Publications

Survey of Energy Resources 2007

Inter-fuel Substitution - Coal to Liquids

Of course, high oil and gas prices do not solely impact on power generation, but raise credible economic possibilities for inter-fuel substitution. Oil provides 35% of global energy consumption and more oil is used today than ever before.

Demand for oil will continue to grow, primarily owing to rapid growth in vehicle ownership in developing nations. Energy security concerns in the oil sector are increasing, owing to questions of resource availability, supply security, political instability and infrastructure difficulties. Oil prices are expected to remain high.

The development of a coal-to-liquids (CTL) industry can serve as a hedge against oil-related energy security risks, minimising exposure to oil price volatility and foreign currency risk, while providing the liquid fuels needed for economic growth. CTL can provide ultra-clean fuels for transport, domestic use and power generation, while the use of carbon capture and storage can minimise greenhouse gas emissions from the production process.

Production of liquid fuels from coal has been carried out in South Africa since the 1950s and is now undertaken on a commercial, non-subsidised basis.

Projects are under way and planned in several countries around the world - perhaps not surprisingly, countries which have large indigenous coal reserves but import substantial amounts of oil. The USA and China have projects in operation, while South Africa is reportedly considering an expansion of its production. Monash Energy is planning a new project in south-eastern Australia which will use the local brown coal as a feedstock. The CO2 emissions will be piped for enhanced oil recovery in the Bass Strait. Serious interest has been shown in projects in Indonesia, India and Germany.