PDF _ RL34133 - Liquid Fuels from Coal, Natural Gas, and Biomass: Background and Policy
15-Aug-2007; Anthony Andrews; 28 p.

Update: August 15, 2007

Abstract: As the price of gasoline approaches the 1981 record high (adjusted for inflation), liquid transportation fuels synthesized from coal, natural gas, and biomass are proposed as one solution to reducing dependency on imported petroleum and strained refinery capacity. The technology to do so developed from processes that directly and indirectly convert coal into liquid fuel. Congress now faces decisions on whether, and to what extent, it should support such a solution.

Lacking domestic petroleum resources, but abundant in coal, Germany built synthetic fuel plants during World War II that employed the Bergius coal hydrogenation process (direct liquefaction), and Fischer-Tropsch synthesis (indirect). The United States attempted to capitalize on the German experience after World War II. Despite considerable investment in synthetic fuel research and development, the United States cut support for commercialization when crude oil prices dropped and supplies stabilized in the mid-1980s. Since then, several synthetic fuels plants have been constructed around the world that convert coal, natural gas, or biomass to liquid fuels using the Fischer-Tropsch process. Several private ventures in the United States are now studying the feasibility of constructing Fischer-Tropsch synthetic fuel plants based on coal, natural gas, and biomass.

Proposals to expand the use of coal to synthesize transportation fuels have generated much opposition, particularly because the carbon dioxide (CO2) produced in the Fischer-Tropsch process is a greenhouse gas associated with global warming. Also, opponents claim that coal-based synthesis, in particular, is inefficient and thus prohibitively expensive. Proponents counter that Fischer-Tropsch technology provides a means of capturing carbon dioxide for geological sequestration (though a promising solution, sequestration remains unproven on an industrial scale) and that it appears economically viable in a sustained crude oil price range above $40 to $45 per barrel.

Fischer-Tropsch synthesis is well suited to producing middle-distillate range fuels like diesel and jet. The diesel produced is superior to conventionally refined diesel in terms of higher cetane-number and low sulfur content. Overall, middle distillate fuels represent a limited portion of U.S. refinery production, which is primarily driven by the demand for gasoline. A synthetic fuels industry (whether coal, natural gas, or biomass based) that would rival or supplant petroleum refining would require a major shift in transportation fuel demand. Coal-to-liquids would also compete for the same resources needed for electric power generation, and the rail capacity currently supporting their demand.

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Topics: Energy, General Interest

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