Liquid-coal subsidies aren’t needed, but are probably coming anyway

The New York Times reports on a passel of subsidy programs winding their way through the U.S. Congress, aimed at boosting the production of coal-based liquid fuel.

The ostensible purpose: independence from foreign oil for security reasons. A major factor: an amazing number of powerful congressmen and -women come from coal-producing states, including Rep. Nick Rahall of West Virginia, who’s chairman of the House Natural Resources Committee (what could possibly be wrong with that?).

The downside: coal is, well, coal, and liquefying it apparently produces twice as much greenhouse gas as producing the same amount of diesel, and about half again as much as the same amount of gasoline. Those in the industry insist they can capture and sequester the CO2, to be fair, although they’re not noticeably doing so yet.

The subsidies and subsidy-like proposals:

Among the proposed inducements winding through House and Senate committees: loan guarantees for six to 10 major coal-to-liquid plants, each likely to cost at least $3 billion; a tax credit of 51 cents for every gallon of coal-based fuel sold through 2020; automatic subsidies if oil prices drop below $40 a barrel; and permission for the Air Force to sign 25-year contracts for almost a billion gallons a year of coal-based jet fuel.

The truly mystifying bit:

Industry executives contend that the fuels can compete against gasoline if oil prices are about $50 a barrel or higher.

Oil closed at $63.15 US a barrel today.

Wouldn’t energy independence be better achieved by kicking the habit, rather than finding a more reliable dealer?


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