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MIT study concludes that absent climate policy, coal-to-liquids could account for around a third of global liquid fuels by 2050

Chen
The top graph depicts CTL in a no policy scenario; the bottom graph, for CTL in a world climate policy scenario. Credit: Chen et al., 2011 Click to enlarge.

A new assessment of the viability of coal-to-liquids (CTL) technology by researchers from the MIT Joint Program on the Science and Policy of Global Change (JPSPGC) found that without climate policy, CTL has the potential to account for around a third of global liquid fuels by 2050.

However, the viability of CTL becomes quite limited in regions with climate policy due to the high conversion cost and huge carbon footprint. Although adding carbon capture and storage (CCS) could reduce CO2 emissions, the additional cost from implementing CCS makes CTL less attractive, the report finds.

Converting coal into liquid fuels is known to be more costly than current energy technologies, both in terms of production costs and the amount of greenhouse gases the process emits. Production of CTL has a large carbon footprint, releasing more than twice the lifecycle greenhouse gases of conventional petroleum fuels. However, with the rise in energy prices that began in 2008 and concerns over energy security, there is renewed interest in the conversion technology, the report notes.

To assess the prospects for CTL—specifically, polygeneration technology that produces liquid fuels, chemicals, and electricity by coal gasification and the Fischer-Tropsch process—the MIT team incorporated the engineering data for CTL from the US Department of Energy (DOE) into the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium (CGE) model of the global economy.

They modeled different scenarios, varying the stringency of future carbon policies, the availability of biofuels and the ability to trade carbon allowances on an international market. Researchers also examined whether CTL-conversion plants would use carbon capture and storage technology, which would lower greenhouse gas emissions but create an added cost.

Based on DOE’s plant design that focuses mainly on liquid fuels production, the study found that, without climate policy, CTL might become economical as early as 2015 in coal-abundant countries like the United States and China. In other regions, CTL could become economical by 2020 or 2025. Carbon capture and storage technologies would not be used, as they would raise costs. In this scenario, CTL has the potential to account for about a third of the global liquid-fuel supply by 2050; at that level it would supply about 4.6% of global electricity demand.

However, the viability of CTL would be highly limited in regions that adopt climate policies, especially if low-carbon biofuels are available. Under scenarios that include stringent future climate policies, the high costs associated with a large carbon footprint would diminish CTL prospects, even with carbon capture and storage technologies. CTL conversion may only be viable in countries with less stringent climate policies or where low-carbon fuel alternatives are not available.

The main contribution of our research is to provide a comprehensive and consistent approach to investigate the future of CTL conversion, a strategy which has been discussed intensively especially in coal-abundant countries. In addition, the multi-input and multi-output structure we develop to represent CTL conversion could also be applied to other polygeneration approaches that produce different fixed or variable output shares or that relied on other feedstocks. Thus, future research may explore coal-biomass-to-liquid (CBTL) or biomass-to-liquid (BTL) processes which, while probably having higher conversion costs, could have significant benefit in terms of reduced CO2 emissions.

—Chen et al.

Resources

Comments

Treehugger

Their decline rate of oil production seems overly optimistic, oil production will have decline by close to 30% by 2050. Current oil reserve are 1.3 trillons and would run out in a mere 40 years at current consumption rate, means the decline will be much more pronounced than their prediction

Xxdanbrowne

@Treehugger:

Their graph also doesn't take into account gas-to-liquids and oil demand reductions from electrification, so although the decline in *conventional* oil *may* be much more pronounced than their prediction, the decline in all liquids could be reasonable.

HarveyD

According to BP, known oil reserves will satisfy demands (at current level) for another 47 years or until about 2060.

New discoveries + non-conventional oil + bio-fuels, non-fossil fuel + electrified vehicles + more efficient ICE vehicles-trains/ships-airplanes-machinery etc could extend crude oil availability by as much as another 100 years or until 2160 or so.

All we really have to worry about is much higher future crude price.

Mannstein

Cyclone Power has demonstrated a wood pellet burning engine. Maybe that's the future.

Reel$$

"In this scenario, CTL has the potential to account for about a third of the global liquid-fuel supply by 2050; "

Sorry but any projection that far ahead is baseless speculation. Fuel cells could just as well replace all heavy lift liquid fuels in 40 years.

Treehugger

Harvey

You don't understand the concept of peak oil and how it works, so do a bit a research on it

Scott

...so what about adding biofuels to the no policy graph to provide a third graph?

