President Bush almost got the idea right. In his 2007 State of the Union Address, he proposed a goal:
"Let us build on the work we’ve done and reduce gasoline usage in the United States by 20 percent in the next 10 years. When we do that we will have cut our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East."
But I would take his goal one step further. Why not eliminate our entire demand for oil?
I think that sounds like a better idea.
The world’s coal reserve is estimated at 290 zettajoules. And current global consumption uses 15 terrawatts of energy. This means that the world has enough reserves of coal to sustain its current energy consumption for 600 years.
Even conservative estimates are promising. British Petroleum reported in 2006 that there were 909,064 million tons of proven coal reserves. That quantity would still last 155 years. Also, the BP figure is only calculating proven reserves. The amount of recoverable coal continually rises as unexplored areas are mined.
According to the Energy Information Agency’s 2006 International Energy Outlook, world consumption of coal will double by 2030. Developing coal technologies will dramatically decrease the U.S. energy demands. This is because the U.S. has the world’s largest amount of recoverable coal reserves. The EIA reported that we have over 270 billion short tons. That is over 100 billion more than second-place Russia.
Coal can be processed into a liquid similar to gasoline. Coal-to-liquid (CTL) technology presents a realistic solution to the problem of peak oil. In the procedure, coal is gasified and run through the Fischer-Tropsch process. The result is fuel similar to jet and diesel fuel. The final product is cleaner, too. Almost all the sulfur and nitrogen is removed. If CTL is sufficiently developed, rising oil prices could be held in check.
CTL is ready to explode. In order to be cost effective, oil prices need to be about $35 per barrel. Prices in the next few months will double that figure. This will give us a serious incentive to curb our Middle Eastern oil imports.
So what’s stopping us?
The cost of developing coal-to-liquid plants is high. Companies interested in producing CTL plants would need to invest billions of dollars.
Pollution is another problem for CTL. Production of coal-to-liquids releases double the amount of carbon dioxide of petroleum. This would cause an uproar from environmentalists concerned about global warming.
I am not suggesting we charge forward into CTL production. Technology needs to be improved first. This would require a little help.
H.R. 370 Coal-to-Liquid Fuel Promotion Act of 2007 was introduced into congress recently.
The Act amends the Energy Policy Act of 2005. Its three main parts are aimed at increasing the potential of coal-to-liquids.
The first part would guarantee loans to large-scale CTL facilities for producing liquid transportation fuel. This targets the cost and marketability issues that producers face. A standard CTL plant would cost more than $2 billion, taking roughly five to eight years to construct. Finding investors to finance these projects would be impossible. The loans would be used for plants with minimum production capabilities of 10,000 barrels of fuel per day.
The bill would also expand the investment tax credit and expensing provisions of the Energy Policy Act of 2005. It would raise the tax credits for CTL plants by 20%, up to $200 million. It would extend the expiration date from 2009 to 2020. This would allow CTL plants enough time to benefit from these tax incentives.
Furthermore, this bill gives the Department of Defense funding to incorporate CTL fuel into the military. For example, CTL has been successful in fueling B-52 bombers.
The development of CTL technology presents the U.S. with a viable way to meet President Bush’s goal of curtailing our foreign oil imports. Renewable energy may not be ready to meet our energy demand for years. But coal has the potential to provide relief in the face of peak oil.
Until next time,