Coal may hold solution to gas prices

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Later this year, a plant in China will begin churning out liquid fuel made from coal, a technology that -- if all breaks right for the coal industry -- is headed to American shores.

From the CTLtec Americas 2008, which begins today at the Omni William Penn Hotel, Downtown, to Capitol Hill, coal-to-liquids is a popular topic, spurred by rising gasoline prices and this country's ever-present need to wean itself from oil imports.

Coal-to-liquid proponents insist that the technology would strengthen national security and be a cheaper alternative than current petroleum. Estimates vary widely, but Richard Bajura, director of the National Research Center for Coal and Energy at West Virginia University, said liquid coal could be produced for $60 to $70 a barrel. Last week, oil prices approached $140 a barrel.

Still, coal-to-liquid plants would cost several billion dollars to build, and if the whims of OPEC were to drive down oil prices, there would be little market for a more expensive domestic product. That's why the coal industry has taken its case to Washington.

Luke Popovich, spokesman for the National Mining Association, said the industry would push for government backing, as Wall Street has been timid to provide capital. Coal companies, such as Bethel Park-based Consol Energy, are seeking startup capital and government bailouts for investors if oil prices drop too far.

But a bigger hurdle than funding is the environmental lobby, which is vigorously attacking the technology for its greenhouse gas production. From the time it's hauled out of the mine until it leaves the tailpipe, coal-to-liquid produces about twice as much carbon dioxide as petroleum.

"It's just not an intelligent way to use coal," said Joseph Minot, director of the Philadelphia-based Clean Air Council.

"It's environmentally a disaster, economically a disaster. It doesn't make any sense."

Building steam

The Fischer-Tropsch process of coal liquification, named for the German researchers who invented it, was first used on a large scale when the Nazis were cut off from oil imports during World War II. South Africa also began coal-to-liquid production when isolated during apartheid, and still uses it today.

The United States has flirted with the idea in the past, most notably with the Synthetic Fuels Corp., a public-private partnership formed in 1980 during the last severe oil price spike. It was disbanded in 1985 as lower prices killed interest.

Now, soaring gas prices have once again given incentive to pursue the idea.

Plants are in development in coal-producing regions around the country, including Gilberton, Schuylkill County, where Waste Management and Processors Inc. is working on constructing a plant that would convert waste coal -- too low-grade for use in conventional processes -- into gas, then liquid. In addition to liquid fuel, the plant would produce electricity. Funding details have not been finalized, but the federal government was to provide about $100 million in loan guarantees for the $1 billion project.

Taxpayers also are financing projects in other ways. The Air Force, which consumes about half of all the fuel used by the federal government, says it will use liquid coal in its fleet, a vote of confidence that would be a major boon to the fledgling industry.

A glaring emission

But environmental activists say it's foolish to pump resources into a technology that would emit greenhouse gases at a higher rate.

"We're trying to decrease our global warming. What if we went to a fuel that doubled carbon emissions?" said Elizabeth Martin Perera, climate policy specialist for the Natural Resources Defense Council.

"We're going in exactly the wrong direction, just digging the hole a lot deeper and making the problem a lot worse."

Mrs. Perera and others insist that the best way to use less foreign oil is to work on efficiency, not seek a more polluting alternative.

Carnegie Mellon University post-doctorate researcher Paulina Jaramillo and doctoral student Constantine Samaras concluded in a paper last year that coal-to-liquid production would be far less efficient and more polluting than using plug-in hybrids that drew electricity from coal power. The greenhouse gas playing field could be leveled, the researchers said, if a coal-to-liquid plant could capture and sequester 90 percent of its carbon emissions.

Technologies now on the market will capture only 60 percent to 70 percent of carbon emissions from coal-to-liquid plants. Environmentalists would like to see those numbers get to between 90 percent and 95 percent before the projects move forward, yet the technology to reach such targets is 12 to 15 years away, according to Mr. Popovich.

"It is very frustrating to once again have the environmental community standing in the way of lowering energy prices," he said.

"China's greenhouse gas emissions greatly surpass our own and will even more so in coming years, and they're not covered by any of this. To us, any way you look at it, it seems to be foolish for the United States to continue to rule off limits this enormously valuable energy resource for transportation fuel."

Coal-to-liquid does have some greenhouse advantages in that the diesel fuel it produces emits less sulfur than conventional diesel. Also, a study at a proposed plant in Wellsville, Ohio, along the Ohio River, an hour northwest of Pittsburgh, showed promising advances in emissions reduction. When a 70 percent to 30 percent coal-biomass blend is fed in to produce fuel, the plant releases 46 percent less carbon dioxide than conventional diesel production.

But the environmental lobby's concerns extend to the mining process as well. Coal-to-liquid plants would result in more strip mining and mountaintop removal, said Mrs. Perera, devastating surrounding environments. If liquid coal were to account for a 10 percent displacement of current oil use, coal mining would have to increase by 43 percent, she said.

So far, Congress has sided with the environmentalists, rejecting an attempt to mandate liquid coal fuels last year. But coal-backing House members introduced legislation last month that would mandate production of liquid coal and provide incentives for its use.

With gas prices rising -- and Congress denying President Bush's cries for more domestic oil drilling -- the pressure increases for lawmakers to act on the issue.

Subsidy questions

Peter Van Doren of the Cato Institute, a Washington-based free-market advocacy group, thinks such action would be nothing more than pandering, and a severe waste of government funds.

"People look for substitutes when things get expensive, and there's nothing wrong with that, but we do," Mr. Van Doren said.

"Both the public and politicians seem to kind of panic."

Private investors, Mr. Van Doren said, should be the ones to step in to develop the new technology. If they don't, it's not the government's job to prop up something that isn't economically viable.

The government has an interest in promoting research and development of new technologies, he continued, but coal-to-liquids is proven, so there's no need for taxpayers to subsidize it.

Yet coal proponents say a government-initiated spark could be the key to reinventing fuel in America, and Wall Street capital will flood in as soon as a plant is demonstrated to be effective here.

"You provide government funding to get that first plant started, to get a demonstration," said Dr. Bajura.

"Once you remove the aspect of uncertainty of design and show the plant can work and be economical, you overcome fear about the plant being profitable. That would make it possible to deploy more plants."

Dr. Bajura, whose department at WVU receives federal funding as well as support from oil and coal companies, sees coal-to-liquid technology as a bridge from crude oil to sustainable energy.

With current levels of use, American coal reserves, which are the richest in the world, would be exhausted in 250 years. Doubling coal extraction to feed liquid coal plants would give the nation 125 years to develop reliable renewable energy sources. Increased efficiency is a good thing, Dr. Bajura said, but it is folly to think America's fuel appetite will wane considerably before we run out of crude oil.

"All forms of energy are going to be needed, and what [environmentalists] advocate in terms of more efficiency, that's not using fossil fuel, that's a good thing to do," he said.

"But when you look at the total scale of what we need to provide for our country in the United States, unless we want to change our lifestyle, we are going to need all of these technologies as we move to more unified policy in the future."


Correction/Clarification: (Published June 24, 2008) This article as originally published June 23, 2008 gave the wrong name for a conference Downtown yesterday and today. The correct name is CTLtec Americas 2008. The International Pittsburgh Coal Conference will take place in September.

Daniel Malloy can be reached at dmalloy@post-gazette.com or 412-263-1731.


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