Coal Fuels A Debate Over Obama

The Bush administration targeted Obama, banking on his rhetoric about thinking outside party lines and his concern for Downstate Illinois. But in the end, he held firm in opposition, saying the bill would worsen pollution while not helping the Illinois coal industry as much as claimed. The bill died in committee on a tie vote. Reaction was swift.

"All of [his] dialogue and rhetoric during the campaign had been pro-coal, and we saw this as a pro-coal initiative," Carbondale Mayor Brad Cole (R) said.

Three months later, Obama saw an opportunity to win back goodwill. He attached a provision to the 2005 energy bill for $85 million over five years to test using Illinois coal to produce transportation fuel.

Converting coal to a diesel-like transportation fuel was pioneered by German scientists in the 1920s and put to use by two regimes without easy access to oil: Nazi Germany and the apartheid government of South Africa. There are no coal-to-liquid plants in the United States, mainly because of the enormous cost -- about $4 billion per plant.

But an expanding list of mining companies, investors and politicians in coal states say that with the cost of oil riding high and concerns growing about dependence on autocratic oil-producing nations, coal-to-liquid's time has come. It produces twice the carbon dioxide emissions of petroleum, but, proponents say, if the emissions produced in conversion were captured and stored underground, coal-to-liquid would produce hardly more greenhouse gases than oil.

"We can find the balance," said West Virginia Gov. Joe Manchin III (D). "When you have 60 percent of your oil coming from nations that aren't friendly to the U.S., why continue to go down that road and put yourself in jeopardy?"

Environmentalists reject this. Carbon capture and storage is years from being proved doable on a large scale, they note, and even if it is found feasible, it will be very expensive. It makes far more sense to invest in emissions storage for a new generation of coal-fired power plants instead of spending billions for a transportation fuel that produces as much emissions as petroleum, they say.

"Even if it does work, we're no better off," said Steven Bantz, an analyst with the Union of Concerned Scientists.

Obama's support for exploring coal-to-liquid drew little notice at first. But in April 2006, he was approached by Sen. Jim Bunning (R-Ky.), who was also interested in the technology. Over several months, Bunning staff member Bill Beaver and Obama energy aide Todd Atkinson drew up a package with $20 million grants for facility designs, accelerated loan guarantees, an extension of tax credits applicable to coal-to-liquid, provisions for military supply contracts and investment tax credits of up to $200 million for each of the first 10 plants to be built. Altogether, the package could be worth $8 billion.

Obama and Bunning unveiled it in January. "The people I meet in town-hall meetings back home would rather fill their cars with fuel made from coal reserves in southern Illinois than with fuel made from crude reserves in Saudi Arabia," Obama said.

The proposal drew support from, among others, the United Mine Workers of America; the Air Force, which has studied using coal to liquid in its fleet; and major coal producers such as Peabody Energy, which owns several mines in Illinois and has a contract to build a coal-to-liquid plant in East Dubuque, Ill., with Denver-based Rentech.

Environmental groups were at first reluctant to chide Obama, whose record was otherwise to their liking, but criticism gradually grew. "When our friends do things that we think are not smart, we tend to call them and talk to them about it," Sierra Club Executive Director Carl Pope said. "We thought this was a mistake. We let them know that we thought it was a mistake and why."