W.Va. coal-to-liquid plant to get state incentives; exec acknowledges carbon dioxide is a problem

The coal-to-liquid plant announced recently for West Virginia's Northern Panhandle is in line for $196 million in tax incentives from the state, and its chief promoter says it could face political obstacles because of its carbon-dioxide emissions.

The state's agreement with Appalachian Fuel LLC, a joint venture of Pittsburgh-based Consol Energy Inc. and Houston-based Synthesis Energy Systems Inc., offers $196 million in tax breaks, "about $3.3 million in government incentives for each of the 60 jobs the facility would provide," writes Ken Ward Jr. of The Charleston Gazette, who got the state to release the agreement.

The plant, which would employ 200 to 300 people during its construction phase, "would convert coal to gas using a Synthesis proprietary technology called U-Gas," Ward writes. "Developers said 'it is expected' that this gas will be used to produce methanol for the chemical industry. In addition, they said, the plant would 'be capable' of converting methanol production to about 100 million gallons a year of 87-octane gasoline." Consol President Peter Lilly said on Bray Cary's West Virginia Media Holdings "Decision Makers" show last week that the technology is being used in China.

Ward notes, "Many scientific and environmental organizations oppose liquid coal projects. Even if greenhouse gas emissions from the fuel plants are captured and pumped underground, liquid coal fuels still generate more carbon dioxide emissions than traditional transportation fuels." Capture and underground storage of CO2, to prevent more global warming, is called carbon sequestration.

A commenter on Ward's story noted that Lilly "stated very candidly that it may be years before the CO2 sequestration problems can be solved. This suggests this project is highly speculative." Lilly told Cary that the answer to those questions will be political, and might push the plant past its target completion date of 2012. "The real issue is the feeling of the American people as it relates to the emissions of the carbon dioxide," he said. Referring to sequestration, he said, "That technology I'm not sure is quite proven out, so whether a five-year time frame is the exact time frame I'm unsure." Later in the interview, Lilly spoke of having sequestration technology available for export to other countries in 10 to 15 years. To watch the interview, click here. For more on Bray Cary, click here.