The pro-coal lobby is really raising its game these days on the back of oil and gas worries and fairly clear, if contentious, points that can be made in coal’s favour. Certainly there is today massive investment in clean coal technologies, in the US, in Europe and even in China, the world’s largest producer.

On January 10, the World Coal Institute (WCI) noted “Russia’s decision to cut European oil supplies through Belarus makes today’s release of the EU Energy Review particularly timely. It is vital that Europe reviews its energy supplies and seriously questions the future security of oil.” Supplies were also cut to Poland and Germany.

“Last year started with a gas dispute between Russia and the Ukraine and ended with a stand-off between Russia and Georgia. The current oil dispute with Belarus clearly demonstrates that these are not one-offs – security of oil and gas supplies from Russia are a cause for wider concern. It is essential that Europe look at alternatives to both oil and gas. One alternative is coal.”

While the WCI and the news media may be slightly guilty of overstating the situation, there is serious, and justified, disquiet in Europe about dependence on Russian oil; and in the US about dependence on any other country’s oil.

The WCI notes that coal “already plays a vital role in power generation across Europe – supplying some 30% of all electricity. Coal is an affordable, reliable, widely available and flexible source of fuel. Its affordability has been particularly important over the last 12 months, as high gas prices have taken their toll during periods of high demand, such as winter 2005. What is little known is that coal can also be used an alternative to oil.

“Coal liquefaction allows coal to be converted into liquid fuels, which can be used across the existing European vehicle fleet. Converting coal into a liquid fuel is not a new technology – it was developed and has been used since the early 20th century. In South Africa [Sasol], coal liquefaction already meets 30% of oil demand.

“A number of governments, particularly those with large reserves of coal and high oil consumption, have already started to look seriously at coal to liquids technology. Australia, China, the USA and India have all been taking steps towards CTL [coal-to-liquid] development.”

Across the world CTL is looking a very promising option, particularly in the US and China, the two biggest oil-consuming countries and the two biggest coal producers. Current estimates show the world has just 40 years of known oil reserves and 65 years of natural-gas supplies. But we have enough coal to last an estimated 155 years, with some of the largest reserves in the US and China.

America’s National Coal Council wants government incentives to help produce, daily, about 2.6 million barrels of liquid fuel from coal by 2025. That would satisfy about 10% of expected US oil demand that year. The plan would require 475 Mt/y of coal, which represents more than 40% of current annual US production. Certainly, US coal reserves are big enough to allow for the extra production.

All over the US, there are calls to embrace CTL. The Southern States Energy Board (SSEB) has released the American Energy Security Study detailing how the USA can significantly strengthen energy security by implementing a robust plan to support the development of a domestic CTL fuels industry and other alternative fuels. The governors and state legislators of the 16 SSEB states spent six months on this project. Specific incentives form the basis for a comprehensive energy plan aimed at slashing US oil imports by 5%/y every year for the next 20 years beginning in 2010.

Of the alternative fuels targeted in the study, ultra-clean CTL transportation fuels account for 29% of the fuels that would be used to reduce American oil imports – by far the largest source of alternative fuel promoted in the study. According to the study, a concerted effort to develop CTL and other alternative fuels will help facilitate a renewed US industrial boom through direct new energy sector investments of up to $200 billion by 2030, establish a reliable domestic energy base that sustains the global competitiveness of US industries and create more than 1.4 million new jobs over two decades.

Using coal to produce an alternative to crude oil has many benefits, as noted by the WCI:

· Coal has a broad geographic distribution – there are coal reserves in more than 70 countries. There is also a well-established, well-supplied and historically reliable international market. In contrast, 80% of the world’s total oil reserves are found in just 11 countries (OPEC)

· CTL utilises indigenous coal resources or the international coal market to reduce the risks associated with oil import dependence

· Coal prices are generally lower and more stable than oil prices. CTL can produce oil at $25-45/barrel of oil equivalent – including the costs of carbon capture and storage.

· CTL fuels are ultra clean to use – no sulphur, significantly reduced NOx, particulate matter and carbon monoxide emissions. CTL fuels offer higher efficiencies than conventional oil resulting in lower CO2 emissions when used

· Carbon dioxide capture and storage offers the potential for major reductions in CO2 emissions from coal. CCS may result in greenhouse gas emissions being some 20% lower over the full life cycle than fuels derived from crude oil.

A WCI report, Coal: Liquid Fuels can be downloaded from http://www.worldcoal.org/assets_cm/files/PDF/wci_coal_liquid_fuels.pdf

The Americans are even flying planes on CTL! Last September on a flight at Edwards Air Force Base, a CTL fuel mixture was used to power two engines on a B-52 bomber that undertook a two-hour test flight.

Coincident with the WCI statement, the Coal-to-Liquid Fuel Promotion Act of 2007, was introduced into the US House of Representatives as companion legislation to S. 154 introduced the previous week. The new bill authorizes the US Department of Energy (DOE) to administer loan guarantees and provide other incentives for initial construction of CTL plants, expands tax credits for CTL plant construction and authorizes Department of Defense funding for CTL research and development:

National Mining Association (NMA) President and CEO Kraig R. Naasz said: “Americans stand to benefit enormously from the leadership shown by Representatives Nick Rahall and Geoff Davis in sponsoring legislation that will reduce our country’s growing reliance on foreign energy. The bill recognizes the enormous potential of America’s coal reserves – the world’s largest – for generating more of the transportation fuel we need. The congressmen also clearly recognize the formidable financial risks involved in developing an entirely new domestic fuel vulnerable to the influences of a global energy market.

“The technology for converting U.S. coal to transportation fuel already exists. The cost of building this industry is considerable, but so too is the cost of continuing to rely on volatile and unfriendly regimes for the energy our economic prosperity depends on. Swift approval of this legislation, and its companion bill in the Senate, will help our country take an important step towards greater independence from foreign energy suppliers.”

Returning to the WCI’s most recent statement: “It is now time for Europe to look at the potential of coal liquefaction as a way of securely and affordably meeting demand for liquid fuels and to prepare for the next time Russia decides to switch off oil supplies.”