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The American Prospect

Flirting With Liquid Coal

Democratic Primary Voters Want a Clean Break With The Bush Administration's Focus on Subsidizing Dirty Energy. The Party's Two Front-Runners for President Might Want to Listen Up.

Last week, Barack Obama and Hillary Clinton showed that despite efforts to build support with progressives suspicious of their close ties to corporate America, when it comes to real decisions and real votes, big business will often come first. This was reaffirmed when the two senators voted for an amendment to the energy bill offered by Montana Democrat Jon Tester that would have provided $200 million in grants and $10 billion in taxpayer loans for projects to turn regular old solid, black coal into new, shiny liquid coal to power cars and trucks. The coal companies love the idea, because replacing even 10 percent of gasoline with liquid coal would spur a 43 percent increase in coal mining, according to environmental groups. And proponents have tried to put coal liquefaction in the politically appealing framework of "energy independence" -- helping reduce our dependence on foreign oil.

Alas, there are a few problems. At the top of the list is the fact that turning solid coal into liquid fuel requires massive inputs of energy. Indeed, liquid coal currently produces double the greenhouse gas emissions that regular gasoline does. As the U.S. Public Interest Research Group's Ben Dunham noted to the Prospect, global warming -- which technologies like liquid coal will only accelerate -- will eventually melt some of the polar icecaps, leading to a 20 foot rise in sea levels inundating millions of acres of land across the globe. "Liquid coal would lead to liquid Florida, liquid Louisiana, and liquid low-lying areas around the world," Dunham said. (Full disclosure: U.S. PIRG formerly employed the author.)

Before the vote on the amendment, liquid coal backers had been peddling the argument that, with enough taxpayer subsidies, they could capture much of that dangerous carbon dioxide and bury it deep underground, keeping it safely out of the atmosphere for decades. "It runs cleaner than conventional fuels from petroleum, producing slightly less greenhouse emissions than conventional diesel when used in the same engines," said liquid coal industry representative John Diesch in testimony to a Senate Finance subcommittee in April. "When compared to similar vehicles with gasoline internal combustion engines, there is about a 25 percent reduction in greenhouse gas emissions."

But not everyone believed Big Coal's promises that it would capture those nasty greenhouse gas emissions and bury them underground. In an attempt to assuage those concerns, Tester (a liquid coal backer) proposed his amendment requiring that any project that received taxpayer support had to produce at least 20 percent less global warming pollution than gasoline over the lifetime of the product, and initially capture at least 85 percent of the carbon dioxide.

Faced with the possibility that they might actually have to live up to their promises, the Coal to Liquids Coalition (an unholy alliance between the coal industry and some elements of the AFL-CIO) suddenly changed its tune. In an about-face, the members opposed Tester's amendment, despite the subsidies windfall it promised. Rather than touting their ability to make liquid coal clean as they had in their Senate testimony, industry officials now said it would be unfair to require them to live up to the environmental standards they themselves had promoted.

"Imposing an unrealistic standard that specifically requires both a 20 percent lifecycle reduction in greenhouse gas emissions and an 85 percent capture of greenhouse gas emissions would all but end any chance America has of using CTL fuels to reverse our growing reliance on foreign energy," the Coal to Liquids coalition wrote to New Mexico Senator Jeff Bingaman. "A '20/85' standard would require the use of technologies that have never been fully demonstrated and would make it virtually impossible to secure the financing needed to construct the first fleet of domestic CTL plants."

This was an admission that all their grand promises about the potential of "clean" coal -- including their testimony to the Finance subcommittee -- were just plain lies. Even with $10 billion in low-interest taxpayer loans, and $200 million in subsidies, they doubt their own ability to actually make coal clean. The switcharoo didn't bother pro-coal Republicans, however, who followed in lockstep with the industry and voted against the Tester amendment.

Despite the fact that the Tester amendment was too clean for the liquid coal industry and pro-coal Republicans, it's far from clean enough to deserve the support of progressives who care about the environment - which is why Senate environmental champions like Barbara Boxer and John Kerry (and 16 other Democrats) helped defeat it. Providing such high levels of taxpayer financing for liquid coal would still likely draw enough interest to spur the construction of several liquid coal plants, even if that interest comes primarily from coal "wild-catters" willing to tolerate lower levels of return and greater risk than the coal industry's major players.

And despite the Tester amendment's demand that liquid coal produce less global warming pollution, its indirect effects would have neutralized those benefits: by massively increasing the demand for coal, it will raise prices, making even dirty coal projects more financially attractive to investors. That would have environmental impacts that reach far beyond global warming.

