A common expectation is that biomass will feed the next generation of ethanol production, but an abundant domestic supply of coal from areas like Wyoming's Powder River Basin or the tree-topped peaks of Appalachia may prove this postulation wrong. Existing federal incentives and new measures pending a congressional vote would subsidize commercialization of coal-to-liquid (CTL) technologies—much like the push to initiate biomass projects. Already more than half of U.S. electrical power comes from coal, with little mitigation of its enormous carbon dioxide emissions. Nevertheless, coal industry advocates continue to invest capital in media campaigns to change people's minds about this domestic resource with 250 years of "proven" reserves. However, simply calling coal "increasingly clean" doesn't make it so. "Increasingly clean by what standards?" asks Dave Hamilton, spokesman for the Sierra Club.

The combustion of coal drove the Industrial Revolution, which was the foundation of the modern world. CTL fuels for internal combustion are not novel either, but they are domestic alternatives to importing foreign petroleum. The history of Fischer-Tropsch (FT) CTL technology dates back to the 1920s in Germany. Subsequently, during World War II, the Nazis fueled their nearly decade-long maniacal campaign by gasifying and catalyzing coal. South Africa relied on CTL fuels during Apartheid, when the exchange of superfluous commerce was crippled by an international embargo protesting institutionalized racial oppression. According to Bill Beaver in the office of Sen. Jim Bunning, R-Ky., South Africa still makes 30 percent of its transportation fuels from coal, producing 150,000 barrels per day (3 billion gallons per year). In a Jan. 5 letter addressed to their colleagues U.S. Sens. Barack Obama, D-Ill., and Bunning said that the People's Republic of China committed to spending more than $100 billion on CTL technology. Chevron Corp. and Sinopec, China's second-largest crude oil producer, already have a coal gasification plant, which produces ammonia and urea for fertilizers, and hydrogen.

Coal has its appeal. The United States has a lot of it. If converted to liquid fuels, it could redirect billions of dollars back into the U.S. economy that would otherwise be spent on foreign crude oil. Also, coal is cheap. John Reardon, research and development manager with Frontline Bioenergy, a design-engineer firm specializing in gasification technology, tells EPM that coal is three to four times cheaper than corn per million British thermal units, but its carbon is nonrenewable in contrast to corn.

With the right catalyst, many chemical compounds can be produced from synthesis gas. The first stage in making CTL fuel is the gasification of coal slurry. "Water is added to the coal, and it's pumped up in toothpaste-like slurry to a very high pressure," Reardon says, elucidating the basics of the process. "Then the oxygen reacts with the coal to generate very high temperatures." For example, a temperature of 2,700 degrees Fahrenheit is not uncommon when gasifying coal. The heated coal slurry and oxygen produce a high-temperature synthesis gas, containing primarily hydrogen and carbon monoxide.

Almost anything containing carbon can be gasified, given the proper conditions. Coal produces a particularly high-quality synthesis gas. Once this gas is cooled and filtered, the conditioned mixture proceeds to a sulfur removal step, Reardon says. "Then it is run through a catalytic reactor to convert the synthesis gas into mixed alcohols at high pressure," he tells EPM. "There might then be a distillation step, where recycled methanol goes back in the reactor to increase the yield of higher alcohols—ethanol, propanol and butanol, things like that." A typical diesel fuel molecule contains 16 carbons and 34 hydrogen atoms, and a dibutyl ether's composition is eight carbons, 16 hydrogen atoms and oxygen. By using the appropriate catalyzing agents, pressure and heat will recombine these elements accordingly.

Reardon says conventional FT synthesis—like what Sasol, which produces gasoline and diesel fuel from coal and natural gas, uses in South Africa—requires refinery-scale investment costing billions of dollars. It is a more complicated process but can achieve massive scales. Modified FT, a simpler process, can be done much cheaper and on a smaller scale. Either way, tax incentives originally designed for grain-based ethanol producers may become a target for emerging CTL companies, not to mention those financial incentives designed specifically for nonrenewable ethanol.

Costs of Commercialization
The Energy Policy Act of 2005 authorized $200 million per year for coal gasification research and development. There is also a Title XVII loan guarantee program underway. Additionally, CTL fuel is eligible for the 51-cent-per-gallon Volumetric Ethanol Excise Tax Credit (VEETC), which expires in 2009. There are powerful pieces of legislation pending in U.S. Congress to extend or ramp up these incentives.

A new lobbying organization on Capitol Hill, the CTL Coalition, is pushing strongly for passage of the Coal-to-Liquids Fuel Promotion Act, or Senate Bill 155, a bill submitted by Obama and Bunning that is mirrored in House Resolution 370. This legislation seeks to expand federal tax credits for building CTL facilities—up to $200 million per plant for as many as 10 plants. The measure also seeks to extend the VEETC to 2020. The CTL Fuel Promotion Act also contains language to boost tax credits for carbon capture, delivery and sequestering equipment.

