Alternative fuel: Writing in the New York Times yesterday, the Democratic governor of Montana, Bryan Schweitzer, made a very strong pitch for refining fuel oil from the nation’s – and especially Montana’s – vast coal reserves. Schweitzer is a soil scientist by trade and says fuel made from coal, which is called “synfuel,” is better for the environment than fuel made from oil – and it works in today’s combustion engines:

Most people are surprised to learn that we can produce gasoline, diesel, jet fuel and other petroleum products out of coal. Indeed, the process was used in America as early as 1928. In World War II, 92 percent of Germany’s aviation fuel and half its total petroleum came from synthetic-fuel plants. South Africa has used a similar technology for 50 years, and now makes 200,000 barrels per day of synthetic gasoline and diesel.

“Synfuels” have remarkable properties: they are high-performing substances that run in existing engines without any technical modifications, and they burn much more cleanly than conventional fuels. The synfuel process, which is nothing like conventional coal use, removes greenhouse gases as well as toxins like sulfur, mercury and arsenic. And the technology has other applications: a synfuel plant can generate electric power, make synthetic natural gas, and produce the hydrogen that many (including President Bush) believe is the energy source of the future.

Sounds great but what’s the downside?

The hurdle in making synfuel has always been the cost of production, about $35 a barrel, more expensive than oil has historically been. But as we all know, times have changed. Yes, there will be significant start-up costs for private companies, but risk can be alleviated with long-term buyers like the military and with new federal loan guarantees. And while Montana will do its part to help with appropriate transportation and other public facilities, a stronger federal investment – like the billions in annual subsidies and tax breaks big oil companies have long received – could really kick-start the industry.

Thanks to L.R. for the tip!

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