The Ergosphere
Wednesday, December 22, 2010
 

Coal-to-liquids: claims vs.reality

It's quite common to see claims that coal-to-liquids is capable of replacing the USA's imports of oil.

Reality check:
  1. Net US imports for 2009 ran about 9.7 million bbl/day.
  2. At 6.1 GJ/bbl this is 21.6 EJ (20.5 quads) per year.
  3. If refineries convert crude to product at 90% and CTL operates at 45% efficiency, it would take 43.2 EJ (41.0 quads) per year of coal to replace oil imports.
  4. The USA only produced 19.8 quads of coal in 2009.
Using CTL to replace oil imports would require more than tripling coal production.  This is Not.  Gonna.  Happen.  PEVs can happen, and we should make them happen just as fast as we humanly can.
 
Comments:
That's a big increase in coal production! Although to be fair and from a historic perspective, the same thing has happened the last 50 years, US coal production almost tripled from the 60's to today. The two big unknowns are strong climate regulations and possible coal peaking. At this point I'm not so sure about either, though.
 
The powers that be, both political and business powers, desperately want to avoid having to accept the premise that the transportation fleet must be replaced and the replacement vehicles will be significantly more expensive than those that are replaced. Ditto for the probable result that transportation patterns will change significantly.

They are willing to grasp at any straw -- coal-to-liquids, gas-to-liquids, biomass-to-liquids -- that would let transportation continue to be based on inexpensive internal combustion engines and long-range fuel capacity.
 
I'm not sure that the PTB in this case are anything other than the oil industry.  All the diversions into dead-end schemes (corn ethanol, coal-to-liquids, hydrogen) can be explained by oil money putting its thumb on the scales of the selection processes and helping buy influence for other interests which align (e.g. Big Ag).

If you look at the scheming behind climate-change denial and the time it took to unravel the connections, this appears all too plausible.
 
We probably don't need to replace all of the oil imports by coal to liquids.

Is there enough coal liquids potential to supply *only* the current diesel based big-rig trucking fleet?
(while the rest of the fleet transitions to electric or plug-in-hybrid)

AND is there enough gas-to-liquids capability to close the gap between EV production capacity and what is actually needed to eliminate the corresponding decline of the transportation fleet by oil production declines?

That would be an interesting pair of questions to answer...
 
"Is there enough coal liquids potential to supply *only* the current diesel based big-rig trucking fleet?"

As I've written elsewhere, I think the appropriate number of CTL plants is zero.  A major chemical plant like CTL is an investment which lasts on the order of 50 years.  Not only do we need to make the transition in under 20 years (leaving a huge stranded asset), there are much cheaper and more efficient ways of using coal and NG.  LNG is relatively compact and can be co-fuelled into diesel engines with simple, known technologies; existing coal plants can burn coal to replace the electricity we'd otherwise generate with the NG.  One's cheap, the other we already have.

"AND is there enough gas-to-liquids capability to close the gap between EV production capacity and what is actually needed to eliminate the corresponding decline of the transportation fleet by oil production declines?"

Converting NG to liquids at 45% efficiency makes no sense compared to just burning the NG.  Gas carburetors work well enough to make vehicles functional, and the fuel system lasts about as long as the vehicle.  Once the vehicle is replaced with an EV or PHEV, you don't need the fuel supply.
 
Poet,

You're thinking like an engineer and not like a manager or a consumer.

Witness your comments:
"Converting NG to liquids at 45% efficiency makes no sense compared to just burning the NG."

From an energy efficiency point of view yes I agree. But see your next comment to see why it won't go that way:

"Once the vehicle is replaced with an EV or PHEV, you don't need the fuel supply."

Two words: Sunk Costs.

Although it's more *efficient* from an energy point of view, *somebody* has to spend the money to either replace the vehicle or replace the source of the fuel.

That is effectively the choice.

Now ask yourself this: is it
A. Easier for 10 million Americans to replace their vehicle every year with a more expensive electric vehicle in a bad economy or
B. Easier for some connected rich individual to get venture capital for a plant that will be guaranteed high profits due to declining availability of the fuel it's going to be producing.

There's *always* the profit motive to take into account.
 
As a consumer, I don't expect to hold a vehicle much longer than 10 years; it'll be worn out.  I don't care what it will cost to run it then, I care what it'll cost to run the next one.

As a consumer, I don't want to have to pay whatever inflated price oil is going for today to get to work.  If the US$ is depreciating, I especially want my energy supplies to come from US sources instead of imports or be priced at the margin by those imports.  An engine which dual-fuels on CNG is a possibility.  PHEV/EV is another.

CTL will never get enough market share to take pricing power away from OPEC; people who buy CTL fuel will not get a discount.  NG sells at a very large discount over oil, so CNG and LNG can be expected to be cheaper (though how much cheaper is a good question; I expect $8/mmBTU soon, but that's still about half the price of crude).  Electricity is especially cheap.  Not only is coal->electricity->battery->wheels much more efficient than coal->liquids->engine->wheels, electric prices are regulated and there is a much wider variety of sources for electric energy.  As a consumer, going electric limits my downside risk.  The cost of going electric is going to fall rapidly over the next few years, as several doublings of cumulative battery and powertrain production occur and the industry runs down the experience curve.

