Worldwide, coal-to-liquids plants not built without government help

2012-03-25T09:00:00Z 2012-09-14T21:50:20Z Worldwide, coal-to-liquids plants not built without government helpBy JEREMY FUGLEBERG Star-Tribune energy reporter Casper Star-Tribune Online

Projects similar to the DKRW Advanced Fuels coal-to-gasoline plant proposed for Wyoming seem to have one thing in common besides what they do: If they got built, they all depended on government support.

Plants that convert coal to fuels exist in South Africa and China. But they’re rare in the U.S. because of their multibillion-dollar price tags, opposition from environmental groups and difficulty obtaining financing, says Luke Popovich, spokesman for the National Mining Association.

The U.S. has supported coal-to-fuels projects several times in the past 60 years. Toward the end of World War II, Congress passed a law funding demonstration coal-to-liquids plants. Another attempt was made in the late 1960s, and the oil prices spikes of the 1970s sparked new consideration of the technology.

With an eye to newly skyrocketing oil prices in 2007, Congress considered encouraging the development of coal-to-fuels plants with loan guarantees, tax credits, purchase promises and protection from oil price swings.

That legislation was supported by both then-President George W. Bush and current president but then-Illinois Sen. Barack Obama.

“That really did not survive, that concept did not survive the political to- and fro-ing,” Popovich said.

While environmental groups were the chief opponents to the 2007 legislation, current opposition for federal support of coal-to-fuels plants is more broad-based and tied to much-lower oil prices, he said.

It’s “a combination — because of the recession — of moderate global oil prices, growing skepticism about growing government subsidies and finally green opposition,” he said.

The Sierra Club has been at the center of environmental opposition to coal-to-liquids plants. And while the group lost its court challenge of the DKRW project in Wyoming, its Beyond Coal Campaign director says he’s convinced the DKRW project and others will live or die on state support.

As a “last gasp,” said Bruce Nilles, the campaign’s director, companies are seeking coal-friendly states such as Wyoming and trying to wring out hundreds of millions of dollars in subsidies from “states that are struggling.”

While just a handful of projects are moving forward in the U.S., the coal-to-fuels process provides three to four of every 10 gallons of fuel used in South Africa, which perfected the technology and threw it into large-scale use when international sanctions resulting from the country’s apartheid policies tightened oil supplies.

Nazi Germany depended on coal-to-liquids technology to fuel its war machine, and government officials in both Pakistan and sanctions-bound Iran have said they will push forward on such projects.

China has made such projects a priority. The country’s coal-to-liquids production is expected to jump twenty-fold from 2010 to 2020, from 1.5 million tons to 30 million tons, according to a recent Market Avenue report cited by Houston-based Accelergy Corp. in an announcement of its involvement in a coal chemistry research institute in Beijing.

China’s economy, in which the state makes key decisions, may not be one the U.S. wants to emulate. But it’s certainly showing what a state can accomplish when it prioritizes use of a technology.

A U.S. coal industry representative last year made a call to action in his country.

In an April hearing before a congressional energy and power subcommittee, Peabody Coal Senior Vice President Fredrick Palmer touted his St. Louis-based company’s work in China, and encouraged the U.S. to support investments in advanced coal projects, such as coal-to-liquids.

“My question to the subcommittee is simple: What are we waiting for?” he said. “I sincerely doubt any member supports a policy to import energy innovations from China’s high-growth industrial economy.”

Reach Jeremy Fugleberg at 307-266-0623 or jeremy.fugleberg@trib.com. Read his blog at http://trib.com/news/opinion/blogs/boom/ and follow him on Twitter: @jerenergy.

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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