pros and cons of clean coal continue to fuel debat

Francine Pennington
Monday, 24 July 2006

A NEW wave of interest and investment in developing cleaner fuel
options is starting to help coal shed its image as a dirty fuel.
Francine Pennington reports.
But while the end product is a clean-burning diesel fuel
for the transport industry, the actual coal-to-liquids
process produces far more carbon dioxide emissions than
that created by oil or gas refineries.
As a result, some energy and environmental experts
have warned that unless these emissions are captured at
a production level, a CTL industry is unlikely to fit in with
a potential carbon constrained economy of the future.
"It's a potential disaster for the environment if we move
in the direction of trying to create a big synfuel program
based on coal to run our transportation fleet," the New
York Times quoted Daniel Lashof of the United Statesbased
Natural Resources Defense of Council as saying
recently.
"There's a brown path and a green path to replacing oil, and Fischer-Tropsch fuel
is definitely on the brown path."
But while there are drawbacks, there are plenty of pluses. Coal is cheap to
produce and there is an abundance, especially in energy-hungry countries such
as Australia, the US and China.
In recent times, more and more companies both at home and overseas are
announcing their intentions to get 'clean' coal projects off the ground.
Just yesterday, Linc Energy declared it had moved a step closer to establishing a
20,000 barrels a day 'ultra-clean' diesel plant at Chinchilla in Queensland, with
immediate plans to start a six-week drilling program to expand its existing nine
production wells.
Then a couple of weeks ago, US company Geostar announced plans to use a
'clean dewatering coal' technology developed by Perth-based Environmental
Solutions International.
More recently, two energy giants – Royal Dutch Shell and Shenhua – have
teamed up to conduct a feasibility study into developing a major CTL project in
China that could cost up to $US6 billion (almost $A8 billion).
And it is not just the private enterprise jumping on the bandwagon either. Last
week, the CSIRO put its research into action, after plans were unveiled to
develop its Underground Coal Gasification technology in partnership with Australian-listed Metex Resources.
Even US President George W Bush has declared his support. In his State of Union
speech in February – probably most remembered for his declaration of America's
"addiction to oil" – he called for further research and development in alternative
energies, making specific mention of cleaner coal technologies.
As a result, the US Department of Energy is now funding a two-year study into
tweaking the CTL, or Fischer-Tropsch, process and determining the feasibility of
establishing a widespread industry in the coal-rich nation.
However, just because the US is a fan, does this mean a CTL future is
necessarily in Australia's best interest?
Perhaps not, if CSIRO business development manager James Puller's comments
carry some weight.
Speaking at a gas-to-liquids and CTL conference in March, Puller told delegates
that while the US and China are focusing on cleaner coal technologies, Australia
should instead look to develop its own technological solutions in order to unlock
its massive offshore stranded gas reserves.
"Australia has traditionally relied on research and technology developed by other
countries, especially the United States," he said.
"But the size of the US' coal reserves are bigger than the oil reserves in the
Middle East, which explains why the country is spending so many dollars
researching how to clean up coal."
While interest in this alternative energy sector is being driven by high oil prices
and a demand for cleaner fuels, the reality is that developing CTL technology
does not come cheap. The technology needs a large initial capital investment and
a drop in oil prices could potentially render a plant redundant.
But high prices are only part of the equation. Australian Bureau of Agricultural
and Resource Economics senior economist Jamie Penm, who also spoke at the
GTL and CTL conference, said technological improvements were needed in the
sector to ensure these alternatives were cost-competitive with other mainstream
energy industries.
These limitations and concerns have been the primary reason that a widespread
CTL industry has never really taken off. However, today's optimists are operating
on the premise that high oil prices are here to stay.
One company's enthusiasm for the industry that has not waned is Sasol, which
has used the technology in South Africa for decades. The company is currently
exploring potential uses around the world and is conducting a feasibility study
with a Chinese partner of two big CTL projects in western China.
At the end of the day, coal is cheap and there is plenty of it. So as long as talks
of 'peak oil' and further oil price rises continue, coal is likely to keep being
promoted as a potentially viable alternative – even despite doubts over how
clean these 'clean' technologies profess to be.

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