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Snake Oil Instead Of Foreign Oil

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The New York Times outs the coal industry's latest scheme to turn high gasoline prices into a giant subsidy for coal-to-liquid fuel. The industry argues our energy should be coming from Middle America not the Middle East, but take a close look at the greenhouse gas emission index. It's questionable that coal to liquid fuels may be cheaper, but even under the cleanest version, a carbon capture technology that's not perfected, it won't be cleaner.

That's not stopping the coal money on capitol hill from trying to inject huge taxpayer subsidies into the "energy independence" legislation likely to make its way through the Senate and House in July. Coal state political power is "proposing that taxpayers guarantee billions of dollars in construction loans for coal-to-liquid production plants, guarantee minimum prices for the new fuel, and guarantee big government purchases for the next 25 years."

Here's the crux of the boondoggle:

The move reflects a tension, which many lawmakers gloss over, between slowing global warming and reducing dependence on foreign oil.

Many analysts say the huge coal reserves of the United States could indeed provide a substitute for foreign oil.

The technology to convert coal into liquid fuel is well-established, and the fuel can be used in conventional diesel cars and trucks, as well as jet engines, boats and ships. Industry executives contend that the fuels can compete against gasoline if oil prices are about $50 a barrel or higher.

But coal-to-liquid fuels produce almost twice the volume of greenhouse gases as ordinary diesel. In addition to the carbon dioxide emitted while using the fuel, the production process creates almost a ton of carbon dioxide for every barrel of liquid fuel.

Coal industry executives insist their fuel can actually be cleaner than oil, because they would capture the gas produced as the liquid fuel is being made and store it underground. Some could be injected into oil fields to push oil to the surface.

Several aspiring coal-to-liquid companies say that they would reduce greenhouse emissions even further by using renewable fuels for part of the process. But none of that has been done at commercial volumes, and many analysts say the economic issues are far from settled.

"There are many uncertainties," said James T. Bartis, a senior policy researcher at the RAND Corporation, who testified last week before the Senate Energy Committee. "We don't even know what the costs are yet."

Congress should not let the coal industry steer debate away from the cleaner, cheaper alternative fuels that are ready for market. As is reporting, gas prices are leading to a host of political opportunism on capitol hill. Here's the quintessential cautionary tale from the NYT's Edmund Andrews:

some energy experts, as well as some lawmakers, worry that the scale of the coal-to-liquid incentives could lead to a repeat of a disastrous effort 30 years ago to underwrite a synthetic fuels industry from scratch.

When oil prices plunged in the 1980s, the government-owned Synthetic Fuels Corporation became a giant government albatross that lost billions and remains a symbol of misguided industrial policy more than 25 years later.

"This is the snake oil of energy alternatives," said Peter Altman, a policy analyst at the National Environmental Trust, an environmental advocacy group. "The promises are just as lofty and the substance is just as absent as the first snake oil salesmen who plied their trade in the 1800s."

Most disturbing is that Senator Barak Obama appears to be on the coal-to-liquid bandwagon. After this morning's newspaper, Obama should take a closer look at his stance.