Coal-to-Liquid Technology Entices Congress
The idea that everyone's suddenly talking about on Capitol Hill is coal to liquid, a pricey technology that hasn't played a significant role in the global energy picture outside of Nazi Germany and apartheid South Africa. While the liquid fuel that is produced is a clean-burning diesel, environmentalists are aghast at the carbon emissions and water use involved in the process.
But coal-state Democrats and Republicans alike are pushing for big federal subsidies to get the idea off the ground in the United States, arguing that support for the home-mined fuel alternative is a national security concern. It's also an economic security issue for the coal industry, which has been buffeted by the trend of electric companies shunning the high-sulfur, premium-priced coal of Central Appalachia. Eastern power producers have found they can much more easily meet federal acid rain regulations by buying the low-sulfur, lower-priced coal of the West, even though they have to pay substantial rail shipping fees.
Here's a sampling of what the coal industry, explaining recent lower earnings, has been telling Wall Street about the promise of coal to liquids:
Arch Coal, April 23 earnings report (profit: $28.7 million, down 53 percent from last year): "Over the longer term, Arch maintains a bullish outlook on coal markets...Congressional support for enhancing domestic energy security is growing, spurring interest in coal-to-liquids and coal-to-gas technologies. The advancement of coal-conversion technologies represents a meaningful positive long-term development for the coal industry."
CONSOL Energy, March 6 Raymond James Institutional Investors Conference (profit: $113.3 million, down 16 percent): "Not only are we the largest coal producer east of the Mississippi, but we are the largest coal reserve holder...We've got about 1.2 billion [short tons] of undeveloped, unassigned northern [Appalachian] coal reserves that can be developed...as either new mines or projects that would support unconventional coal use like conversion of coal to liquids...We still believe in the story that this country will use coal, it will use coal to generate electricity, and despite the challenges of global climate and carbon constraints that we will develop the technologies to allow coal to continue to be used in that fashion. We think there is a possibility that we will develop an entirely new market for liquefied versions of coal."
Joy Global mining equipment and services, May 30 earnings conference call (profit: $77.6 million, down 6 percent): "Coal to liquids is just a very critical important new technology for our industry. It will allow coal to be converted and in the process to be cleaned so it becomes a fuel that becomes environmentally compliant. And I think that that's just really the future for coal—to be a fuel that's environmentally compliant. We already know that coal is very cost efficient. We know it's very reliable. We know there's tremendous security for production in the U.S. Once it's environmentally compliant, we have all the aspects of coal to make it a continued preferred fuel source for power generation, and also on a coal-to-liquids basis it will begin to open up the transportation markets as well. So I think the long-term outlook for coal is very positive, and it's very positive specifically because of the potential for commercial technologies."