The National Mining Association (NMA) is a member of the new lobby group. "The coalition's position is that America needs a diverse array of domestic energies," says Corey Henry, director of industry communications for the NMA. "Our mission is to get this legislation passed through and signed into law." However, the bill has its detractors, and environmental concerns over escalating the use of coal in America's transportation fuels strategy have merit. "We're actively working against this," Hamilton says. "Some members [of Congress] supporting it don't really understand all of the issues involved. Sure, there's concern about energy independence, and oil is such an issue on first flush, but if we're talking about making ethanol from coal, we need to do that in the constructs of a carbon-constrained world and make sure supporters know the issues."

Reardon prefers to take a four-cornered approach to initiating discussion on alternative fuels production that takes into account local economic development, national security, environmental impact and sustainability. Coal could satisfy portions of this schematic—local economic development and national security—but even in the most complimentary light, it struggles with issues of sustainability and environmental impact. "It's important to note the chutzpah of the coal industry to push for this at a time when awareness of global warming is at its peak," Hamilton tells EPM.

The Issues
In well-to-wheel—or in the case of coal mines, mine-to-wheel analyses—CTL diesel fuel ought to be compared with petroleum diesel and higher-alcohol CTLs should be pitted against gasoline rather than grain-based ethanol, considering that petroleum is the target of displacement. "With gasoline, you're pumping it out of the ground, and you're getting like 80 percent of that energy going into your tank," Reardon says. "With coal, only about 50 percent will be in your tank, the carbon from which ultimately emits net greenhouse gases. The other energy will be in the process or in efficiency losses, things like that. So there's a well-to-wheel efficiency to be considered. I mean, how simple is it? You pump crude out of the ground, distill it and hydrotreat it. That's it."

To be fair, the Sierra Club doesn't support CTL or corn-based ethanol. "Right now, the calculation of the carbon impact on the environment with corn-ethanol is all over the map," Hamilton says. However, Reardon says using biomass energy at a conventional corn-to-ethanol plant reduces its fossil-carbon footprint by half. The mine-to-wheel carbon release of CTL fuels—without carbon capture and sequestration—is close to double that of petroleum, Hamilton says. "None of these will require carbon capture without the [regulatory] means though, like supporters claim will happen," he adds. If further refining of C16H34-type molecules to make C2H5OH ethyl alcohols is needed, this could mean even higher amounts of carbon emissions from the plant," he says.

It will be hard for CTL projects to get their permits granted if carbon capture isn't part of the plan, Henry says. CTL diesel fuel carbon emissions from the process smokestack and vehicle tailpipe are slightly less than those derived from petroleum diesel fuel when effective capture equipment is implemented at the plant. He also says this new generation of coal processors will view carbon dioxide as a revenue stream, and therefore, CTL plants will seek that additional income. "The first fleet of these plants will be built in and around oil fields for enhanced oil recovery (EOR)," Henry says. He cites as an example the Great Plains Synfuels Plant near Beulah, N.D., which gasifies coal into natural gas and fertilizers. Its carbon dioxide is captured and piped north to Canada, where it's sequestered underground for EOR. While carbon dioxide could be a revenue stream, the fact is that only a handful of the more than 100 U.S. grain ethanol plants view it this way. Even if the carbon was secured, there are still questions. "How long does the carbon dioxide stay in the reservoir?" Reardon asks. "Does it come back out or burp it up? Just because it's put down there, that doesn't mean it's down there forever." Does the sequestered carbon dioxide stay down there 50 years, 10 years or two years? According to Henry, the North Dakota plant's sequestered carbon dioxide has been monitored for years, with no evidence of leakage.

Much like biomass refineries, the capital costs to build CTL plants are high, which is why some are pushing strongly for federal money to begin construction of the first 10 plants. High capital costs could be offset by high-volume production, which Reardon says could easily reach 500 MMgy per plant. The 10 theoretical plants at 500 MMgy each would total 5 billion gallons a year of subsidized synthetic ethanol.

What does this mean for U.S. corn farmers and fuel-alcohol producers? "The CTL Coalition is not out to take anyone down," Henry says, referring to grain-based ethanol producers. "And I can't comment on future market conditions." Reardon says he realizes that these two fuels with very different backgrounds, yet identical chemical compositions, must learn to coexist in U.S. markets. Even so, there's an economic concern, he says. "If ethanol can be made cheaper from coal than corn, and it's eligible for tax credits, basically the renewable aspect of corn ethanol has been devalued as a result," Reardon tells EPM. "One way value can be created out of this is if there was a carbon cap and trade system. Ethanol plants producing lower fossil carbon ethanol could then sell credits to people that need to buy them, and that will actually increase value for the corn-based ethanol industry if they are producing a more renewable ethanol."

Ron Kotrba is an Ethanol Producer Magazine staff writer. Reach him at rkotrba@bbibiofuels.com or (701) 746-8385.