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Producing Liquid Fuels from Coal Prospects and Policy Issues PROJECT AIR FORCE and INFRASTRUCTURE, SAFETY, AND ENVIRONMENT THE ARTS This PDF document was made available from www.rand.org as CHILD POLICY a public service of the RAND Corporation. CIVIL JUSTICE EDUCATION Jump down to document ENERGY AND ENVIRONMENT 6 HEALTH AND HEALTH CARE INTERNATIONAL AFFAIRS The RAND Corporation is a nonprofit research NATIONAL SECURITY POPULATION AND AGING organization providing objective analysis and PUBLIC SAFETY effective solutions that address the challenges facing SCIENCE AND TECHNOLOGY the public and private sectors around the world. SUBSTANCE ABUSE TERRORISM AND HOMELAND SECURITY Support RAND TRANSPORTATION AND INFRASTRUCTURE Purchase this document WORKFORCE AND WORKPLACE Browse Books & Publications Make a charitable contribution For More Information Visit RAND at www.rand.org Explore RAND Project AIR FORCE RAND Infrastructure, Safety, and Environment View document details Limited Electronic Distribution Rights This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. This electronic representation of RAND intellectual property is provided for non-commercial use only. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see RAND Permissions. This product is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity. Producing Liquid Fuels from Coal Prospects and Policy Issues James T. Bartis, Frank Camm, David S. Ortiz Prepared for the United States Air Force and the National Energy Technology Laboratory of the United States Department of Energy Approved for public release; distribution unlimited PROJECT AIR FORCE and INFRASTRUCTURE, SAFETY, AND ENVIRONMENT The research described in this report was sponsored by the United States Air Force under Contract FA7014-06-C-0001. Further information may be obtained from the Strategic Planning Division, Directorate of Plans, Hq USAF. It was also supported by the National Energy Technology Laboratory, United States Department of Energy, and was conducted under the auspices of the Environment, Energy, and Economic Development Program within RAND Infrastructure, Safety, and Environment. Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN: 978-0-8330-4511-9 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. Cover photo courtesy of Peabody Energy Corporation. © Copyright 2008 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2008 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface The increase in world oil prices since 2003 has prompted renewed interest in producing and using liquid fuels from unconventional resources, such as biomass, oil shale, and coal. This book focuses on issues and options associated with establishing a commer- cial coal-to-liquids (CTL) industry within the United States. The book describes the technical status, costs, and performance of methods that are available for producing liquids from coal; the key energy and environmental policy issues associated with CTL development; the impediments to early commercial experience; and the efficacy of alternative federal incentives in promoting early commercial experience. Because coal is not the only near-term option for meeting liquid-fuel needs, this book also briefly reviews the benefits and limitations of other approaches, including the development of oil shale resources, the further development of biomass resources, and increasing dependence on imported petroleum. A companion document provides a detailed description of incentive packages that the federal government could offer to encourage private-sector investors to pursue early CTL production experience while reducing the probability of bad outcomes and limit- ing the costs that might be required to motivate those investors. (See Camm, Bartis, and Bushman, 2008.) The research reported here was performed at the request of the U.S. Air Force and the U.S. Department of Energy. The Air Force sponsor was the Deputy Chief of Staff for Logistics, Installations and Mission Support, Headquarters, U.S. Air Force, in coordination with the Air Force Research Laboratory. The Department of Energy sponsor was the National Energy Technology Laboratory. Within RAND, it was conducted as a collaborative effort under the auspices of the Resource Management Program of RAND Project AIR FORCE and the RAND Environment, Energy, and Economic Development Program (EEED) within RAND Infrastructure, Safety, and Environment. During the preparation of this book, the U.S. Congress and federal departments were considering alternative legislative proposals for promoting the development of unconventional fuels in the United States. This book is intended to inform those delib- erations. It should also be useful to federal officials responsible for establishing civilian and defense research programs; to potential investors in early CTL production plants; iii iv Producing Liquid Fuels from Coal: Prospects and Policy Issues and to state, tribal, and local government decisionmakers who are considering the costs, risks, and benefits of early CTL production plants. To promote broad access to this book, we have avoided detailed technology descriptions and have relegated supporting econometric analyses to the appendix and the companion volume. This book builds on earlier RAND Corporation publications on natural resources and energy development in the United States. Most relevant are the following: t Oil Shale Development in the United States: Prospects and Policy Issues (Bartis et al., 2005) t Understanding Cost Growth and Performance Shortfalls in Pioneer Process Plants (Merrow, Phillips, and Myers, 1981) t New Forces at Work in Mining: Industry Views of Critical Technologies (Peterson, LaTourrette, and Bartis, 2001). RAND Project AIR FORCE RAND Project AIR FORCE (PAF), a division of the RAND Corporation, is the U.S. Air Force’s federally funded research and development center for studies and analyses. PAF provides the Air Force with independent analyses of policy alternatives affecting the development, employment, combat readiness, and support of current and future aerospace forces. Research is conducted in four programs: Force Modernization and Employment; Manpower, Personnel, and Training; Resource Management; and Strat- egy and Doctrine. Additional information about PAF is available on our Web site: http://www.rand.org/paf/ The RAND Environment, Energy, and Economic Development Program The mission of RAND Infrastructure, Safety, and Environment is to improve the development, operation, use, and protection of society’s essential physical assets and natural resources and to enhance the related social assets of safety and security of indi- viduals in transit and in their workplaces and communities. The EEED research port- folio addresses environmental quality and regulation, energy resources and systems, water resources and systems, climate, natural hazards and disasters, and economic development—both domestically and internationally. EEED research is conducted for government, foundations, and the private sector. Information about EEED is available online (http://www.rand.org/ise/environ). Preface v Questions or comments about this book should be sent to the project leader, James T. Bartis ([email protected]). Contents Preface ................................................................................................. iii Figures ................................................................................................. xi Tables .................................................................................................xiii Summary ..............................................................................................xv Acknowledgments ................................................................................xxvii Abbreviations .......................................................................................xxix CHAPTER ONE Introduction ........................................................................................... 1 About This Book ....................................................................................... 2 CHAPTER TWO The Coal Resource Base ............................................................................. 5 The Adequacy of the U.S. Coal Resource Base ....................................................
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