Liquefied coal could offer an alternative to the nation's dependence on foreign-sourced energy.

As farmers prepare to feast on the sudden demand for corn-based ethanol, another energy source is poised to pay big dividends to the economy of Illinois and other states: coal. Rising concerns over the country's growing dependence on foreign energy is driving renewed demand for coal – and Illinois is among states that have lots of it.

• The industry's resurgence may be surprising but it's unmistakable. Power plants, steelmakers and other heavy industries are increasingly turning to U.S. coal reserves, the world's largest, as a secure and affordable alternative to dwindling or costly supplies of energy.
• The biggest boost may come not from power plants, but from projects to create a significant transportation fuel supply from liquefied U.S. coal. Billion-dollar liquefaction plants, using proven technology, can produce a clean diesel fuel to offset the nation's growing appetite for foreign energy.
• From the Pentagon to Beltway think tanks, experts are clamoring for liquefied coal as a hedge against oil and gas imported from Russia, the Persian Gulf and Latin America. A growing number of policymakers and congressional leaders – worried about the almost daily turmoil in oil-rich parts of the world – are becoming believers in so-called coal-to-liquid (CTL) fuels. After all, foreign governments can't nationalize U.S. coal supplies or restrict U.S. coal shipments. 

Congress Responds
Bipartisan congressional support is growing for incentives to jumpstart the new coal liquefaction industry. Senator Barack Obama (D-Ill.) recently called for a package of loan guarantees and tax incentives to reassure investors worried that global oil prices could crash and kill the industry.

"Illinois Basin coal has more untapped energy potential than the oil reserves of Saudi Arabia and Kuwait combined," Obama said. "Instead of enriching the Saudis, we can use these reserves to bring a renaissance for Illinois coal."

Congressmen Jerry Costello (D-Ill.) and John Shimkus (R-Ill.) – who back similar legislation – have told reporters that they are determined to steer liquefied coal into the nation's energy mix. "I'm going to stake my two-year term on that success," Shimkus declared.  "I think we're going to do it."

Congressional support for incentives is needed because without federal loan guarantees, and extensions for existing energy tax breaks set to expire, the task of jump-starting a new domestic energy industry unknown in the United States will not be easy or quick.

For one thing, Wall Street is skittish about investing in a new domestic energy industry that could be vulnerable to global oil prices manipulated by the international oil cartel.

Besides, oil-rich countries are not eager for competition from U.S. coal, energy experts say. The Organization of the Petroleum Exporting Countries (OPEC) would willingly drop oil prices temporarily just to kill any domestic industry that threatens to cure America's addiction to imported oil.

Gains for Illinois
As bad as a newly resurgent coal industry would be for OPEC, it would be good news for states such as Illinois. For instance, more than half of the state sits atop the nation's largest reserves of bituminous coal, whose legacy in Illinois lingers in the names of towns such as Carbondale, Energy, Carbon Hill and Coal City.

Global players such as Alliance, CONSOL, Peabody Energy, Foundation, Arch and Drummond are especially well-positioned for a coal renaissance. But so, too, are regional firms, such as the Chicago area's Benetech Corp., a technology and services provider to coal-based power companies.

"The energy fundamentals – not temporary trends – are driving renewed interest in this resource," Benetech's CEO Ronald Pircon says.

Environmental Considerations
Ultimately, coal's rebirth in the nation's coalfields may depend on surmounting other environmental obstacles. A top priority is finding ways to capture and store carbon dioxide and other greenhouse gases from coal combustion that contribute to global warming.

Already, official skepticism from Congress about the ability of coal-to-liquid plants to capture CO2 has scuttled an initial attempt to provide incentives necessary to attract investment.

Environmental lobbyists remain opposed – regardless of federal studies showing the environmental benefits of using new clean coal technology. Tests of coal liquefication technology show that premium diesel fuel from coal is cleaner than the petroleum-based gasoline it would replace. Indeed, the coal-derived fuel would reduce emissions of regulated pollutants dramatically and producing fewer greenhouse gases even when measured on a total lifecycle basis.

But coal-based power plants are advancing over the objections of environmental activists who have opposed plans for even the most advanced clean coal plants.

For example, the Illinois Environmental Protection Agency recently approved the construction of the first-ever commercial-scale power plant using gasification technology. The $2 billion project, known as the Taylorville Energy Center, is scheduled to begin commercial operation by 2011.

FutureGen Coming Soon
A bigger prize might yet await Illinois: a state-of-the-art power plant that could be the future of electricity generation. Illinois – or Texas, the other finalist – will be chosen this fall as the coveted site for the $1.5 billion FutureGen plant.

FutureGen will be the first coal-fired power plant capable of storing greenhouse gases and with near-zero emissions of regulated pollutants. The plant will be financed and managed by the FutureGen Alliance, a partnership consisting of energy companies and the U.S. Department of Energy.

If Illinois is chosen, the plant is expected to be built downstate in either Mattoon or Tuscola.

With these technologies coming on line, energy developers and technology providers to the coal market are confident environmental solutions can be found, and soon. "Coal can be as important in the digital age as it was in the country's industrial past," Pircon says. 

Luke Popovich is a writer covering energy policy in Washington, D.C. Popovich is with the National Mining Association. For more information on this topic, send e-mails to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it