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COAL TO LIQUIDS

Section 526

Section 526 of the Energy Independence and Security Act of 2007 (H.R.6)1 provides:

No Federal agency shall enter into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility related use, other than for research or testing, unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.

This provision assures that federal agencies are not spending taxpayer dollars to promote new fuel sources that will exacerbate global warming. It was included in the legislation in response to proposals under consideration by the Air Force to develop coal-to-liquid fuels, but applies to all federal agencies.

Air Force officials have stated repeatedly that the Air Force does not intend to pursue the development of coal-to-liquids fuels with higher greenhouse gas emissions than conventional fuel. Absent application of advanced control technology, coal-to-liquid fuels are estimated to produce almost double the greenhouse gas emissions of the comparable conventional fuel. Section 526 applies to fuels derived from unconventional petroleum sources such as tar sands, which produce significantly higher greenhouse gas emissions than are produced by comparable fuel produced from conventional petroleum sources.

1 [see also:Carbon Neutral Government Act of 2007 (H.R. 2635)--Section 207, Procurement and Acquisition of Alternative Fuels]

Source: Henry Waxman Letter to Carl Levin & John McCain

Crow Tribe Signs CTL Contract

Aug 9 2008 - - The 12,000 member Crow Tribe in Montana has signed a 50-year development deal with American Energy Company, a subsidiary of Australian Energy Company, to build a $7 billion plant to convert coal into liquid diesel fuel. It would be among the first such projects in the nation. The plant will be called 'Many Stars' and initially would produce 50,000 barrels a day of diesel and other fuels. Future expansions of the Many Stars plant could eventually bump up production to as much as 125,000 barrels of fuel a day. Coal for the project would come from a mine yet to be developed by the tribe on the reservation. Approximately one ton of coal would be needed for every barrel of fuel produced by the plant.

The agreement calls for the Crow to receive up to 50 percent of profits from the plant after investors in the project recoup their costs. Total proceeds to the tribe could eventually top $1 billion annually — a sum that dwarfs the Crow's current annual budget of about $26 million. The Crow reservation sits atop some of the nation's largest coal reserves — an estimated 9 billion tons of recoverable resources. Yet only limited mining has occurred, and the tribe's economy remains hobbled by high rates of poverty and unemployment.

No large-scale coal-to-liquids plants have been built in the United States, although several are proposed or on the drawing boards in Wyoming, Ohio, West Virginia and elsewhere. South Africa is home to the only existing commercial-scale coal-to-liquids plants, built during the apartheid era after oil imports into the country were blocked by international political sanctions. (Source: Associated Press)