KELLY: Coal's energy potential

By Jack Kelly | Monday, June 30, 2008

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COMMENTARY:

The headline on an otherwise first-rate story in the Pittsburgh Post-Gazette last Monday was: "Coal may hold solution to gas prices."

The story was about technologies to convert coal to gasoline and diesel fuel. This fall the Shenhua Group, a Chinese firm, will open in Mongolia a plant expected to produce 50,000 barrels a day of low-sulfur gasoline and diesel fuel from coal by 2010. The Shenhua Group is using technology developed mostly in the United States. But we have no comparable projects here, even though coal can be converted to oil for between $60 and $70 a barrel.

A plant like that in Pennsylvania or Ohio or West Virginia would provide some welcome relief, plus hundreds of well-paying jobs. But Americans consume 20.7 million barrels of oil daily, equivalent to 414 Shenhua plants producing at full capacity. Promising as the technology is, there is no way CTL (coal to liquids) can be a "solution" to high gas prices. No one thing can.

We're in the fix we're in largely because our political leaders have believed in the energy equivalent of the Easter bunny and the tooth fairy. Energy independence is a pipe dream. "Green" energy is a pipe dream. So is the notion we can conserve our way out of dependence on foreign oil.

The American Public Transportation Association estimates Americans who ride buses, subways and trains "save" 1.4 billion gallons of gasoline a year, or about 70 million barrels of oil (about 19.5 gallons of gasoline can be produced from the typical barrel of oil). That's about 191,780 barrels per day. If public transit ridership doubled, that's about what we could expect to save. It's nothing to sneeze at, but the savings would be equivalent only to what four Shenhua-style CTL plants could produce.

Environmentalists who tout savings from conservation tend to dismiss the contribution drilling in the Arctic National Wildlife Reserve could make to our energy supplies. But the estimated production from ANWR (a million barrels a day for 30 years) is fivefold what we could expect to save from the unrealistic goal of doubling mass transit ridership.

A more promising means of oil conservation would be if more of us traded in our gas guzzlers for hybrid-electric cars. The Toyota Prius gets 44.6 miles per gallon, compared to a U.S. fleet average of 19.8. Some hybrids under development promise 60 mpg or more. But a major shift to hybrids would require a huge increase in electrical generating capacity, and environmentalists have been as hostile to building electric power plants as they have been to drilling for oil or mining coal.

It is time to put away the fairy tales and do the math. There's no quick, or easy, solution to the fix we're in. We're going to pay a severe price for 25 years of folly. Energy independence is a pipe dream. But if we start now, in five to 10 years we could get our dependence on foreign oil down from the current 60 percent plus to a manageable level of between 25 percent and 30 percent.

To achieve that goal, we must produce more oil at home, and use less of it. We don't have a choice between production and conservation. We must have both. But in the intermediate term (other than a hair-curling depression) only a massive shift to hybrids can reduce substantially our dependence on oil. And this can't be done without a big boost in electrical generating capacity, which in the next five to 10 years can be accomplished only by building nuclear power plants - lots and lots of nuclear power plants - because only nukes can generate the volume of electricity required at an affordable price. Putting some of them on military bases could help deal with the NIMBY (not in my backyard) problem.

Congress must abandon its historic role as part of the problem to become part of the solution.

• Legal obstacles to drilling in ANWR and off our coasts should be relaxed or removed altogether. (Perhaps some environmentalists would be mollified if, in exchange for the right to drill on the 2,000 acres in ANWR where the oil is, oil companies could be required to add 2,000 acres to national parks people actually visit.)

• Congress should provide consumers with substantial tax credits for buying hybrids, or for making energy saving improvements to our homes.

• Large tax incentives are required to attract the huge amount of capital needed to build CTL plants, nuclear power plants, and solar power plants. Providing those incentives would be as sound an investment in America's future as building roads and canals were in Henry Clay's day, or railroads were in Abraham Lincoln's day.

Jack Kelly, a syndicated columnist, is a former Marine and Green Beret and a former deputy assistant secretary of the Air Force in the Reagan administration. He is national security writer for the Pittsburgh (Pa.) Post-Gazette.

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