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The Bull Mountain mine in Montana, site of a proposed $1.5 billion coal to liquids plant. (AP photo)

Coal to liquids—silver bullet or coal-state pork?

ASK THIS | June 04, 2007

This article is the first in an occasional Nieman Watchdog series on environmental issues that reporters and editors may want to follow up on as part of their 2008 election coverage. It includes strong questions as to the efficiency of the coal to liquids process, political angles, and abundant source material.

By Joseph A. Davis

These are heady days for those who are advancing energy technologies in the name of fighting global warming, air pollution, high gas prices, and dependence on foreign oil. One such technology – known as coal-to-liquids – has joined the fray, with fallout for both presidential and Congressional elections in 2008.

A champion of coal-to-liquid fuel technology is Democratic presidential candidate Sen. Barack Obama (IL), although he is hardly the only one. Obama has co-sponsored a bill (S. 154) that would subsidize coal-to-liquid fuel production with a set of loans, loan guarantees, and guaranteed buyers (namely the Defense Department). Obama's home state of Illinois is rich in coal, and coal-mining jobs are prized in the southern part of the state. Anything that uses coal is considered by many in Illinois to be good for the state's economy, regardless of its energy or environmental cost or consequences.

Some of the usual reasons for federal subsidies – encouraging fledgling technologies to become commercially feasible – may be missing with coal-to-liquids. The basic technology (called the Fischer-Tropsch process) was invented in the 1920s, and has been perfected for decades. It was used in Nazi Germany and South Africa, two coal-rich, oil-poor countries with their backs against the wall that needed liquid fuel to keep an army or an economy running at any cost when normal trade was impossible.

The basic technology is expensive. The U.S. launched the multi-billion-dollar Synthetic Fuels Corporation during the oil-price shocks of the Carter administration to gain some protection against geopolitical blackmail like the Arab oil embargo and the emerging market power of OPEC. But after some $8 billion in spending, the Synfuels Corp. was dismantled during the Reagan administration, partly because it produced few results and partly because the price of oil dropped to levels where coal-to-liquids no longer had any commercial feasibility. The Reagan administration pointed with wagging finger to the episode as a lesson in why government should not intervene in free markets.

Coal-to-liquids costs more in energy as well as in dollars. It takes a lot of energy, both as feedstock and process heat, presumably in the form of coal, to make a small amount of liquid fuel.

Finally, coal-to-liquids technology, at the current state of the art, is no environmental bargain. It produces a lot more carbon dioxide (the principal gas causing global warming) than conventional petroleum or coal. The coal industry claims that this problem could be overcome by capturing and sequestering the carbon dioxide underground – but the technical ability to do this may be years away for most sites and is not provided for in the coal-to-liquids bill.

Industry advocates often refer to coal-derived liquid fuel as "clean." But they are referring to the amount of pollution it emits, relative to conventional diesel or gasoline, when burned in a car engine. The real problem is the emissions produced in making the fuel in the first place.

Obama's stance on coal may say much about his political calculus as he runs for President while holding a Senate seat. Being coal-friendly will help him if he remains a Senator. But it will split some of the traditional Democratic constituencies he may need to win the nomination or the presidency. It may win votes in coal states and among mining unions, but it could alienate environmentalists and voters from California and New York.

Getting elected to either the Senate or White House also takes money. Coal money helped win George Bush the state of West Virginia in 2000, and ultimately the White House – a fact some say shaped his energy and environmental policies for two terms ((See Political Energy: A Coal-Fired Crusade Helped Bring Bush A Crucial Victory," Wall Street Journal, June 13, 2001, by Tom Hamburger (paid archive)). The question is: how would coal-industry support affect the policies of an Obama executive branch?

The same question might well be asked of other candidates, both Democratic and Republican. Obama rival Sen. Hillary Rodham Clinton (D-NY), for one. Clinton recently made news when Forbes, The Nation, and others reported that one of her key campaign strategists, Mark Penn, CEO of the PR firm Burson-Marsteller, has a day job doing advocacy for coal and utility companies.

Congress right now is working hard to come up with both global warming legislation and another energy bill. It's a good time for journalists to be asking politicians in both chambers on both sides of the aisle tough questions about just how they reconcile their environmental and energy stands.


Q. How much will S. 154 or any other coal-to-liquids program cost the American taxpayer – considering all the costs (loans, guarantees, tax breaks, price supports, purchase contracts, administration costs, etc.) over the lifetime of the program?

Q. How does the proposed subsidy for coal-to-liquids compare with current or proposed subsidies for conventional fuels like oil, coal, gas and nuclear – or alternatives like energy conservation, renewables, solar, etc.?

Q. What are the environmental consequences of a big scale-up of coal-to-liquid energy production in the U.S.? Does this estimate include the mining of the coal itself, the energy going into the conversion process, carbon dioxide emissions from the conversion process, other pollution and waste from the conversion process, as well as the combustion of the ultimate fuel product? What happens to the sulfur, mercury, and polycyclic aromatic hydrocarbons?

Q. What were the reasons for the failures of previous U.S. government efforts to promote coal-to-liquid fuel production? What lessons were to be learned from them? Are those lessons being heeded in today's coal-to-liquid push?

Q. What are the real benefits of coal-to-liquids? Is it being sold as an environmentally advantageous technology or a solution for dependence on foreign oil – or are industry advocates confusing the two in the public mind?


"Lawmakers Push For Big Subsidies for Coal Process," New York Times, May 29, 2007, by Edmund L. Andrews.

Coal To Liquids Coalition. Press contact: Corey Henry, chenry@futurecoalfuels.org, (202) 463-9789 or (202) 731-8347 (cell).

"Why Liquid Coal Is Not a Viable Option To Move America Beyond Oil," Natural Resources Defense Council, February 2007.

"Lawmakers Look at Coal to Break Oil Dependence," Los Angeles Times, May 10, 2007, by Richard Simon and Janet Wilson.

"Clinton Aide Penn Mixes Campaign Role, Advocacy for Companies, " Bloomberg News, May 24, 2007, by Timothy J. Burger and Kristin Jensen.

"Coal-To-Liquid Diesel Fuel: A Bipartisan Issue That Unites Environmentalists With Farmers,” Treehugger, Jan. 26, 2007, by John Laumer.

"Who Are the Coal-to-Liquids Players?" Treehugger,  May 15, 2007, by John Laumer.

"Even Stevens? With new energy-focused bills, Stevens delights enviros and Obama disappoints," Grist (Muckraker), Jan. 12, 2007, by Amanda Griscom Little.

"It's Coal vs. Oil as Lobbying Heats Up the Hill," The Hill, March 26, 2007, by Jim Snyder.

"Coal Converts," Governing, April 2006, by Christopher Swope.

"Ohio Liquid Coal Advocates Cheer Pollution Study," Cleveland Plain Dealer, May 10, 2007, by Sabrina Eaton.

"How To Clean Coal," onearth magazine (Natural Resources Defense Council), Fall 2005, by Craig Canine. 

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