Word nears on 'liquid-coal' plant

HARRISBURG - It has been more than a decade since John W. Rich Jr. got the idea to build the nation's first plant to convert coal into diesel fuel on a mountaintop in Schuylkill County.

Now, after years of delays, Rich is close to finding out whether he will receive the approvals he needs to jump-start the project. Just a year ago Rich's plans appeared destined for death from a case of fickle government bureaucracy.

By Jan. 31, the U.S. Department of Energy is expected to decide whether to lend Rich $100 million. The money would go a long way toward securing the private financing needed to finally put shovel into ground to build the $1 billion facility on 75 acres that Rich owns in Gilberton, about 100 miles northwest of Philadelphia.

Rich says the realization of his dream would constitute a much-needed step in the effort to reduce the nation's reliance on foreign oil. He has won backing from a number of heavyweight Pennsylvania politicians, despite objections from many in the environmental community to liquid coal.

"I never would have thought that with oil close to $100 per barrel, we'd be faced with the kind of scrutiny we've been under for so many years," Rich said last week.

"But I never thought about giving up. I think it's more imperative now than ever."

Rich, a coal magnate and big political donor, says his legacy should and will be the coal-to-diesel plant.

The process involves a technology known as FischerTropsch, developed and named after German scientists in the 1920s and used during World War II in Germany and several decades later in South Africa.

In addition to South Africa, which still has large-scale liquid-coal plants, China plans several such facilities, although the Associated Press reported last summer that the Chinese government was considering abandoning the effort because of concerns over cost and energy efficiency.

Here is how liquid coal works: Coal waste is converted into a mixture of hydrogen, carbon monoxide and carbon dioxides. The carbon and other contaminants are then removed, and the "cleaned" product is turned into liquid hydrocarbons to produce zero-sulfur fuel.

Rich says his "superior project" would produce cleaner-burning fuel.

Elected officials, at least in Pennsylvania, seem to agree.

Gov. Rendell has frequently touted the project and has helped assemble a coalition of government and private businesses that could purchase about half the product generated by Rich's plant for the next 10 years.

Also supportive: U.S. Sens. Arlen Specter (R., Pa.) and Bob Casey (D., Pa.) and U.S. Rep. Tim Holden, a Democrat who represents Dauphin, Lebanon, Schuylkill, and parts of Berks and Perry Counties.

"It's a very novel approach to utilize [waste coal] and move toward independence from OPEC oil," Specter said, "and it's more important now than when it started because the price of oil has gone up so dramatically."

Rich's plant would generate about 60 million gallons of fuel a year, a fraction of the 141 billion gallons of gasoline the United States uses annually.

In the environmental community, liquid coal is considered a bane.

Environmentalists say converting waste coal into liquid releases harmful air pollutants and contributes to global warming.

According to an environmental impact study by the U.S. Department of Energy, Rich's plant would emit trace amounts of mercury, benzene, hydrochloric acid and arsenic, among other pollutants, though the study says "no direct threat to human health" is expected.

Emissions of carbon dioxide, a greenhouse gas that contributes to global warming, would be high. From production to transport to use of the gas, liquid coal could result in 80 percent more greenhouse gas emissions than from conventional petroleum-derived fuels, according to the study.

For environmentalists, such figures are troubling.

"Our point is, there are only so many dollars to be spent on alternative-energy technologies, and we should be spending them on the most cost-effective and cleanest," said Nathan Willcox, an energy and clean-air advocate for PennEnvironment.

Rich said he believed it was unfair to single out carbon dioxide without looking at his plant's emissions as a whole.

He also said the plant could use a mixture of coal waste and biomass, such as wood and animal waste, instead of just coal waste, which would reduce the amount of carbon dioxide released.

"The bottom line is, nothing threatens the environment more than this kind of continued fighting," he said.

Rich has been seeking public backing for his project almost since its inception. Because his proposal has no precedent in the country, banks have been reluctant to lend money without some guarantees.

In 1999, the Pennsylvania legislature approved and Gov. Tom Ridge signed almost $47 million in tax credits for the proposed plant.

Several years later, language was inserted into a federal bill calling on the U.S. Energy Department to invest in clean-coal technology. Rich's project was tapped to receive some of that money, the $100 million.

The money was earmarked for Rich's project in January 2003. But early last year, the Bush administration yanked it. Energy Department officials said they were frustrated with how slowly Rich was moving to address concerns, key among them obtaining private financing.

Specter, Casey and Rendell stepped in and urged the administration to reconsider, and that is where the project stands today.

Rich says he hopes the decision will be in his favor.

"We've had so many monkey wrenches thrown our way," he said, "but I'm optimistic. We're going to continue to push this no matter what."