Can Coal Become an Alternative Fuel?

Coal Industry Decline

The global coal industry has been losing steam in recent years. As world leaders have been pushing forward with initiatives like the Paris Climate Agreement, the pressure has been mounting for the coal industry. The challenges are most visible in the world’s developed countries. For example, between January 2017 and December 2019, eleven American coal companies went bankrupt, including Murray Energy, which was the biggest privately-owned coal company in the country (Moritz-Rabson, 2019). Even though developing countries like Bangladesh continue to increase energy generation from coal-fired power plants, the decline of coal consumption in North America and Europe has continued to take a toll on the global coal industry. However, as coal companies struggle to find a path forward, some energy experts say that the development of coal-based liquid fuels could keep the industry from collapsing.

In an effort to fulfill his presidential campaign promise to save the coal industry, President Donald Trump appointed a team of individuals focused on scrapping numerous Obama-era regulations related to the coal industry. In 2017, the Department of Interior rescinded a federal rule that required coal companies to pay millions in royalties for coal mines located on federal lands (Wade, 2019). Nevertheless, even with a significant rollback in regulations targeting the coal industry, the decline of coal consumption has continued to put an enormous amount of financial stress on the industry. The decline has even proven to be much faster than many energy analysts originally anticipated. Abundant natural gas reserves coupled with falling renewable energy prices have radically impacted coal’s energy market share in the developed world (Roberts, 2019).

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Coal as an Alternative Fuel

As efforts to reduce energy-related regulations have failed to revive the industry, some U.S. congressional leaders have been pushing legislation to subsidize coal as an alternative fuel to reduce greenhouse gases and climate change. Coal companies and industry lobbyists say that the development of coal-based liquid fuels would further support energy independence and a greener future. These individuals also point to the massive quantities of cheap and easily accessible coal still left on the planet as one of the primary reasons why efforts should be made to utilize this source of energy.

The 2017 BP Statistical Review of World Energy reported that there were roughly 1.1 trillion tons of proven coal reserves remaining on the planet, which would be enough to power global electricity and development needs for at least the next 150 years. Even with the decline of coal, it is still the United States’ largest source of energy for generating electricity, as well as the most abundant source of fossil fuel in the country (National Geographic, 2019).

So what are coal-based liquid fuels? Coal-based liquid fuels are developed through the process of coal liquefaction. This process converts solid coal into a mixture of liquid hydrocarbons. The liquefaction of coal can be placed into two categories: direct liquefaction or indirect liquefaction. With direct liquefaction, advanced technological approaches like carbonization, hydrogenation, and pyrolysis are used. With indirect liquefaction, the process involves gasification to convert coal into a mixture of carbon monoxide and hydrogen.

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Reducing Dependence on Oil

While some experts point to the laborious process needed to develop coal-based liquid fuels, the technology has been around since the early 1920s. In 1944, Germany’s industrial coal-based liquid fuel plants provided around 90 percent of its fuel needs during World War II (Chen et al, 2011). However, following the war, the technology was largely abandoned due to the abundance of cheaper fuel oil from the Middle East.

According to the World Coal Association, the conversion of coal into a liquid fuel may help some nations reduce pressure related to oil dependence. There are many countries around the world that have vast coal reserves but are still dependent on fossil fuel imports from the Middle East and other oil-exporting regions. Coal is now mined in about fifty countries in the world. If all of these countries were able to convert some of their coal reserves into liquid fuel, the need for oil imports could be greatly reduced. Through the process of both direct and indirect coal liquification, a wide array of liquid fuels can be produced. Coal liquids can be refined into petroleum and diesel, lubricants, synthetic waxes, and chemical feedstocks. Coal can also be used to produce liquid methanol, which is a highly versatile chemical that can be used for a variety of industrial purposes.

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South African Success

South Africa is one of the countries that is most well known for its production of coal-derived fuels. The African nation has been producing coal-based liquid fuels since 1955. Today, around 30 percent of South Africa’s diesel and gasoline needs are met through the use of domestic coal reserves (Chen et al, 2011). In the late 1970’s, the former state-owned coal company Sasol expanded its coal-related operations to include coal-based liquid fuels. The World Coal Association highlights how Sasol has produced in excess of 1.5 billion barrels of synthetic coal-based fuels and chemical products since it began its operations.

South African factories now produce roughly 160,000 barrels of coal fuels each day, which is a little more than all the businesses and residents in Utah use in a single day (Madrigal, 2009). Moreover, its products are now currently sold worldwide in over 90 countries. Sasol contributes over three billion dollars or two percent of South Africa’s national gross domestic product (GDP), while also saving the country over four billion dollars annually by offsetting the need to import more fuels from other nations. Today, South Africa still maintains the largest coal-to-liquids industry in the world.

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The Energy Policy Act

As the global demand for energy continues to increase in the future, energy experts have started to hypothesize how coal-based liquid fuels could help to meet the need for scarce natural resources. The wild swings in the price of oil has renewed interest in the development of alternative sources of fuel. The implementation of the 1992 Energy Policy Act was one of the first federal policies that aimed to both improve air quality and reduce U.S. dependence on foreign oil imports. The Energy Policy Act highlighted the need to make investments in alternative fuels through federal policy to help encourage American companies to contribute funding towards alternative fuel technology. With regards to transportation planning, the law required automakers as well as state and federal vehicle fleets to develop alternative fuel vehicles using natural gas, propane, hydrogen, biodiesel, methanol, ethanol, electricity, and coal-based liquid fuels.

