A $3.8 billion Lake Charles plant is being threatened by President Donald Trump’s proposal to cut a loan program critical to the project.
The proposed plant would turn petroleum coke into high-value chemicals like hydrogen and methanol, which could be used in plastics, paint and other products. What’s more, the excess carbon dioxide would be injected back into the ground to stimulate oil production.
According to a report in Bloomberg, the technology hasn’t been proven yet, which has made financing difficult. Because banks have been reluctant to give loans for the project, it has been partially funded by a conditional $2 billion loan from The Department of Energy (DOE).
The department’s loan program is meant to help kick-start clean energy projects. It’s had many success stories and even gave a direct loan to Elon Musk’s Tesla (which has since been repaid).
But the program has also suffered one debacle — a $535 million loan guarantee to a cylindrical solar panel maker that went bankrupt in 2011.
That failure has cast a dark shadow over the program, especially for Republicans generally opposed to publically funded assistance. Other Republicans, however, remain supportive of fossil-fuel driven projects. Bloomberg speculates that this particular project could chisel a rift between party members.
The proposed project, called Lake Charles Methanol LLC, (LCM) is slated to use General Electric-licensed equipment and innovative machinery to decarbonize the oil. LCM says the project will create 1,000 construction jobs and 500 permanent manufacturing jobs. LCM also estimates that it will sell 4.5 million tons of captured CO2 to oilfield operators every year.
The portion of LCM not covered by the DOE loan is being funded by “equity financing.” Construction is supposed to start this year.
Trump’s budget proposal includes cuts to DOE programs, which could affect loans. But as debate about the issue intensifies it’s still unclear if the Trump administration will allow projects like LCM to fall victim to the cuts. Trump has touted the fossil fuel technologies and supports infrastructure development.
After the Solyndra solar project went belly up, however, he tweeted criticisms of then President Barak Obama for “wasting tax dollars on unproven technologies.”