Already, soot and smog pollution from coal kills more than 30,000 Americans every year; thousands of mountaintops in West Virginia and elsewhere have been destroyed for coal mining, with all the waste dumped into streams and rivers; and both coal and liquid coal plants require massive amounts of fresh water to operate, all of which comes at the expense of the rivers and lakes that provide wildlife habitat and clean drinking water to millions of Americans.

So why are Hillary Clinton and Barack Obama so willing to back the coal industry, despite its widely known dangers? Neither has received major financial backing from the coal industry. Obama, however, was the Senate's most enthusiastic Democratic backer of subsidies for liquid coal -- largely to promote the southern Illinois coal industry (of less apparent concern are the 1700 Illinoisans who die as a result of pollution from coal fired power plants every year, according to EPA consultants Abt Associates).

Until it started to attract derision in the blogosphere, Obama even prominently featured a supporting statement on the "energy issues" page of his campaign website from the coal industry's top lobbyist, Kraig R. Naasz, applauding Obama's "leadership" in helping "make greater use of our most abundant and affordable domestic source of energy: coal." But Obama recently backed off his support for liquid coal after the environmental movement and the media shined an unwelcome spotlight on his him. After weeks of abuse from environmentalists, he issued a "clarification" that he would support only coal to liquids projects that met the kind of standards laid out in the Tester amendment. That won him praise from the environmental movement, but his vote on the Tester amendment has only revived the criticism that he's too willing to sacrifice the environment for home-state polluters. (Obama also voted for Bush's heavily polluting 2005 energy bill, largely because of the subsidies it included for the ethanol grown in Illinois).

Clinton's reasons for supporting liquid coal are harder to divine. Like Obama, she's compiled a generally pro-environment record, but also like him, she's surrendered to polluter lobbyists on some key issues -- for example, supporting the logging company International Paper in burning highly toxic tires at a major facility in upstate New York. But there are no major coal mining interests in New York (outside of the New York-based hedge funds who own a large share of the power and mining industry). Nevertheless, she's consistently supported subsidies for coal, if not with the gusto that Obama has brought to the cause. She usually explains it by touting what she says is coal liquefaction's ability to reduce America's reliance on foreign oil (economists doubt this proposition; liquid coal is so expensive to produce that it's likely to only displace domestic sources of oil, which have significantly higher production costs than Saudi, Venezuelan or African oil). Still, she seems to feel divided on the issue; when the Senate voted on the Tester amendment, she stood on the Senate floor and waited until almost all the other senators had cast their votes before announcing her support.

In contrast, all the other major Democratic presidential candidates are on record opposing liquid coal subsidies. A spokesman for John Edwards, for example, explained the candidate's opposition to liquid coal: "He believes that federal resources should support research into clean renewable energy." This is an important point. The cost of reducing greenhouse gases from carbon-rich coal will always greatly exceed that of producing that energy from sources that are clean to start with, like wind and solar power. Indeed, wind power already often out-competes new coal plants on a financial basis. With clean energy still in relative technological infancy, huge efficiency gains remain on the table to be snapped up for relatively little investment. A dollar of government investment in clean energy is almost sure to yield a greater eco-bang for the buck than any additional subsidies for King Coal -- no matter how green the end product.

The good news is that the Senate seems to have recognized that -- rejecting the Tester amendment 61-33 (though its final energy bill did include significant subsidies for solid coal technologies). However, the Senate also left out some measures that would really have cut into dirty electricity generation, such as a requirement that electricity companies produce 20 percent of their energy from clean sources, and a measure that would have redirected billions in subsidies from oil to cleaner fuels. It's unclear now whether President Bush will support the energy bill: Despite all its shortcomings, it will still cut into the profits of some of his biggest contributors in the oil and coal industries.

For that reason, it's unlikely that any energy legislation passed in 2007 will be the final word on America's energy future -- or the planet's well-being. Polls indicate that pro-environment Democratic primary voters want a clean break with the Bush administration's focus on subsidizing dirty energy, which could pose risks for front-runners Clinton and Obama -- and create a big, green opening for one of their opponents.

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Glenn Hurowitz

Glenn Hurowitz is a senior fellow at the Center for International Policy, where he works to protect tropical rainforests and on other environmental issues. In addition, Glenn is highly involved in politics and is the author of the critically acclaimed book Fear and Courage in the Democratic Party. Glenn's writing has appeared in The New York Times, The Atlantic, The Nation, Politico, The American Prospect, and many other publications and he is a frequent contributor to the online environmental magazine Grist.

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