They are simple, 'policy on' and 'policy off' scenarios with basic assumptions. So they can be read and skewed with either an optimistic or malthusian bias, as demonstrated above.

Treehugger

Scott

You cannot add the biofuel to the 3rd graph, you would drop the price of gas too much then neither the CTL or Biofuel would be uneconomical. Both biofuel and CTL need oil price steady above 100$

SJC

OPEC could do just that, if alternatives come online, they can just drop the price to stop all of that, then raise it again if we change course.

CelsoS

for instance, just like this: Report: Saudi prince worried over increasing fuel economy standards and technology, http://green.autoblog.com/2011/06/05/report-saudi-prince-worried-over-increasing-fuel-economy-standa/

Engineer-Poet

Saudi Arabia, worried about higher fuel economy?

High fuel economy is the only thing that can save the USA, and the USA is KSA's protector. Someone getting 20 MPG can't afford $4/gallon gas for long; someone getting 50 MPG can handle $6/gallon gas, no problem. 50 MPG vehicles will keep the USA's economy going while KSA squeezes every bit of wealth it can get out of its reserves. But at 20 MPG, USA's economy goes into recession and oil prices are forced back down below $100.

KSA would be encouraging higher US fuel economy unless it places a higher priority on damaging the USA than achieving higher export revenues.

CelsoS

EP,

It's all about timing. I still think SJC's point about a tactical "price undermining" of alternative energy sourcing is valid.

KSA (and other cheap oil producers) are not stupid, and will make the best business choices in their interest. They won't price oil high enough for long enough to bring about any real disruption of their business.

Price has nothing to do with cost here. This business is far away from "perfect competition", and prices won't track marginal cost. Cheap producers have huge margins. Within their huge margins, they (KSA and all of "Big oil") will [probably] settle for a bit less immediate profit to extend the time they have a grip on the energy market, and maximize profit over time.

Developing ways of sourcing critical energy needs in usable forms is crucial to avoid possible unsettling events and unrest. It will take time, will have a lot of uncertainty and risks, and won't be profitable for some time. It will pay off in the long run, but won't take of with a go-and-stop signaling.

For a more "market driven" change, there is a need for proper regulation creating a reasonable floor to [liquid fuel] prices to introduce predictability against this type of manipulations.

Incidentally it would partially solve a budget problem too taxing what creates problems, channeling resources to what solves problems.

Regulation can always be changed back if new cheap ways to provide energy are discovered or developed.

This is just my view.

SJC

I think OPEC knows exactly where the break even price point is for alternatives. If coal companies, farmers, industry and others start making fuels that have a $50 per barrel break even, guess where oil prices are headed.

Roger Pham

"United We Stand" against OPEC!

It will start with the US Government. With gasoline retailing right now at $3.50/gal, the Gov should set a floor on the minimum price of gasoline not to get below $3.00 USD. If the retail price of gasoline should drop below $3.00 USD, the US Gov should adjust the gasoline tax until this minimum retail price is achieved.

This will give the Gov the leverage to stabilize the price of fuel in order to stabilize the economy. This will also assure investors in alternative fuels to invest more in sustainable energy future. This should not put Congress at a political disadvantage because at the moment, this will not reflect a tax increase. Of course, this will make too much sense...Being a very good chess player, OPEC perhaps has already set up a plot against this move in advance!...

3PeaceSweet

I'm not sure OPEC really have much of a choice anymore. I don't think any of them would want to reduce output and risk pushing the world back into a major recession, but they are also pumping pretty much flat out so have little scope to increase production enough to change prices.

I think Saudi spare capacity is next to nothing, and they will be exporting less and less oil each year as internal consumption increases.

http://arabnews.com/economy/article449449.ece

Coal to liquids seems like a bad idea as it is far more expensive then EV's or CNG. If we are going to use coal its going to be coal powered EV's which while not ideal are a less worse option than CTL

SJC

Are we going to convert a lot of power plants to combined cycle, no. Are we going to convert a lot of vehicles to natural gas, no. Are we all going to be driving electric cars real soon, no.

We have to go with what is probable and what will work. The most benefit for the least change and lowest cost is a guideline. We may not like the energy loss in CTL, GTL or BTL, but we have more than 200 million liquid fueled vehicles and that will not change soon.

We need to build a bridge to get to where we want to go or we sit on this side of the river hoping for some perfect solution to come along and get no where waiting for the next flood. A mixed metaphor to be sure, but I hope it paints the picture of why I think we need to be practical and make the transition in stages.