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Coal Fuel Controversy

While some domestic energy advocates and coal industry lobbyists say that the development of coal-based liquid fuels should be expedited, a significant number of energy analysts and environmental experts say that there are numerous social, economic, and environmental drawbacks related to the development of coal-derived liquid fuels. The World Coal Association says that liquid fuels from coal can deliver ultra-clean transportation fuels for use in today’s vehicle fleets and produce cleaner cooking fuels to reduce indoor air pollution, while also providing significant reductions in greenhouse gas emissions from coal (WCA, 2006). On the other hand, studies conducted by the Environmental Protection Agency and the U.S. Department of Energy have concluded that coal-based liquid fuels could more than double life-cycle carbon emissions when compared to those emitted by traditional petroleum-based fuels (Chen et al, 2011).

Environmental organizations like the Natural Resources Defense Council have been adamantly opposed to the development of coal-based fuels. In order to combat attacks from environmentalists, the coal industry has been spending millions of dollars in lobbying and has established key allies in the form of U.S. congressional leaders, organized labor unions, major airlines, and even the U.S. Air Force (Andrews, 2007). Coal industry executives say that whenever the price of oil exceeds $50 a barrel, coal-based fuels can compete directly with the price of gasoline. According to Ben Glasser of the University of the Witwatersrand in Johannesburg, South Africa, new coal-to-liquid technology could reduce the energy cost of producing coal-based fuels by nearly 20 percent (Madrigal, 2009). If new technology continues to cut the cost of producing these fuels, the adoption of electric vehicles could be significantly undercut.

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Environmental Impacts

As the price of technological improvements continues to fall, environmental groups continue to highlight the cost that may be inflicted on the natural environment. Studies have shown that producing one barrel of liquid coal requires about one half ton of coal (Bartis et al, 2008). Therefore, if coal-based fuels are widely adopted, there would likely be a significant increase in coal mining around the world. Coal mining is known to create abundant levels of hazardous and acidic waste that can pollute groundwater resources. Moreover, the process of strip mining destroys wildlife habitats and has been found to permanently alter entire landscapes.

There is a great deal of controversy surrounding coal-based liquid fuels and greenhouse gas emissions. While the coal industry has highlighted studies showing a reduction in greenhouse gas emissions, other studies from the Environmental Protection Agency and the U.S. Department of Energy have found that the development of coal-based liquid fuels increases greenhouse gas emissions. With this level of ambiguity, green technology proponents say that the practice should be abandoned altogether.

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Energy Independence and Sustainable Fuels

Joe Romm, a senior fellow at the Center for American Progress, has said, “We are simply running out of time to avoid catastrophic warming, and we no longer have the luxury of grossly misallocating capital and fuels to expensive boondoggles like coal-to-liquid” (Madrigal, 2009). Romm has spent a significant amount of time advocating against the use of coal-to-liquid technology within the House of Representatives’ Science and Technology Subcommittee on Energy and Environment. As the adoption of sustainable transportation options continues to make headlines around the world, it’s clear that the conflict over coal-based fuels may continue to be a tremendously divisive political topic.

The clash between the notion American energy independence and the need to combat the impacts of climate change have been heating up within the U.S. House and Senate. Coal-state Republicans have continued to push for coal incentives and the expansion of technology to turn coal into useable fuels. On the other hand, Democrats have vowed not to support these initiatives. Instead, Democrats have been focused on legislation aimed at incentivizing electric vehicles. Some have even started to rally around the idea of banning the future development of fossil fuel-powered vehicles. While the idea of energy independence also resonates with Democrats and environmental organizations, some leaders says that the country has the ability to reduce dependence on foreign oil without the use of coal-based liquid fuels.

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The Future of a Dying Industry

According to analysis conducted by the Natural Resources Defense Council, a combination of investments in sustainable renewable fuels, efficiency, and alternatives to driving such as public transportation can reduce oil consumption more quickly and efficiently than could be done with investments made in coal-based liquids (Siu, 2011). With the absence of appropriate global policy initiatives, research from the Massachusetts Institute of Technology has predicted that coal-based liquid fuels have the potential to make up around a third of global liquid fuels by 2050 (Chen et al, 2011). However, due to existing climate-related policies that have already been implemented, the likelihood of this prediction coming to fruition remains low. With this in mind, coal industry groups continue to advocate for coal-based fuels as a strategy to save the dying industry.


Andrews, E. (2007). “Can coal be king of alternative fuels?” The New York Times.

Bartis, et al. (2008). “Producing Liquid Fuels from Coal.” RAND Corporation.

Chen, Y., et al. (2011). The Prospects for Coal-to-Liquid Conversion: A General Equilibrium Analysis. Massachusetts Institute of Technology: MIT Joint Program on the Science and Policy of Global Change

Madrigal, A. (2009). “Bad News: Scientists Make Cheap Gas From Coal.” Wired.

Moritz-Rabson, D. (2019). “Eleven Coal Companies Have Filed for Bankruptcy Since Trump Took Office.” Newsweek.

National Geographic (2019) “Coal.”

Roberts, D. (2019). “Coal left Appalachia devastated. Now it’s doing the same to Wyoming.” Vox.

Siu, B. (2011). “Why Liquid Coal Is Not a Viable Option to Move America Beyond Oil.” Natural Resources Defense Council.

Wade, W. (2019). “The Coal Miner That Bet Everything on U.S. Power and Lost.” Bloomberg.

WCI. (2006). “Coal: Liquid Fuels.” World Coal Association.

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