Coal-to-liquid: 180 degrees the wrong direction

The energy density of hydrocarbons is just too high for there to be a wholesale switch immediately.  From an economic standpoint the nation would go through a pretty big recession if not depression if our ability to access liquid hydrocarbon fuel dried up in the short term.

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From a national security and economic prospective this is a good thing. 

I humbly submit an old diary:

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Coal’s Stranglehold on Congress

There seem to be three issues conflated in th post:

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(i) the possibility of at least some energy independence, that may come via coal liquefaction;

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(ii) the likelihood that process of liquifying coal, and the subsequent combustion of the liquified coal, will actually result in the production of higher levels of CO_2; and

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(iii) taxpayer subsidies for coal liquefaction.

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The first two have been dealth with on previous posts.  Regarding (iii), it seems to me that, if coal liquefaction, the coal companies themselves, or perhaps partnered with petroleum refiners, could build liquefaction plants themselves, and wouldn’t need taxpayer subsidies.  I’m not sure where the tipping point is at which the cost of mining and liquefaction of coal would at least correspond to the cost of pumping and refining oil, but I seem to remember reading that it is on the order of US$60/barrel of oil, which is about the current price.

Why not start by using less themselves?

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Policy Proposal 1:
If a US gov’t vehicle can take an alternative fuel  * ethanol  * biodiesel  * CNG  * etc
with very minor alterations (under $100/vehicle), and if the fuel source is located within 10 miles of vehicle storage, than that vehicle must use an alternative fuel.

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This means ethanol for flex-fuel vehicles, biodiesel for diesel engines (and hence the $100/vehicle changeover costs, necessary to change some hoses to prevent degradation).

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Policy Proposal 2:
If a US gov’t agency is purchasing a vehicle to be stored in a location covered under PP1, it must be an alternate fuel vehicle if one exists that meets needs of vehicle.

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This is obvious, given PP1.

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Policy Proposal 3:
Start shifting government contractors over to alternative fuels by favoring contracts with companies using alternative fuels, eventually requiring the same criteria as PP1 and PP2.

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Policy Proposal 4:
Trickle this down to the states.  Use carrot/stick to get 50 state governments to implement policies like PP1, PP2, and PP3.

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The Feds have lots of vehicles.  The sum of 50 states’ vehicles is lots, too.

What’s elegant about this is that the gov’t is sending a signal that there’s measurable, dependable future demand increase in these alternative fuels, and businesses could even calculate (using public records) just where there is untapped demand — locations where, if they opened a fuel depot, there’d be instant demand of x units/week.

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Once you see alternative fuel depots becoming more commonplace, it stimulates demand — which helps more alternative fuel depots spring up.

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Of course, this extra demand should come with an increase in CAFE standards, since otherwise the requirements won’t be binding, and will hence be neutered.

P.S.  Creating more mass transit options for local, commute, and long distance travel reduces demand on gasoline!

Now that even Christie Todd Whitman is an “environmentalist,” every energy company’s PR department is retooling to board the Green Energy Express.

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At the same time those who take climate change seriously have been trying to assemble the broadest possible coalition in favor of taking the issue seriously, lest the entire cause founder on destructive partisanship. Consequently the conventional wisdom is heavily salted with broad consensus statements about the need for renewables and efficiency, but also industry heavy hitters like nuclear and “clean coal” as part of a comprehensive blah blah blah.

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(In Ohio, there was legislation that would have allowed coal to satisfy the state’s Reneweable Portfolio Standard, though I don’t know the final outcome of that.)

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At this point I think it is important for the political language to change. All energy sources are not created equal and their vitues do not corelate well to their political clout; some are innimical to resolving climate change.

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The good news, if there is any, is that the astonishing cost of these boondogles means they are far from a done deal and that as they go forward opposition will grow. Let’s hope sooner rather than later.

Haven’t we shown in the past that the government isn’t very good at picking the best technology for solving problems? Isn’t the whole idea of capitalism based on the claim that markets find the best solution?

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The government should not be subsidizing specific solutions. For technology development, the government should be funding research into new, untested ideas. Once an idea has been shown to be good, companies will take care of developing it.

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The best market-based solution to global warming is to directly tax CO2 production. This will produce a good mix of reducing demand and switching over to better technologies. The easiest way to tax CO2 production is to tax the fuels when they are either imported or pulled out of the ground on the basis of how much CO2 will be produced when they are burned. Cap and trade systems worked for reducing acid rain; they will also work for reducing greenhouse gasses.

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Taxing pollution has the added advantage that it increases government revenues, rather than increasing government spending. Why spend millions or billions of dollars on one method which may or may not turn out to be a good idea when you can instead collect money in proportion to usage and let everyone their consumption in the most efficient way they can find?

It seems as if the whole state of Illinois is involved in the coal/ethanol boondoggles.  They decided to swoop down on some “cheap energy” enthusiast a couple months ago.  Nobody likes competition.  I assumed then that the other states would follow suit.  (Anyone know if Mass DOR is following?)  I’d love to know the whole story, but will have to wait to get a glimpse on the news when the scandal breaks, some years from now.