairman.

Introduced by Brandt Hershman, Majority Whip and James Merrit, jr. Majority Caucus Chair, Senate Bill 0423 reads more like a document that would be discussed in the Beijing’s National People’s Congress than it would be in the Indiana General Assembly but sadly it is the other way around.

The Bill, assigned to Merritt’s Utility and Regulatory Affairs Committee seeks to force State government into purchasing “substitute” natural gas, refined from processing coal and then selling it to “end use” customers in a state controlled method similar to the model used throughout Red China to promote state run businesses.

Specifically, it requires that the new Indiana Finance Authority, an agency set up to help fund state and local capital projects around the state, to become a broker for gas produced in some yet to be built coal gasification plant, presumably proposed for somewhere in Indiana.

One such proposal was recently withdrawn from the docket of the Indiana utility Regulatory Commission after it was determined that the state’s two largest natural gas utilities did not want to assume the risk of thirty year “take or pay” contracts for coal gas that was slated to be produced in Rockport, on the Ohio River in Spencer County.

That facility was the subject of legislation that would have forced Indiana consumers to “take or pay” for the synthetic gas produced by a firm calling itself Indiana Gasification LLC.. Indiana Gasification finally withdrew their petition for a “Certificate of Public Convenience and Necessity” when Vectren and NiSource balked at being stuck with the uncertainty of project costs and pending carbon legislation that might have driven the cost of the syngas through the roof.

It is unclear whether Indiana Gasification is the principal behind this bill but it is known that IGLLC was a major contributor to Senator Hershman (see: http://www.brandthershman.com/).

It is the bill’s language that sets it apart and makes it look as if it could have been written by Hu Jintaom, the current Chinese President. Sections 13 and 14 of the seven page bill state,
Sec. 13. The authority shall do the following:
(1) Enter into contracts for the purchase, transportation and delivery of SNG.
(2) Establish and collect rates and charges for SNG.
(3) Enter into contracts for private professional and technical assistance concerning SNG contracts.
Sec. 14.
(a) The authority, either directly or as an assignee of an energy utility, shall enter into purchase contracts for the purchase of SNG from coal gasification facilities in an annual amount of at least thirty-four billion cubic feet (34 Bcf).
(b) The authority shall submit a final purchase contract to the commission for approval.
(c) The commission may reduce the volume of SNG purchased by the authority under a purchase contract by the volume of SNG that an energy utility (other than a regulated energy utility) has contracted to purchase directly from the coal gasification facility.

There is a clear implication in this language that the state’s regulated utilities will be expected to go along with this state run scheme that is designed primarily to assure the continued prosperity of Indiana’s coal industry.

To justify such extreme measures, the bill states that U.S. natural gas supplies are “unreliable” but offers no proof and seems to ignore the fact that natural gas supplies are plentiful and expected to stay that way for a long time.

The bill also ignores the issue of cost entirely, and does not mention that gas supplies are currently so plentiful that even today, when the northern half of the United States is at its winter peak for gas demand, the price dropped to its lowest level in nearly three years at $4.84 per million Btu, while the cost to produce syngas from coal is expected to exceed that figure by more than 60%. And that is without the added cost of capturing and storing (CCS) the massive carbon dioxide emissions the plant will create. The US Department of Energy estimates that CCS will add as much as fifty percent to the capital cost of such facilities resulting in even higher fixed costs for it synthetically produced coal gas.

It is uncertain why two state senators who call themselves “conservative” would toss away that label just to placate the coal industry in a bid to increase the power of the state over the lives of the citizens of Indiana. Perhaps they do not understand the current political climate when it comes to carbon or the health problems caused by Indiana already being the number two state in burning coal at 67,000,000 tons per year.

Or, maybe they fail to understand that coal gasification plants require huge outlays of capital which the state is required to amortize with its forced purchases of the syngas product from some “get rich quick” company with a nice lobbying presentation.

But the bottom line is that this bill, if passed, will result in a rapid slide into state socialism that mimics the worst of the communist model.

Will Indiana residents allow this to happen? Maybe. It is obvious that up to now, Hoosier officials and especially those who are commissioners at the IURC seem to go along with any Ponzi scheme that will make the utilities or the coal companies richer than they already are and the financial and physical health if Indiana citizens be damned.

And here we thought that communist theory was no more than an abstract concept in America and particularly its crossroads.


John Blair is a Pulitzer Prize Winning photographer who serves as president of the public health advocacy group, Valley Watch, located in Evansville, IN. His website is valleywatch.net

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Comment by waldopaper on February 14, 2009 at 12:16am
PS... "...established free enterprise business models." Cripes... do you actually BELIEVE that???
Comment by waldopaper on February 14, 2009 at 12:03am
Oh yeah, Mitch and his gang are simply a bunch of Bolsheviks and Republican Herschman is no less than the infamous Gang of Four. C'mon... if coal gassification is a bad idea economically and environmentally (which it is), why not say so? Why couch your point in such Commie-bashing rhetoric to pander to (what you may believe are) mouth-breathing "Hoosiers" who don't know the difference between Communism and Rheumatism?

If SB 0423 is an inside crony featherbedding deal (which it is), just say so. Plastering this point over local environmental sites is a good idea... couching the point in a well-poisoning Chairman Mao sophism is not, since most environmentalists are forward enough to know the difference between Communism and Totalitarianism. ,Perhaps you do not know the difference... which weakens your argument. Such polemics pervert the point.

"Just sayin'"

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