The issue of cost goes back to CTL as well.  If people abandon liquid fuels or environmental laws get stricter, CTL plants can become stranded assets.  Investors will demand a higher return to compensate for the risk, which is passed on in the cost of the product.

"is it
A. Easier for 10 million Americans to replace their vehicle every year with a more expensive electric vehicle in a bad economy...
"

Do you realize that the same argument has been made over CAFE regulations for the past 30 years, and the resulting paralysis over essential increases in fuel taxes is directly responsible for the situation we find ourselves in today?

Americans expanded their vehicles and their houses immensely over the last few decades.  The hysteria lobby treats going back the other way like a crime against humanity; we need to ignore the special interests (mostly the oil companies) and do what we should have done from '70's.

"Easier for some connected rich individual to get venture capital for a plant that will be guaranteed high profits due to declining availability of the fuel it's going to be producing."

I don't care for policies which create sinecures for rich people.
 
I think you're missing the point I'm making poet.

I'm not denying that you're right and what *should* be done if you're focussed strictly on the price of oil and not wanting to use it.

What I'm pointing out is that there are multiple stakeholders involved here and multiple factors. I'm emphatically NOT a cheerleader for the status quo but we need to be realistic here.

The average price conscious consumer doesn't only look at the price of gas. The total cost of the vehicle PLUS gas is what they look at. If they are paying $120 a month for gas now and $300 for their vehicle now, then if they pay $240 bucks a month for gas and $300 a month for the vehicle, they're STILL cheaper than $800 a month for the current generation of electric vehicles.

That won't stop *me* from buying an electric vehicle (because I can afford it) and can justify it to myself by other means than cost.

And on the other hand, yes, we should have voted Jimmy Carter back in and backed his policies.

But we *didn't*.

So now those with the money (as it ever was) still want to make a return. (Project Better Place notwithstanding) they are not interested in saving the world or getting off of oil. Look at Boone Pickens. His plan was not too too bad all things considered, but it didn't fly.

What you HAVE TO deal with is sunk costs and big investors who want a return. They have various projects to look at. If CTL makes more money for them compared to your project, then damn straight it's CTL that will get the funding regardless of whether it's 2X more efficient to burn the coal and power electric cars with the electricity.

So you have me all wrong I'm afraid, I'm pointing out how things ARE (not how I want them to be) and how we get from where we are to where we want to be.

Regardless of your position and your beliefs, the big oil lobby and those with sunk costs are going to have to be given a piece of the pie. I personally would rather we switch to all electric with a massive push and RIGHT NOW but it's not going to happen.
It's just the way thinks work.

So the best we can do is ask, what's the least painful way for ALL stakeholders (and I'm including those who can't afford to upgrade the electric vehicles at current prices as well as the owners of fossil fuel plant) to get to the right place.

Try not to let your views get in the way of sight of the goal (avoid too much downside from peak oil depletion over decades) rather than solve 100% the entire downslope NOW.
 
"The average price conscious consumer doesn't only look at the price of gas. The total cost of the vehicle PLUS gas is what they look at."

The Volt is leasing for $350/month.  Someone with a 35-mile round trip commute on electricity will save roughly a gallon a day over the Volt's gas-powered economy, and over 1.5 gallons/day over the national average.  That's $60-$80 per month at $3/gallon, offset by maybe $25 in electricity at off-peak rates.  If gas hits $5/gallon the avoided fuel cost rises to $100-$130.

The Leaf leases for $349/mo.  Potential savings are greater because the electric range is more than twice the Volt's, but it depends on the user's route.

"What you HAVE TO deal with is sunk costs and big investors who want a return."

I don't see them getting very far; Rentech has been pushing CTL and polygeneration for a while, and they're just a bit player.  I do see mountain-top removal mining going away.  Besides that, it doesn't change the physical realities.  A massive expansion of coal mining isn't in the cards.

"Regardless of your position and your beliefs, the big oil lobby and those with sunk costs are going to have to be given a piece of the pie."

You mean, the Arab oil states and Hugo Chavez?  It won't take much publicity of how they hate us to defeat their political power; after all, all they've got is money, not votes (and Chavez is losing his money rapidly).

"what's the least painful way for ALL stakeholders (and I'm including those who can't afford to upgrade the electric vehicles at current prices as well as the owners of fossil fuel plant) to get to the right place."

I know that's not what you meant, but it sounds an awful lot like a vision of everyone holding hands and singing kumbaya.  When stakeholders have directly opposite interests (like oil companies and states vs. US citizens), it's unlikely in the extreme.

I've long been behind a petroleum/carbon tax and 100% citizen rebate.  The rebate could be structured to give the low-income enough support to continue to buy necessary fuel until EVs come down far enough or appear on the used market.  The problem with this isn't technical, it's political; the special interests demand rent from anything we do in return for letting it be done, and a 100% rebate creates no diversions to their pockets the way e.g. emissions trading does.

I fear what we are doing is creating the conditions for a dictatorship, because a dictator can make examples of enough of the rentiers to get the rest to shut up and keep out of the way.  The alternative is enough of a popular uprising to force the pols to do the right thing no matter who bought their way into office.  The Tea Party has membership, but it's going the wrong direction on taxes and incentives.

"Try not to let your views get in the way of sight of the goal"

Believe me, if I could see things your way I'd probably agree.  The problem is that this nation is BROKE, and every wasted investment means more lost time and more debt.
 
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