A new report published by Energy Business Reports – Commercialization of Coal to Liquids Technology 2007 – said given America's large coal reserves, coal-based fuels could rapidly replace other sources of transportation fuel to meet future needs.

Through CTL, coal can be made into low-sulphur diesel and used as a substitute for petroleum products. Coal-derived fuels can be used directly in today’s diesel vehicles, with no need for modification.

Road trials of coal-based fuels have shown that significant local air quality improvements can be achieved through the reduction of tailpipe emissions.

Some studies suggest particulate emissions can be up to 75% less than with traditional diesel, and oxides of nitrogen can be reduced by up to 60%. The optimisation of new engines for these fuels will offer even greater reductions, particularly of nitrogen oxides. New engine design, such as direct injection, will offer yet greater efficiencies, the study said.

“While coal itself is a low efficiency fuel and a notorious polluter, advanced gasification technologies can convert over 95% of coal fuel into a combustible gas, commonly called syngas,” EBR said.

Syngas consists mainly of carbon monoxide and hydrogen and can be used like natural gas to efficiently generate electricity through an integrated gas turbine/steam turbine combined cycle. Syngas is also a basic feedstock for manufacturing a range of chemicals and synthetic fuels, such as hydrogen, ammonia, methanol, dimethyl ether, and Fischer-Tropsch gasoline and diesel, which can substitute for oil.

“The positive impacts of coal-based fuel include long-term environmental advantages ranging from the reclamation of decades-old coal waste piles and the mining of secondary coal sources, to possible ways to reduce hazardous emissions in coal combustion,” EBR said.

Energy Business Reports looks at the various technologies and methodologies for liquefying coal, the economics of CTL development, key players in the global market, the advantages and disadvantages of liquid coal, and the market outlook for CTL as a fuel source.

The conversion coal to usable liquids uses a lot of primary energy and produces significant quantities of greenhouse gases. The coal must be gasified, the gas must be liquefied, and the liquid hydrocarbons produced by this process must also be refined before they can be used in vehicles.

According to many observers, this means Fischer-Tropsch is more expensive than standard oil refining and is also more greenhouse-intensive.

For CTL to be truly environmentally sustainable, a workable geosequestration program would need to be implemented, according to Australian consultant Mark McKenzie of Rare Consulting.

Geosequestration is central to a planned Australian CTL project.

The Monash Energy project, a partnership between Shell and coal giant Anglo American, would involve the gasification – via Shell’s proprietary coal gasification process – of Anglo American’s brown coal (or lignite) from the Latrobe Valley for liquefaction into clean transportation fuels.

The Latrobe Valley’s brown coal has a moisture content of more than 60%, and vaporising this moisture when the fuel is burnt reduces the electricity generated per unit of CO2 emitted.

The aim is to dry the coal, and then separate the hydrocarbons from CO2 during the gasification process. The CO2 will then be pumped into depleted gas reservoirs off the coast of Gippsland, not far from the Latrobe Valley.

Once the operation is in full production, it would be sequestering about 13 million tonnes per annum (MMtpa) of CO2.

The Gippsland region’s brown coal reserves could support several such plants, each operating for about 50 years, according to Monash Energy.

The CSIRO’s Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC) says several long-term projects from around the world have shown that carbon geosequestration is a viable way of reducing CO2 emissions.

A 2005 Australian Government-funded study by Monash Energy found the offshore Gippsland Basin could provide secure, low-cost storage for at least 50MMtpa of CO2.

Commissioning of the Monash Energy plant is envisaged for 2016.