HarveyD

Maybe KSA should start worrying more about the economy in China and India because those two very large countries, with close to 3 billion people or 9 to 10 times USA's population by 2025, will use and import more crude oil than USA.

Yes TH, traditional peak oil may be the point in time when new proven discoveries are less than increase in consumption but there is a lot more crude that has not been discovered yet, specially under the seas. Brazil (and many other places) may become very large producers when all their deep sea potential are exploited. Tar sands and schist are other, not so well exploited, huge sources. Traditional peak oil will be extended by many decades with the arrival of fuels from coal, NG/SG, biomass etc. The progressive improvement of ICE machines, the arrival of electrified machines and further improvement in HVA, building codes and industrial processes etc will further contribute to peak oil extension by reducing oil consumption.

KSA gave away their crude oil for decades (at $1/barrel) and are fully justified to want 100 to 200 times more. So would we?

SJC

The reserve replacement ratio is about 1 to 4, we use 80 million barrels per day worldwide but discover only 20 million per day in new reserves. This tells the story.

Stan Peterson

Gentlemen,

Do you know the difference between proven reserves and future and known but currently untappable reserves, versus the pure unknown reserves? Is sure does not sound like it at all.

Proven reserves are merely oil reservoirs drilled and tapped, but with some portion still unpumped, with present technology. Untappable reserves are all oil pools known, but untappable for several reasons. Examples are the known pools restricted from exploitation by current law, such as off the Coasts. Others are known pools that cannot be economically recovered with today's existing technology.

As prices and laws change, these become exploitable. Finally there are the truly unknown oil pools at present.

The total oil reservoirs are not even on the order of a trillion barrels. It is at least one or possibly two magnitudes higher than that.

No one has yet established with any degree of certitude what the regeneration rate of hydrocarbons is. As short as five years ago, we thought it was essentially zero. Now we know better, but do not know anywhere near enough. All we know is that guesstimates are that a prodigious 1/3 of the life on Earth,previously unknown, is busy creating Oil in the aeneorobic areas of the rock up to several miles below the Ocean's floors.

Hydrocarbons will be still available several 1000 years from now, but we are truly unlikely to care very much at all. In only a few score years, modern man will have moved beyond oxidizing hydrocarbons as a Prime Mover, reserving it use for chemical feedstocks for polymers and pharmaceuticals.

HarveyD

Good points Stan. We worry TOO much about ill defined peak oil and future e-energy shortages that will never happen.

SJC

regeneration rate of hydrocarbons

Are you implying that oil wells fill themselves back up during a human lifetime? It took millions of years to create that oil and I do not think those wells are filling back up anytime soon.

HarveyD

Not really, but we may not need that stuff forever. There are many other cleaner more sustainable energy sources.

CelsoS

I think Stan is referencing Thomas Gold's (http://en.wikipedia.org/wiki/Thomas_Gold) paper "The Deep, Hot Biosphere" http://www.ncbi.nlm.nih.gov/pmc/articles/PMC49434/, or his the book "The Deep Hot Biosphere: The Myth of Fossil Fuels" http://www.amazon.com/Deep-Hot-Biosphere-Fossil-Fuels/dp/0387985468.

AFAIK, its just an hypothesis right now, no one knows if it's really true, and then at what rate, and with what consequences hydrocarbon reservoirs could be replenished. That's a multi-Trillion Dollar question.

It deserves to be scientifically investigated and cleared over the years, but I would not bet next generations or humanity's fate on this. I might be wrong, never been fond of betting.

Reel$$

"In only a few score years, modern man will have moved beyond oxidizing hydrocarbons as a Prime Mover, reserving it use for chemical feedstocks for polymers and pharmaceuticals."

Stan, I think we can lower the score. It is all about to change. Unfortunately to some degree by force, as old school has refused to share...

Energy is ubiquitous throughout the universe and man will make use of it sooner than later.

Roger Pham

@Stan and Celso,

So we are not going to run out of oil, after all! Oil is continously produced by deep thermophillic bacteria!?*#$%... Well and good...Oil may be plentiful, but the US consumers and the economy cannot afford to be price gouged every few years, like in 2008,leading to major economic collapse, so that Big Oil can line up their pocket book with hundreds of billions USD of profits.

It's time to move on to solar and wind energy that can be harnessed almost everywhere and that no one can have monopoly to these natural resources. We have the technology and we have the man (and women) power of all those who are currently unemployed or under-employed. We just need good leadership and strong will to simultaneously fight unemployment, restore the economy, clean up the environment, halt global warming, and bring about energy security.

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