Air Force wants coal for fuel, but will idea fly?

Coal producers have their sights set even higher.

A 2006 report from the National Coal Council said a fully mature coal-to-liquids industry serving the commercial sector could produce 2.6 million barrels of fuel a day by 2025. Such an industry would more than double the nation's coal production, according to the industry-backed Coal-to-Liquids Coalition.

On Wall Street, however, skepticism lingers.

"Is it a viable technology? Certainly it is. The challenge seems to be getting the first couple (of plants) done," said industry analyst Gordon Howald with Calyon Securities. "For a company to commit to this and then five years later oil is back at $60 — this becomes the worst idea that ever happened."

Only two coal-to-liquids plants are now operating worldwide, all in South Africa. A third is scheduled to come online in China this year, said Corey Henry with the Coal-to-Liquids Coalition.

The Air Force is adamant it can advance the technology used in those plants to turn dirty coal into a "green fuel," by capturing the carbon dioxide and other, more toxic emissions produced during manufacturing.

However, that would not address emissions from burning the fuel, said Robert Williams, a senior research scientist at Princeton University. To do more than simply break even, the industry must reduce the amount of coal used in the synthetic-fuel blend and supplement it with a fuel derived from plants, Williams said.

Air force officials said they were investigating that possibility.

In a recent letter to Defense Secretary Robert Gates, Rep. Waxman wrote that a promise to control greenhouse gas emissions from synthetic fuels was not enough. Waxman and the committee's ranking Republican, Virginia's Tom Davis, cited a provision in the energy bill approved by Congress last year that bars federal agencies from entering contracts for synthetic fuels unless they emit the same or fewer greenhouse gases as petroleum.

Anderson said the Air Force will meet the law's requirements.

"They'd like to have (coal-to-liquids) because of security concerns — a reliable source of power. They're not thinking beyond that one issue," Waxman said. "(Climate change) is also a national security concern."

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