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China plant to begin coal-to-liquid production

| Tuesday, June 24, 2008

One of the world's largest coal producers will finish construction this year of the first coal-to-liquid plant built in 40 years -- but the $1.5 billion project isn't located in America -- it's in China.

The Shenhua Group will begin producing diesel fuel from coal later this year at the facility, located in Inner Mongolia, about 375 miles west of Beijing. The plant will convert coal into some 22,000 barrels of crude oil-like liquid per day, of which 70 percent will be pure diesel fuel.

Shenhua is years ahead of U.S. coal-to-liquid proponents, yet it still took the company 10 years to move from planning to production.

"China is not talking about coal-to-liquid -- it's doing," said Qingyun Sun, associate director of the U.S.-China Energy Center at West Virginia University.

Sun addressed 60 attendees to CTLtec Americas 2008, a two-day coal-to-liquid conference sponsored by Singapore-based Centre for Management Technology. The conference began Monday and continues today at Downtown's Omni William Penn Hotel.

"The Shenhua project is one of seven coal-to-liquid demonstration plants currently being developed in Western China, at a cost of some $12 billion," Sun said. Three facilities are Shenhua projects.

Sun listed the reasons why China is so heavily involved in coal-to-liquid, and those reasons, ironically, sound much like those offered by proponents in the United States.

The coal-to-liquid push is due to China's desire to be energy secure, to be able to use its most abundant fuel in an environmentally clean way, and due to logistical problems in trying to move coal around the country to where it's needed.

Peabody Coal Senior Vice President Fredrick D. Palmer said coal will be the basis for a new industrial revolution, likening it to the nation's first industrial revolution of the mid 19th century, in what's needed to satisfy future energy needs.

"Economic growth requires a new energy industry revolution, with trillions of dollars and millions of jobs invested in new coal power plants, coal-to-liquid and coal gasification, oil and natural gas, oil sands, nuclear plants, carbon sequestration, gas-to-liquid, oil shale and enhanced oil recovery processes," Palmer said.

But coal-to-liquid processing is not embraced by everyone. The Philadelphia-based Clean Air Council is holding a news conference today at the Omni William Penn to rebut the positives the CTLtec conference espouses.

"From a carbon point of view, CTL is a double whammy," said Clean Air Council Executive Director Joe Minott. "There's the carbon released during the processing, plus the carbon released when the product's used," Minott said.

Minott discounted the need for tax credits or other subsidies based on proponents' argument that coal-to-liquid is an unproven technology.

"That's ridiculous," Minott said. "The process has been around since World War II. " Minott is referring to the Fisher-Tropsch process, developed by the Germans during World War II to take advantage of the country's coal deposits when crude oil and diesel fuel supplies were cut off by the Allies.

Minott said the idea of putting huge sums of federal, taxpayers', funds into coal-to-liquid and carbon sequestration, which is the burying of carbon emissions in empty crude oil locations and salt domes, isn't a good first step.

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