Air Date: Week of May 27, 2011

With record oil prices, some lawmakers and energy insiders are dusting off an old fuel alternative: liquid coal. Coal is here and it’s abundant but environmentalists warn that coal fuel creates twice as many greenhouse gasses as traditional oil. Living on Earth’s Washington correspondent Mitra Taj looks at the possibility of widespread use of liquid coal.

Transcript

GELLERMAN: It’s Living on Earth, I'm Bruce Gellerman. How many miles per lump of coal does your car get? Converting coal into a fuel you can use in your engine is an old technology, but it’s being considered anew by some in Congress - who see coal liquefaction as a way to help free the nation from petroleum, and ensure energy security. But opponents charge, it’s just a dirty way to speed up climate change. Living on Earth's Mitra Taj reports from Washington.

TAJ: During the 70s, Jimmy Carter pitched a unique alternative to Middle Eastern oil:

CARTER: Coal, which is our most abundant energy source.

TAJ: Coal is heard a lot these days on Capitol Hill. Senator Joe Manchin, a Democrat from West Virginia, says the fossil fuel can save us from the dangers of relying on foreign countries for fuel.

MANCHIN: I still remember waiting in line for gas in the early 70s, it’s something I never thought could happen in America.

TAJ: Like President Carter, Manchin wants to use coal not just to generate electricity, but also as gasoline for car and jet engines. Carter spent billions to develop liquid coal during his administration, then politicians and the public lost interest when oil became cheap.

Fast-forward forty years, the high price of oil is making it interesting again, but there are climate change concerns now as well. Liquid coal produces about twice as much carbon dioxide as conventional petroleum, but Manchin says with the Middle East on shaky ground, coal fuel is worth another try:

MANCHIN: That is one of the many reasons why I’m co-sponsoring the American Alternative Fuels Act with my colleague John Barraso from Wyoming. Among other things the bill would break down barriers.

TAJ: The barrier Joe Manchin would like to break down relates to the federal government— current law restricts it from buying alternative fuels that emit more greenhouse gases than petroleum.

SIU: All it says is that federal agencies cannot make things any worse than they already are. It’s status quo.

TAJ: Brian Siu is a policy analyst with the Natural Resources Defense Council. He says repealing the law Manchin targets would allow the fuel-hungry Department of Defense to enter into long-term contracts for liquid coal and oil shale.

And the Republican-controlled House just passed defense legislation that would do just that. A little-noticed detail in the defense bill allows the military to buy any alternative fuel it wants, regardless of how much it contributes to climate change. Siu says the Senate should fight to keep the current law the way it is:

SIU: It doesn’t require greenhouse gas emissions to even decline, it just says if they are going to access the public coffers, then they should simply be able to at least meet the status quo, especially given all the national security and environmental risks of climate change.

The military is the biggest consumer of oil in the country, and can use its purchasing power to encourage emerging markets for fuel alternatives. And the armed forces, particularly the Navy, DO want to get off foreign oil.

QUINN: By the year 2020 the Navy ashore and at sea and all of our tactical programs, will be running on 50 percent alternative energy. And when we’re talking ships, airplanes, so forth that basically means alternative liquid fuels.

TAJ: John Quinn, in charge of helping the Navy meet that goal, spoke at an energy conference earlier this year. It’s unclear whether the military would even want to buy liquid coal, if allowed. The Department of Defense declined to comment.

But Siu says liquid coal already gets a boost. Every gallon earns producers a 50-cent tax credit. If the industry really takes off, Siu says that could add up to huge tax breaks:

SIU: Right now it’s not a lot because there are no commercial-scale coal-to-liquids facilities. But if you do the math, as soon as these coal-to-liquid facilities come on line, you’re looking at about 380 million dollars per year for every single facility, so this is kind of like the holy grail of moral hazard.

TAJ: But liquid coal enthusiasts see it as the holy grail of energy independence. Adam Victor is the president of Transgas Development Systems, a company that recently broke ground on a liquid coal plant in West Virginia.

VICTOR: In fact, we’re hoping that once this facility is built, we’re going to see an explosion of this industry, and 44 of these plants will displace 100 percent of the US imports of gasoline.

TAJ: Victor, a climate skeptic, says fuel from his plant would be traded on international markets, but would physically end up in gas stations in places like West Virginia, Ohio and Pennsylvania.

He says he’s secured private financing for the project, in part with the help of a company called Uhde, the chemical engineering division of the German industrial conglomerate ThyssenKrupp. During WWII ThyssenKrupp provided Nazi Germany with… liquid coal. The coal-to-gasoline process got its start in Germany in the 1920s, and Victor says what’s keeping it back in the U.S. now, are incoming EPA greenhouse gas regulations.

VICTOR: And so I would say that if there was one thing that could be done to have this technology explode throughout the country is to simply waive the greenhouse gas emission standards for these plants. And you know, if they want to do it temporarily for five years—they did it for ethanol.

TAJ: And lawmakers from coal states, many opposed to EPA’s climate regulations, have more ideas for coal fuel. Earlier this month, West Virginia representatives from both parties proposed mandating a minimum amount of liquid coal to be blended into gasoline, much like ethanol is today. Democratic Senators from coal-rich Montana have have proposed extending defense fuel contracts to give alternatives like liquid coal more security. And an energy bill proposed by House Republicans would require the Defense Department to invest in a liquid coal plant that produces at least 10,000 barrels a day.

Whether liquid coal gets a thumbs-up depends on upcoming decisions in Congress, and how seriously lawmakers take, not just the threat of energy dependence, but also the threat of climate change. For Living on Earth, I'm Mitra Taj in Washington.

 

Links

Click here to learn more about how Transgas Development Systems plans to turn coal into gasoline

Brian Siu blogs on fuel policy for NRDC

A RAND corporation study found liquid coal is a better military choice for an oil alternative than biofuels.