FutureCoalFuels.org Update
Dec. 19, 2007

In this update:

· Air Force conducts first-ever transcontinental Fischer-Tropsch fuels test; conducts B-1 engine test

· Senate approved farm bill extends CTL tax credit

· Gov. Manchin calls for five CTL plants in West Virginia

· EIA predicts increased coal production to meet domestic CTL needs

· World CTL Conference Set for Paris in 2008

· Stay up-to-date on the latest news reports spotlighting CTL

· Become a CTL grassroots supporter

Air Force conducts first-ever transcontinental Fischer-Tropsch fuels test; conducts B-1 engine test

The Air Force this week completed the first ever transcontinental flight of a jet powered by a synthetic fuel made using the Fischer-Tropsch (FT) process, the same technique used to produce clean, domestic coal-to-liquid (CTL) fuels. Air Force Secretary Michael Wynne joined Rep. Jim Saxton (R-N.J.) and a delegation of industry leaders and armed forces personnel at a Dec. 17 ceremony at McGuire Air Force Base in New Jersey to welcome a C-17 cargo jet powered by an FT fuel blend that took off from McChord Air Force Base in Washington state.

During the Dec. 17 ceremony Secretary Wynne stressed the need for increased production of domestic FT fuels, saying “all the energy we need” can be found domestically and can be used to “secure America’s future.”

Wynne emphasized the need for the Air Force to be given the authority to negotiate long-term FT supply contracts in order to accelerate the domestic production of such fuels, a point echoed by Rep. Jim Saxton (R-N.J.), a member of the House Armed Services Committee, whose district is home to McGuire Air Force Base. As the Air Force continues its extensive testing program, Wynne said the “next step” has to be securing long-term contract negotiating authority for the Air Force.

The successful test marked an important milestone in the Air Force’s efforts to certify FT fuels for use in its entire fleet by 2011 and will also accelerate efforts to certify the fuel for commercial aviation, as the C-17 uses the same engine as Boeing’s 757. Both Secretary Wynne and Saxton emphasized that the Air Force’s significant testing program will greatly accelerate the certification process for FT fuel use in commercial aviation. Wynne noted that the Air Force is partnering with the Federal Aviation Administration to aid that agency’s certification efforts, which he said will help “ensure the widespread availability of alternative fuels.”

Wynne also underlined that utilizing enhanced oil recovery and carbon capture and storage technologies, FT fuels made from coal will emit less carbon dioxide than the fuels they will replace.

Separately, Secretary Wynne was on hand earlier this month as the Air Force began a new round of B-1 engine FT fuel tests at Tennessee’s Arnold Air Force Base. At the Dec. 17 ceremony, Secretary Wynne said the successful test on the B-1 engine will help the Air Force expand its testing to include additional supersonic tests.

The C-17 and B-1 tests come on the heels of successful testing last year that resulted in the Air Force certifying its fleet of B-52 aircraft to fly using FT fuels.

Senate approved farm bill extends CTL tax credit

The Senate last week overwhelmingly approved legislation reauthorizing federal agricultural support programs that also includes a one-year extension of an important tax credit that will help accelerate the production of clean, domestic coal-to-liquid (CTL) fuels. The “Farm Bill Extension Act” (H.R. 2419) cleared the Senate 79-14 on Dec. 14 and will now be subject to an effort between leaders in the Senate and House to reconcile competing versions of the bill.

Included in the tax portion of H.R. 2419 is a provision that extends an existing 50 cent per gallon fuel excise tax credit for CTL until 2010 and requires CTL producers to capture and store 50 percent of carbon dioxide emissions. CTL producers could be required to capture and store 75 percent of carbon dioxide emissions should an independent arbitration panel determine that such a level is commercially feasible. Without an extension, the tax credit, created by the Energy Policy Act of 2005, is set to expire in September 2009.

The credit was first approved unanimously by the Senate Finance Committee following an effort by by Sens. Jim Bunning (R-Ky.), Jay Rockefeller (D-W.Va.) and Kent Conrad to include the provision as part of a tax package for H.R. 2419.

Gov. Manchin calls for five CTL plants in West Virginia

A new energy plan being developed by West Virginia Gov. Joe Manchin (D) calls for the construction of five coal-to-liquid (CTL) plants to eliminate the state’s dependence on imported oil. According to the plan, five CTL plants producing 20,000 barrels a day by 2030 would produce enough fuel to displace the 1.3 billion gallons of imported fuel on which the state currently relies.

