Good reasons abound for coal-to-liquid fuels

 

by Jim Sorensen | Of The Morning Call
May 06, 2008

While different economic commentators may choose different words, it is obvious that the U.S. economy has slowed. However, to address the fundamental reasons for the weakness in our economy, we need to do more than stimulate investment with cheap money and consumption with borrowed dollars. An enormous percentage of those stimulus dollars will be exported to pay for the products we buy from foreign suppliers, the most notable of which is oil.

In the longer term, our economy must become more competitive and do a better job of keeping more U.S. dollars in the United States in order to continue funding the standard of living we currently enjoy and all the social and environmental programs currently in place, not to mention the enhancements being promised by presidential candidates on both sides of the aisle. All of these -- the benefits of living in the United States -- are too often considered entitlements, rather than rewards that can only be earned by a competitive economy.

We learned in Economics 101 about ''Guns versus Butter,'' namely, that an increase in productivity was necessary to enable an economy to pay for an increasing quantity of military expenditures without an commensurate reduction in civilian goods. What was not envisioned in those old economics textbooks was the kind of a path we are now following -- a path best described as ''Guns & Butter & Oil From Anywhere At Any Cost.'''

While reasonable people can debate how much and for how long we can increase both guns and butter, it is clear that adding massive and expensive oil imports to the equation results in a path that is not sustainable. As many have written, the country's energy challenge is one for which there is not a single ''magic bullet'' solution -- that all viable contributions are needed. In that context, it is particularly puzzling and frustrating that an aggressive national policy has not emerged to do what it takes to get the beginnings of a domestic Coal-To-Liquids (CTL) industry off the ground. This is an industry that can apply our country's most abundant energy resource to producing a product that will directly reduce oil imports, create real industrial jobs in the process -- technical, business, labor and management -- and enable the export dollars saved to have a significant multiplier impact in the United States.

Clearly, the country has a national motivation to support the emergence of a domestic CTL industry. Besides the direct economic benefits, we would be creating a secure domestic source of fuel for the military, and the country would benefit from a lessening of all the hidden costs of imported oil -- most notably, the pressures and constraints placed on our foreign and military policies.

Carbon dioxide is generated when CTL is produced, as it is with all hydrocarbon energy products. CO2 emissions have been raised as an issue for CTL, even though the CO2 contribution from the first fleet of plants would be but a tiny addition to our national total, and dwarfed in importance by the very large national benefit of domestic CTL production. However, even the CO2 issue can be dealt with, since CTL projects are inherently ready for CO2 capture and sequestration when regulations require it.

Further, because biomass can be used to supplement the coal feed to CTL plants, they can result in even lower CO2 emissions per unit of fuel produced than oil refineries. Studies have been published quantifying this fact, including those by Robert Williams, a leading energy researcher at Princeton University.

The federal government needs to act to move a domestic CTL program forward and eliminate what is being perceived by many as an embarrassing lack of national will. The first step in this effort is to continue supporting the CTL project selected under both the Department of Energy's Early Entry Co-Production and Clean Coal Power Initiative programs, the WMPI CTL project in Gilberton, Pa., and to work with stakeholders in the project to move it forward. This project, which also is supported by the state of Pennsylvania and which has received all its major air and water environmental permits, is designed to produce 5,000 barrels per day of diesel and jet fuel, as well as 40 megawatts of export electrical power. Technically, it will combine a number of proven technologies. Commercially, it will encourage the stakeholders in other domestic CTL projects to continue with their projects. Strategically, the kick-off of its construction will send an unmistakable message to OPEC.