The possibility of the world facing a "peak oil crisis" is now widely recognized as a clear and present danger in the fields of fuel and energy.

Unfortunately, many attractive and widely-touted alternate fuel systems -- such as a safe and practical hydrogen-based transport fuel system -- will remain a dream until the distant future.

For this reason, many nations have been re-examining other transport fuel technologies, such as the Coal-to-Liquids (CTL) technology, as a near future source of transport fuels.

Coal-to-Liquids -- that is, the conversion of coal to liquid transport fuels -- is in fact not new a technology and has been practiced for a number of decades in countries such as South Africa and Germany and will soon be adopted in China.

The most viable Coal-to-Liquids system requires the conversion of coal into a synthesis gas consisting of hydrogen and carbon monoxide and then its synthesis into long-chain liquid fuel molecules. These processes produce excess heat that can be used to generate electricity. The synthetic petroleum products, and especially synthetic diesel, have a number of unique environmental advantages. These advantages include the reduction of particulates, nitrogen oxides and fugitive aromatic hydrocarbon emissions of those associated with 'natural crude'.

Although the technology of CTL is well understood, technological challenges regarding its application to specific coal and lignite (brown coal) resources exist. Lignite is usually a high moisture fuel with moisture contents of up to 65%, for example the Victorian lignites have around 60% moisture. Lignites also can have high mineral matter (ash) content and have high sulphur contents, say to 5%.

The economics of Coal-to-Liquids are that a crude oil price of between $US40 - $US50 per barrel is required to provide conditions where the process is viable. This infers that coal should be provided at a relatively low cost; that favorable logistics such as transport, access to refineries and good proximity to markets exist; and that there is a financial and political will to invest in plant that will have over a thirty year production life. Industry wisdom is suggesting that the scale of successful Coal-to-Liquids plants will be a minimum production of 50,000 barrels per day of synthetic crude plus 400 MWe of power available for export.

The introduction of CTL into the developing countries of Asia that have suitable coal and/or lignite reserves makes good sense.

The replacement of traditional crude oil with CTL crude has positive economic, environmental and security aspects for those countries. The co-generation of electricity will also be positive, as will the co-production of by-products of sulphur, waxes and LPG (liquid petroleum gas).

The production of CTL also has strong security aspects, since indigenous liquid fuel is generally less vulnerable to disruption by terrorist action or international political disputes.