A paper favoring coal-to-oil would be more persuasive if it didn’t coming from the National (Coal) Mining Institute.
As this WSJ article points out, the start up costs of these plants is immense, and the environmental impact is as big as Al Gore’s behind:
“It’s far from clear, however, that the world would be better off — economically or environmentally — by burning more coal to fuel cars and trucks.
One problem is that coal-to-oil projects are extremely expensive. A single plant capable of producing about 80,000 barrels of oil equivalent a day — less than 0.5 percent of America’s daily oil diet — would cost an estimated $6 billion or more to build.
Energy analysts reckon that some coal-to-liquids projects can offer an acceptable return on investment when oil is priced as low as $30 or $35 a barrel, though such ventures might require government tax incentives to reduce operating costs. It seems likely that oil prices will stay above that level for a while, but the longer-term outlook is anyone’s guess. An earlier flurry of interest in coal-to-oil facilities in the U.S. during the Carter administration in the late 1970s died after oil prices collapsed.
Coal-to-oil projects also pose serious environmental questions. When the South African facility superheats coal and turns it into a gas, one of the main waste products is carbon dioxide, thought to be a significant cause of global warming.
The Natural Resources Defense Council, a U.S.-based environmental advocacy group, estimates that the production and use of gasoline, diesel fuel, jet fuel and other fuels from crude oil release about 27.5 pounds of carbon dioxide per gallon. The production and use of a gallon of liquid fuel originating in coal emit about 49.5 pounds of carbon dioxide, they estimate. Even some boosters of the coal-to-oil plants describe them as carbon-dioxide factories that produce energy on the side.”
Further, the current cost of oil is driven up by government drilling restrictions, environment laws, and taxes. It is I think reasonable to assume that the new coal-to-oil plants, and the mining needed to produce that much more coal, would be subjected to the same restrictions/laws/taxes, driving up the theoretical cost of that fuel.
I’m not objecting to coal-to-oil per se. It’s probably a better idea than ethanol. I’m just noting that it has its own problems.