ROANOKE, Va. (AP) - Virginia Rep. Rick Boucher believes liquid fuel derived from coal can help the U.S. break its dependence on foreign oil, and as the new chairman of a House Energy subcommittee he hopes to jump-start the process.
Boucher is renewing legislation he first introduced last year that would provide price guarantees to investors to encourage construction of coal-to-liquids conversion plants.
'The greatest challenge that we face in terms of a national energy policy is defining a strategy to move the country away from petroleum as the primary fuel,' the southwest Virginia Democrat said in a telephone interview.
Boucher, whose district includes Virginia's coal region, noted that the nation has the largest coal reserves of any in the world.
A study last year by the Southern States Energy Board called for coal-to-liquids to supply the greatest share -- 29 percent -- of alternative fuels needed to erase the nation's dependence on foreign oil by 2030. Alternative fuels would have to supply 60 percent of the fuel that now comes from imported oil.
West Virginia Gov. Joe Manchin chairs the SSEB and is trying to persuade the rest of the nation's governors that individual states should eliminate their dependence on foreign energy instead of waiting for the federal government.
The SSEB represents West Virginia, Virginia, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas and the Virgin Islands.
High-quality coal mined from Virginia, West Virginia and Kentucky could drive the effort more than coal found in other parts of the country, said Michael Karmis, director of the Virginia Center for Coal and Energy Research at Virginia Tech.
Other nations, such as China and South Africa, use motor fuel derived from coal, but so far there are no coal-to-liquids plants in the U.S. More than a dozen are in the planning stages, according to information provided by Karmis.
Rentech Inc., a Colorado company, has announced it plans to build a $1 billion coal-to-liquid fuel plant in southern West Virginia to take advantage of the area's abundance of coal and mining infrastructure. The plant is designed to initially produce 10,000 barrels of fuel a day, and then gradually move to 30,000 barrels.
The technology to convert coal into diesel fuel or gasoline has existed for decades. The Germans used liquefied coal during World War II after the Allies bombed their oil refineries.
Nearly 30 percent of South Africa's fuel today is extracted from coal, but the conversion process is expensive. It can cost up to $1 billion to get a coal-to-liquids plant up and running, Karmis said.
Under Boucher's legislation, the price guarantee for coal-to-liquids operations would be tied to the price of oil. If oil prices fell below a certain level, probably about $40 a barrel, the government would make a payment to the conversion operations. If the price of oil rose above a certain level, probably $75 a barrel, plant operators would pay the government.
It's likely that neither the government nor coal-to-liquids operations would make payments, Boucher said, but he believes the measure is needed to instill confidence in investors.
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© 2007 AFX News
