Alternative Transportation Fuels Part 1: Liquid Coal

The potential impacts of these fuels on U.S. and global greenhouse gas emissions have been a dominant concern. Unless the carbon dioxide emissions generated by the processing of these fuels can be permanently sequestered and stored, the greenhouse gas footprint of these fuels is estimated to be approximately twice that of conventional gasoline. Options to reduce life-cycle carbon emissions are being explored but are presently uncertain. How national security, climate change, and local environmental impacts should be weighed and integrated into public policy decisions regarding these fuels remains controversial and unclear.

This briefing was the first in a series on alternative transportation fuels. Subsequent topics will include oil shale and tar sands, biofuels, and electricity. Details will be posted at www.eesi.org/briefings as they become available.

On March 18, the Environmental and Energy Study Institute (EESI) held a briefing to examine the energy, environmental, economic, and national security issues associated with liquid transportation fuels derived from coal. Coal-based fuels were first developed almost 100 years ago, but large-scale deployment has been limited. Germany used liquid coal fuels from the 1920’s until World War II and South Africa has had an active liquid coal industry since 1955. Desire to reduce dependence on foreign oil has driven interest in developing alternative transportation fuels including liquid coal in the United States, which has the largest known recoverable coal reserves of any country in the world. Liquid coal, however, raises significant questions about costs, benefits, and impacts in terms of energy security, climate change, land and water resources, and public health.

• The production of coal-to-liquid (CTL) fuels, without the capacity to capture and store carbon dioxide, generates more than twice the life-cycle greenhouse gas emissions (GHG) compared to conventional petroleum fuels.
• If carbon capture and storage options were available, CTL fuels could be produced with life-cycle greenhouse gas emission levels comparable to those of petroleum fuels.
• Biomass can be combined with coal as a fuel feedstock. Assuming zero or near-zero GHG emissions for the biomass component, coal-and-biomass-to-liquid fuels (CBTL) with carbon capture and storage technology could have life-cycle greenhouse gas emissions lower than conventional fuels. Performance ranges from slightly better using less than 10 percent biomass to zero net life-cycle emissions using more than 40 percent biomass.
• A CTL production scenario of 2.25 million barrels per day (10-11 percent of present U.S. oil consumption) would require a 40 percent increase in coal consumption, or an additional 440 million tons per year. CBTL would proportionally reduce that amount depending on amounts of biomass used.
• Increased coal mining would add to existing environmental impacts of coal extraction. In the Appalachian Region of the eastern United States, coal has increasingly been extracted through “mountain top removal”. A ton of coal may require the removal of more than 10 tons of fill material (more than 20 tons in some cases) and fill disposal has covered more than 1000 miles of headwater streams. CTL production also uses large amounts of water which may constrain its development.
• The energy security implications of CTL should be viewed more broadly than just displacement of foreign oil. Diversity, supply stability, price volatility, and security of trade flows are among several interrelated energy security factors.
• The production of coal fuels will likely not be large enough to have a significant effect on world oil prices and CTL fuels may have their own price volatility.
• Public policy needs to pursue options that advance energy security, climate protection, and the economy. Energy efficiency is the only ideal option; other options have trade-offs.
• Carbon capture and storage is the key enabling technology for CTL fuels; CTL does not make sense without it.
• CTL production is very capital-intensive and requires large economies of scale. The opportunity costs of diverting limited public and private resources, as well as other external costs, should be weighed in decisions regarding these fuels.