Coal-to-liquids (CTL) is a suite of technologies that convert coal to a liquid fuel such as synthetic diesel. Coal is a widely available, abundant, and relatively inexpensive form of energy. However, coal production constraints, infrastructure and externalized costs, and high greenhouse gas emissions may limit CTL’s contribution to the U.S. goal of energy security.
CTL technologies were developed in the 1900’s spurred by the necessity of domestic fuel production for Germany during WWII and for South Africa during its international isolation in the Apartheid era. Proponents argue that low-cost coal can make CTL products commercially viable when oil prices are high. During the high oil prices of the 1970’s numerous additional techniques and processes were developed to more efficiently turn coal into liquid fuel. Currently, only South Africa, with plenty of coal but little oil and gas, uses CTL to meet a share of its transportation fuel needs. More importantly, CTL offers countries like the U.S. and China the perceived opportunity to insulate themselves from unstable international oil markets.
The major drawback of CTL technology, besides high cost, is the increased carbon dioxide emissions and high water requirements. Lifecycle CTL greenhouse gas emissions are nearly double those of conventional oil. Shifting any sizable portion of fuel usage to CTL necessitates a carbon mitigation strategy to ensure that climate objectives are met. Carbon capture and sequestration (CCS) can be used during CTL production, but would only offset a portion of the increased carbon emissions. Final greenhouse gas emissions using CTL with CCS would still be equal to or higher than using standard petroleum, while costs would rise significantly.
Some believe that CTL is economically viable when crude oil prices reach $35 per barrel or more, although this has not been demonstrated in transparent, commercial settings. Capturing a portion of the process-related CTL carbon dioxide and sequestering it underground would further increase costs. China is currently constructing several large CTL facilities and experimenting with a largely untested version of the technology (direct liquefaction). It is now widely acknowledged that China will have difficulty deploying CTL on a massive scale unless the issue of water usage is resolved (each gallon of CTL product requires 10 gallons of process water). In its “high scenario,” the Energy Information Administration forecasts that 1 percent of U.S. oil needs will be met with CTL fuels in 2025. If oil prices increase dramatically or major breakthroughs in CTL technologies occur, CTL’s potential to contribute could increase significantly.