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Modern Innovations
Clean Fuels from Coal — Today's Response to Imported Energy
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Using proven technology, coal-to-liquid (CTL) fuels made using America's unrivalled coal reserves can provide the nation with an important new source of clean, secure and affordable fuels. Domestically made CTL fuels can help power America's Armed Forces and provide the nation's transportation, agricultural and manufacturing sectors with a clean fuel that is not vulnerable to foreign interference or natural disasters.
In this century, America will not be secure unless its energy supplies are secure. The nation's abundant and affordable coal reserves - matched with proven gasification and liquefaction technology - can provide an invaluable hedge against our increasing dependence on foreign energy supplies as well as a potentially significant source of transportation fuel for a growing economy.
THE SPECTER OF RISING ENERGY IMPORTS The United States currently depends on foreign sources for 60 percent of its domestic oil requirements, including crude oil and refined products. According to the Energy Information Administration (EIA), that dependence will grow to 70 percent by 2025.
COAL IS A STRATEGIC ENERGY RESOURCE The domestic production of CTL fuels would expand potential uses of America's nearly 250 billion tons of recoverable coal reserves beyond electricity generation and help reduce our reliance on foreign sources of oil, while promoting national security, creating thousands of new jobs, while also helping to achieve important environmental objectives.
CTL IS TODAY'S TECHNOLOGY Producing CTL fuel does not depend on unproven technology nor require extensive R&D. Equally importantly, CTL fuels are compatible with current technologies, requiring no replacement or redesign of either automobile or aircraft engines or delivery infrastructure.
CTL MEANS ENERGY DIVERSIFICATION, ECONOMIC STIMULATION, CLEAN FUELS With coal reserves dispersed among 38 states and production in 26 states, the U.S. boasts a geographic diversity of domestic fuel supply that is less susceptible to natural disasters and terrorist threats.
A typical CTL plant, with an output of 25,000 barrels per day, can support 1,000 construction jobs, 600 permanent on-site jobs and at least 150 jobs at the supporting coal mine.
Domestically made CTL fuels will emit less carbon dioxide than the imported fuels they will replace. CTL fuels are almost completely sulfur-free and will emit significantly less emissions of gasses, such as nitrogen oxide and sulfur dioxide, and particulate matter that impact human health and help create smog.
A NEAR-TERM CTL GOAL The U.S. can bolster its energy security in the near term by establishing a goal of producing at least 300,000 barrels of high-grade fuel per day by 2015 using CTL technology. Production at this level equals the amount of transportation fuel consumed daily by the U.S. military for domestic operations.
FEDERAL PARTICIPATION IS VITAL Federal participation in the development of a nascent CTL industry is critically important for two reasons. First, assistance on a limited scale will help to reassure private investors wary of undertaking major investments in energy technologies untried in the United States. Second, federal participation will discourage foreign oil cartel manipulation of oil prices temporarily for the sole purpose of destroying a competing domestic fuel source.
CTL INCENTIVES The following incentives will assist early CTL project participants to more easily absorb higher costs expected from large-scale build outs using technology new to the U.S.:
- Authorization and appropriation of $500 million in deployment funding support in the form of grants or non-recourse loans to cover front-end engineering and design costs for the initial 10 plants.
- An $8 billion appropriation to underwrite federal loan guarantees (authorized by Title XVII of the Energy Policy Act of 2005) for up to 10 CTL plants through 2015.
- A 20 percent industrial gasification investment tax credit pursuant to Section 48B, to be made available to the first 10 CTL plants, capped at $200 million total per plant.
- Extension of the expiration date of the 50 cents per gallon fuel excise tax credit to cover fuels produced by any CTL plant that is online by December 31, 2020.
- Federal government purchasing support through guaranteed fixed price contracts from the Department of Defense, other agencies and the Strategic Petroleum Reserve. This will discourage oil-exporting countries from manipulating imported oil prices solely to block U.S. development of CTL fuels.
