Canadians sees comeback for coal as slow and costly

* While the restoration of King Coal as a leading source of energy is virtually assured, because there are so few viable options, it will be a painstakingly slow and expensive process.

* Despite its expected future role as the savior of the industrialized world, coal will not be embraced wholeheartedly. In fact, large-volume use will be put off as much as possible in a world spoiled by premium fuels such as oil and natural gas.

* The cost of coal development, meanwhile, is likely to exclude the have-not nations from a more secure and possibly more affordable energy future, even though many of the third-world countries possess substantial resource potential.

These were some of the points raised at the recent 32nd Canadian Conference on Coal, attended by 500 domestic and international experts. What was less clear was Ottawa's brave new plan for the domestic coal industry, which is enjoying a renaissance and is on the verge of "even better" things to come.

Federal Energy Minister Marc Lalonde's insistence that the next chapter of Canadian coal development be written under what amounts to fairly close federal supervision is expected to provide yet another intergovernmental confrontation. Coal, like petroleum, is a provincially owned resource. But unlike petroleum, it has been a commodity neglected by Ottawa.

All this is going to change soon.

Mr. Lalonde has already called for greater use of coal, especially as a boiler fuel. In addition, he proposed opening up Western Canada's massive coal deposits to synthetic fuel production. Coal conversion, whether by gasification or liquefaction, will be available to foreign as well as domestic investors.

Mr. Lalonde has proposed export exemptions for energy fuels derived from coal. So Japanese investors, for example, could actually take delivery of synthetic fuel produced by coal conversion technology.

Also, the federal government wants to see more coal-related activity by Petro-Canada, the state oil company, and a less dominant role by the multinational oil companies entrenched in Western Canadian coalfields.

At the same time, the Western provinces fear that Petro-Canada could be the thin edge of the wedge ushering in a greater federal presence in yet another provincial preserve. Petro-Canada, in a joint venture with Westcoast Transmission Company, and British Columbia Resources Investment Corporation are planning a 50,000-barrel-a- day coal liquefaction plant for the late 1980s. British Columbia resources is also offering to buy a controlling interest in Kaiser Resources Ltd., Canada's largest coal producer.

The Japanese, and possibly the West germans, are likely to take up Mr. Lalonde's invitation to participate in coal conversion projects.

In an oblique reference to racial policies in South Africa, the country with the most advanced coal conversion technology, Mr. Lalonde points out that there would be some awkward political complication if South Africa wanted to take part , too.

Coal conversion is still somewhat of an experimental proposition, and it is still costlier than oil, according to prevailing world prices. American experts say coal liquefaction works out at about $50 a barrel. Medium-quality synthetic gas comes in at $55, and higher-grade pipeline gas at $60 (US) per barrel of oil equivalent. The calculations in constant dollars assume a 15 percent after-tax rate of return on investment. The price of oil on the world market at present ranges from about $30 (US) a barrel to nearly $40.

According to international coal experts, many developing countries might find it cheaper to import rather than to mine their own coal. the reason is that a few well-placed, large deposits in Canada, the US, and Australia could produce the coal for less. Although many a developing country's best interests would demand the use of indigenous resources, they will be compelled to spend scarce foreign exchange on coal imports.

Sir Derek Ezra of Britain's National coal Board says that coal is a bargain at today's prices and that it will be developed on a large scale -- trebling present world production by the year 2000 -- only if priced comparably with oil. As Sir Derek put it, the chief problem with energy affairs is that "people never seem to make up their minds about them." Political and economic resolve born out of a crisis situation tends to dissipate as soon as the situation improves, albeit temporarily.

He doubted that the prevailing soft-coal markets, for instance, would be conducive to the kind of long-term commitments needed to ensure ample coal supplies in the decades ahead.

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