Administration Backs Making Liquid Fuel from Coal

Slurry Bubble Column at Rentech's Denver Research Facility i i

A slurry bubble column makes fuel at Rentech's Denver research facility. Hydrogen and carbon monoxide gas bubble through the column until they grow into long hydrocarbon chains, making a liquid that can be refined into diesel and jet fuel. Kathleen Schalch, NPR hide caption

itoggle caption Kathleen Schalch, NPR
Slurry Bubble Column at Rentech's Denver Research Facility

A slurry bubble column makes fuel at Rentech's Denver research facility. Hydrogen and carbon monoxide gas bubble through the column until they grow into long hydrocarbon chains, making a liquid that can be refined into diesel and jet fuel.

Kathleen Schalch, NPR
In November of 1935, Member of Parliament Tom Williams got the first tankful of fuel from coal.

In November of 1935, Member of Parliament Tom Williams got the first tankful of fuel made from British coal at a service station in London. The fuel was produced by the coalite carbonization process. E. Dean/Topical Press Agency/Getty Images hide caption

itoggle caption E. Dean/Topical Press Agency/Getty Images
Product Upgrading Union Under Construction i i

The Product Upgrading Unit is under construction at Rentech's pilot plant in Denver. Chemical reactions in these tall columns will break long hydrocarbon chains from the Fischer-Tropsch reactor into smaller molecules. Molecules will sort themselves in the columns by size and weight and be collected to make various types of fuel. Kathleen Schalch, NPR hide caption

itoggle caption Kathleen Schalch, NPR
Product Upgrading Union Under Construction

The Product Upgrading Unit is under construction at Rentech's pilot plant in Denver. Chemical reactions in these tall columns will break long hydrocarbon chains from the Fischer-Tropsch reactor into smaller molecules. Molecules will sort themselves in the columns by size and weight and be collected to make various types of fuel.

Kathleen Schalch, NPR

As the House of Representatives gears up for a vote on an energy bill this week, lawmakers agree on the need to wean the nation from imported oil. But they disagree on how to do it. One controversial idea backed by the Bush administration is to make liquid fuel from coal.

A small company called Rentech aims to build the first commercial coal-to-liquid plant in the nation.

"We're 230 people working to end the dependence of the United States on foreign oil," says Harold Wright, Rentech's chief technology officer.

The firm is completing a pilot plant and research facility in Denver, installing machines that will crush the coal, heat it until it literally vaporizes, then clean the gas, leaving a mixture of hydrogen and carbon monoxide.

"The nearly pure hydrogen and CO go to what's called the Fischer-Tropsch reactor," Wright says, pointing out a model that shows how the process works. "The CO and hydrogen come in the bottom and bubble essentially through a liquid medium."

That turns the gas into a liquid that can be refined like crude oil into fuel.

In the past, countries have resorted to turning coal into liquid fuel only when they were desperate. Germany made liquid coal during World War II, and South Africa did it when the country faced an apartheid-era trade embargo.

But Wright says today's high oil prices mean the technology's time has come. The United States' ample coal reserves make it "the Saudi Arabia of coal," he says, but the country is spending $1 billion a day to import oil.

"We might as well use that billion dollars a day inside the United States, developing an industry and infrastructure and jobs for Americans," Wright says.

But making liquid coal is expensive. Each plant is likely to cost four times as much as an oil refinery. And if oil prices fall, the market for liquid coal could dry up. Wright says Rentech would like a government guarantee that it will at least break even.

"One thing that the federal government could do is put a price floor — $45 a barrel would do it," Wright says.

The industry is also hoping the government will sign a long-term contract to buy liquid coal jet fuel for the Air Force. Many lawmakers from coal states are enthusiastic about the idea. Taxpayer and environmental groups are not.

Autumn Hanna of Taxpayers for Common Sense says the country has been down this road before.

"In the 1970s, we had high oil prices and the government responded by doing a push for the synthetic fuels industry, and they put $15 billion out there into this industry," Hanna says. "What happened is oil prices dropped, and taxpayers lost billions of dollars."

Environmentalists complain that making and burning fuel from coal generates twice as much of the greenhouse gas carbon dioxide as gasoline does.

"Basically, what it would mean, in terms of impact on the climate, is that if you're putting liquid coal into a compact car or more efficient car like a hybrid, it would be the equivalent of turning that vehicle in to a large SUV or a Hummer," says Elizabeth Martin-Perera, a climate policy specialist with the Natural Resources Defense Council.

Water is another worry. Montana conservationist John Smiley says a coal-to-liquid plant could require as many as 15 gallons of water for every gallon of fuel it makes.

"At that ratio, a plant of just 22,000 barrels a day — a very small plant — would use half as much water as the city of Billings, which is a city of 100,000 people," Smiley says.

Arguments like these have stymied congressional efforts to jump-start the coal-to-liquid industry. The Senate recently voted down subsidies potentially worth billions of dollars. But companies like Rentech say they hope to win over environmentalists by building plants that can capture greenhouse gases and store them underground, and lawmakers who back liquid coal say they're not giving up.

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