Summary: The Synthetic Fuels Corporation is authorized to provide financial incentives for the development of substitutes for imported oil from domestic sources such as coal liquefaction. Coal liquefaction is the conversion of coal to a clean-burning, low-sulfer-content fuel which can augment gasoline and boiler fuels. Direct liquefaction processes are currently in the research and development stage and are expected to yield a high percentage of boiler fuels for industry and utilities. Indirect liquefaction processes are commercially available and produce a high percentage of light products such as gasoline. However, no commercial liquefaction plants are operating or under construction in the United States today. The Department of Energy and private industry are developing four direct liquefaction processes, pilot plants are operating, and two demonstration plants have been completed. Some of the major issues to be resolved in direct liquefaction include: (1) larger test facilities are needed to adequately address the operability and reliability of a commercial-scale plant; (2) the reliability on a commercial scale of equipment which removes undissolved coal from the liquid products; (3) the products must be upgraded before they can replace some petroleum derived products; (4) some products are known or suspected to contain toxic elements; (5) careful environmental planning is needed in choosing liquefaction plant sites; and (6) waste management regulations for the process need to be developed. Uncertainty still exists over the health and environmental impacts of indirect liquefaction production. Potential problems of direct liquefaction such as toxic content and waste disposal may also apply to indirect liquefaction. Little has been done to promote the commercialization of indirect processes, because it is felt that they are less efficient and more costly than direct processes, and available gasifiers needed for the process can only operate on certain coals. Private industry is willing, with financial assistance, to build commercial-size indirect coal liquefaction plants. The United States must choose between building potentially less efficient, more costly indirect plants now or waiting for the direct processes to be developed.
