Coal in cars: great fuel or climate foe?

A key problem is that liquid from coal emits twice as much carbon as gasoline. Still, Washington likes the idea.

from the March 2, 2007 edition

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Storing or capturing carbon dioxide

But CTL supporters say the industry would produce "clean fuel" that helps the environment by putting out fewer smog-forming nitrous oxides and other chemicals than regular diesel fuel. If 85 percent of CO2 from coal-to-liquid refineries could be captured and stored, CTL diesel fuel would then have about the same emissions as a gallon of regular diesel, they say.

"By the time this first fleet of CTL plants is constructed, that technology will be there and we'll be using it," Mr. Henry says.

Such a promise was called into question in a DOE environmental impact filing in December, which reported that a leading CTL development had no near-term plan to capture any of the 2.3 million tons of CO2 it would produce annually. The $800 million project, which would make 5,000 barrels of CTL fuel a day in Gilberton, Pa., is part of an industry push where CO2 capture costs are frequently not factored into the bottom line of the business plan, Wall Street analysts say.

"The price estimates cited by industry proponents assume facilities are uncontrolled for CO2 emissions," write Christine Tezak and K. Whitney Stanco of the Stanford Group in a December report. Investors should beware of "the increasing likelihood" that the US could establish emissions controls, so that "any large investment in CTL would need significant subsidies to offset environmental costs," the reports says.

High capital costs – $1 billion to $6 billion for a single facility – and the unknown cost of carbon sequestration could make such projects unappetizing for investors to swallow without federal incentives.

States are offering subsidies as well. Montana, West Virginia, and Pennsylvania passed measures to lure CTL plants. Pennsylvania Gov. Edward Rendell last month called on Bush to restore a $100 million no-interest loan for the Gilberton project. The loan, promised in 2003, he said, is not in the 2008 DOE budget.

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Click to enlarge SOURCE: GE Energy Financial Services / RICH CLABAUGH – STAFF