hydroconversion operations where their solubility characteristics could improve the operability of hydrocarbon units. They could also be combined with direct coal liquefaction. When made from low-sulfur coal, pyrolysis liquids have limited potential as a substitute without refining for petroleum fuel oil, and an ongoing CCT program (ENCOAL Mild Coal Gasification project) is aimed at this market. Pyrolysis liquids have traditionally been a source of coal tar chemicals, and the DOE Mild Gasification program is aimed, in part, at this market (see below).

The budget for the DOE Advanced Clean Fuels Program within the FE coal R&D activity underwent a 30 percent reduction between FY 1993 and FY 1994, and a further 45 percent reduction is proposed for FY 1995 (see Table 2-1). These budget decisions reflect a diminished commitment to the use of coal for production of clean liquid fuels by either indirect or direct liquefaction. Of particular note is the proposed reduction of 84 percent in FY 1995 funding for Advanced Research and Environmental Technology; programs in this area are expected to lead to improvements in efficiency and cost reductions for liquid fuel production (see Chapter 9).

COAL REFINERIES AND COPRODUCT SYSTEMS

A coal refinery or coproduct system is defined as ''a system consisting of one or more individual processes integrated in such a way as to allow coal to be processed into two or more products supplying at least two different markets" (DOE, 1991). The concept resulted from the realization that coal must be processed in nontraditional ways to meet the needs of potential expanded markets. A key feature of the coal refinery concept is the production of more than one product form, for example, steam and electricity or fuel gas and electricity. The concept can be generalized to include cogeneration of steam and electricity, production of fuel gas for both industrial heat and electricity generation, production of syngas for manufacture of chemicals and/or fuels, capture and use of pyrolysis tars for chemicals and fuels manufacture, and production of specialty cokes.

Cogeneration

Cogeneration was initially practiced in energy-intensive industrial plants to meet internal needs for steam and electricity. Steam and electricity coproduct systems are now a major commercial activity. With few exceptions cogeneration facilities are designed to use natural gas because of the lower investment compared to a plant that uses coal. As natural gas prices rise to a level that renders the higher investment in coal facilities economically advantageous, advanced cogeneration systems, where the first step is gasification, could also supply coal liquids, fuel gas, and syngas made from coal. Currently, there appears to be ample



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