“Rising direct and indirect cost of transportation fuels and the depletion of conventional oil reserves will lead to the introduction of new liquid fuels,” according to a draft version of the plan released this month. West Virginia currently depends on imports to meet 60 percent of its liquid fuel needs. The plan says coal is “uniquely positioned to be a cornerstone of a transition away from petroleum-based fuels,” adding that “West Virginia, with substantial quality coal reserves, abundant water, an established energy infrastructure and trained workforce, is in a position to capitalize economically on advanced coal technologies.”

Providing the coal to support five CTL plants would require a 15 percent increase in annual coal production, according to the plan, with production in 2006 totaling nearly 149 million tons. Manchin’s plan includes a series of short, medium and long-term goals meant to facilitate the production of clean CTL fuels in his state. In the short-term, the plan calls for the state to partner with industry to establish a polygeneration plant capable of producing liquids, gases and electricity by 2010 and tasks the West Virginia Geological and Economic Survey with identifying potential locations for advanced CTL plants and underground carbon dioxide storage opportunities.

The plan’s medium-term goals call for the West Virginia Public Service Commission to establish a policy to aid the production and sale of pipeline gas or transportation fuels produced from coal, while the West Virginia Department of Environmental Protection is charged with establishing state carbon sequestration procedures and guidelines. Long-term, the plan calls for action meant to ensure that “state-of the-art pollution abatement/management technology is a component of coal-based energy projects.”

The plan was the subject of discussion at the Advancing Domestic Resources in an Era of Carbon Challenges energy summit Manchin hosted earlier this month. Participating in the summit were governors, or their energy advisers, from 11 energy-producing states.

A copy of the plan is available here.

EIA predicts increased coal production to meet domestic CTL needs

The Energy Information Administration (EIA) this month, in an early release of its Annual Energy Outlook 2008, revised upwards by 40 percent its previous projection regarding the amount of coal needed by 2030 to meet demand for domestic coal-to-liquid (CTL) fuels. The early forecast predicts that 157 million tons of coal will be needed for domestic CTL production by 2030, marking a 40 percent increase over the agency’s previous 2030 projection of 112 million tons.

More information on the outlook is available here.

World CTL Conference Set for Paris in 2008

Registration for the inaugural World Coal-to-Liquids Conference, scheduled for April 3-4 in Paris, France, is now open. The conference is being endorsed by the French Institute of Petroleum, World Coal Institute, World CTL Association and the World Energy Council and features a distinguished roster of U.S. and international government and private sector representatives who will highlight the important role clean CTL fuels can play in meeting future global energy needs.

The conference is expected to draw 300 delegates and will focus on the latest information regarding CTL technology, economics and environmental benefits, as well as providing those in attendance with an invaluable opportunity to network with leading CTL industry representatives. In addition, the conference will feature CTL exhibits by participating organizations and companies. Information regarding registration, becoming an exhibitor or a conference sponsor is available here.

Stay up-to-date on the latest news reports spotlighting CTL

Through its web site, www.futurecoalfuels.org, the Coal-to-Liquids Coalition collects news stories from across the country that feature the latest information on how coal-to-liquid fuels will help reduce America’s dependence on foreign oil and yield important environmental benefits. For access to recent CTL news items, please visit: http://www.futurecoalfuels.org/news.asp.

Become a CTL grassroots supporter

The Coal-to-Liquids Coalition is working to build a strong network of grassroots supporters willing to contact federal and state lawmakers to voice their support for measures meant to spur the domestic production of affordable, clean-burning CTL fuels. CTL grassroots supporters can include company employees, union members, retirees, their families, friends and others spread across the country who share a personal stake in the successful launch of a domestic CTL industry.

The coming months are likely to see continued congressional CTL activity; a time in which a robust CTL grassroots network can be an invaluable tool in helping to increase the bipartisan support for legislation designed to jumpstart the production of ultra-clean CTL fuels.

To become a grassroots supporter visit: http://www.capitolconnect.com/future... .

As CTL fuel developments transpire, be sure to regularly visit FutureCoalFuels.org for the latest news and information and learn how you can help strengthen America’s energy future.