US Representatives Introduce Coal-to-Liquids Legislation; CO2 Restrictions Part of the Proposal
12 May 2007
Representative Rick Boucher (D-VA), Chairman of the Energy and Air Quality Subcommittee, and Representative John Shimkus (R-IL), this past week introduced a bill to promote the use of coal-to-liquids (CTL) transportation fuels. The legislation would establish price certainty to provide incentive for investment in CTL facilities.
The legislation introduced by Representatives Boucher and Shimkus would enable the Department of Energy (DOE) to enter agreements with up to six coal liquefaction projects for the purpose of establishing price parameters which will provide the projects with a federal price guarantee.
Under the legislation, if the price of crude oil falls below an agreed upon price— approximately $40 per barrel—the federal government would make a payment to the facility owner, thereby establishing a price floor for the facility’s product. Analysts consider $40 per barrel the threshold at which CTL becomes economic.
Conversely, if the price of crude oil were to rise above a certain ceiling, upwards of today’s market price per barrel, the facility operator would be required to make payments to the federal government. The legislation was established with both a floor and a ceiling to provide the necessary financial certainty to encourage the launch of coal-to-liquids projects while simultaneously insuring that participating facilities are not able to reap windfall profits simply by virtue of their participation in a program which lends federal backing in certain circumstances.
The exact price levels for the floor and ceiling as well as the amount of the payments would be established as part of each project’s agreement with the Department of Energy. In addition, the legislation requires that in order to qualify for this federal guarantee, each project must be certified as producing a fuel which has life cycle CO2 emissions of at or below the levels of a comparable petroleum-based facility.
Multiple lifecycle analyses (LCAs) of different transportations fuels point to standard coal-based Fischer-Tropsch fuels (FT CTL) as having the worst Well-to-Wheels (WTW) greenhouse gas profile. The recent study done by the University of California for the California Low Carbon Fuel Standard (LCFS), for example, calculated the emissions of CTL transportation fuel on a full lifecycle basis to be 214 g CO2 equivalent per MJ—2.3 times the impact of conventional reformulated gasoline or diesel. (Earlier post.)
|Results of the INL-Baard study. Click to enlarge.|
However, the US Department of Energy’s Idaho National Laboratory (INL) has just published a study modeling the greenhouse gas emissions of Baard Energy’s Ohio River Clean Fuels CTL project currently under development in Wellsville, Ohio.
The Baard project will co-feed the gasifiers with 30% biomass and 70% coal, and capture CO2 for sequestration. According to the year-long INL study, the Baard CTL fuels will yield 46% less emissions of greenhouse gases than conventional low-sulfur diesel transportation fuels. All emission reductions documented in the study were measured on a wells-to-wheels basis using the Argonne National Lab GREET (Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation) model of transportation fuels.
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