The committee recommends that an incentive program be developed and implemented that would offset the capital and operating cost risks associated with early commercial applications of technologies previously demonstrated at a commercial scale.

CLEAN FUELS FROM COAL

Coal gasification is a costly and energy-consuming first step for all advanced coal uses. Current industry and DOE development of gasification systems, notably under the CCT program, focuses on needs for IGCC power generation; significant improvements in efficiency over current commercial systems are possible. In light of the outstanding promise of IGCC systems, as well as the production needs for clean gaseous and liquid fuels, the committee considers gasification to be an important area for R&D.

The requirements for gasification systems optimized specifically for power generation can differ from gasification systems suitable for production of marketable industrial gas, synthetic natural gas (SNG), and liquid transportation fuels. For example, air-blown systems with hot gas cleanup—if workable—might be appropriate for isolated power generation facilities, whereas for other uses and coproduct systems a higher level of cleanup is generally required, and dilution by nitrogen is undesirable. The committee considers gasification systems for both power generation and fuels production to be of importance for the DOE coal program, although there is currently little DOE activity on gasifiers aimed at the latter application. Opportunities for improvement are discussed in Chapters 6 and 9, where the committee identified an important role for DOE.

The committee recommends that an expanded DOE role be established to ensure the timely availability of the most efficient and economic gasification systems for future uses of coal in power generation and the production of clean gases and liquids.

Syngas can be converted by the Fischer-Tropsch process to produce liquid fuels and chemicals (indirect liquefaction), or it can be converted to hydrogen for subsequent reaction with coal to produce clean liquid fuels (direct liquefaction). The thermal efficiencies of direct and indirect liquefaction are estimated to be 60 percent and 50 to 55 percent, respectively.

For indirect liquefaction using Eastern bituminous coal and utility financing, 2recent estimates of equivalent crude price fall between $30 and $35/bbl. Use of lower-cost Western coals is projected to reduce this cost by approximately $4/ bbl. Studies of once-through Fischer-Tropsch synthesis with coproduction of

2  

Utility financing assumes 25 percent equity and 15 percent internal rate of return. See Chapter 2 and the Glossary for a more complete discussion of financing.



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