April 2, 2009

Aaron D. Lazarus, PhD.
DARPA/STO
ATTN: DARPA-BAA-08-58
3701 North Fairfax Drive
Arlington, VA 22203-1714

Dear Dr. Lazarus:

I had submitted comments last September on the coal to liquids program. Given the recent increase and extension of the program, I am now submitting revised comments. I would like to see changes to the program.

My original comments suggested a mathematical programming approach to comparing the various CTL processes. Several possibilities exist for the objective function, but for purposes of illustration, the unit cost of the fuel produced will do. Your agency’s RFP imposed a zero-CO2 constraint on the production process. My approach is to instead allow CO2 emissions and charge a fee to offset CO2 elsewhere. The CO2 emission amount would be one of the decision variables used to define the cost of the fuel produced. I believe a reasonable cost for CO2 emissions from CTL would be to require the purchase of an equal amount of emission credits or spending that amount to reduce CO2 in other ways. An example of spending to reduce CO2 in “other ways” would be tax incentive expenditures for energy conservation and clean energy production. Another example would be a reforestation program of former coal mine sites. A case could be made for offsetting more than an equal amount of CO2 emissions. But a zero-CO2 constraint is equivalent to using an infinite cost coefficient for a CO2 amount decision variable. The constraint just seems to be a blunt instrument.

Part of the oil our nation currently uses is imported from overseas. It should be kept in mind that shipping and refining fossil fuel petroleum is not a zero-CO2 emissions process. Of course, the use of liquid fuel also emits CO2. In view of this, a zero-CO2 constraint for CTL could be considered excessive, particularly if it adds substantially to the cost.

Removing the zero-CO2 emissions constraint would not prohibit proposals that conform to the constraint. But I believe that other proposals, even with the cost of emission offsets, would be less expensive. When the emission offsets are factored in, it appears that a low-CO2 (not zero-CO2) proposal would be competitive with traditional, high-CO2 proposals. Given political and economic realities, it seems to be a good compromise between the extremes of zero-CO2 and high-CO2.

In particular, a direct liquification method seems capable of being both economically viable and low-CO2. In direct liquification, coal was traditionally burned in the process of producing hydrogen from water, also yielding CO2. The hydrogen was then used to hydrogenate and liquify other coal. But the hydrogen could instead be produced by electrolyzing water using wind power, without the CO2 emissions. The electrolysis would produce pure oxygen as a byproduct. A substantial portion of the US coal reserves are in the northwest section of the country, which is also well-suited for wind power.

Another possible CO2-free method of producing hydrogen would be a type of solar power known as artificial photosynthesis. The technology is still in the research phase, but could eventually be a very attractive method.

A frequently cited weakness to the use of wind and solar power to supply general electrical demand (non-hydrogen production) is that the output is variable. General electrical demand itself varies. But hydrogen can be stored, providing flexibility in the timing of its production. And while power would be needed to compress the hydrogen that would be stored, the reaction of hydrogen with coal to yield liquid fuel is also done under pressure. Producing hydrogen, especially for CTL, appears to be a good use of wind and solar power.

Producing hydrogen in these ways would not alone reduce the CO2 emissions from CTL to zero. The CTL process requires further power. Conceivably, it could also come from wind or solar, instead of coal. But this is where I fear we run into sharply diminishing returns. Another method to power the reaction would be to use the heat of a nuclear reactor. It might have technical merit, but given the political realities in the US, this appears to not be feasible for a number of years to come.

Therefore, I think direct liquification will need to output some CO2 to be economically viable. But that CO2 stream could be used to grow algae for liquid biofuel. This would further reduce the CO2 emissions (but not to zero), while yielding additional fuel.

The technology behind algae needs additional R&D, but it appears that it will be ready for production within a few years. Artificial photosynthesis also needs additional R&D. The technology for generating hydrogen from wind power is more developed and could be implemented in the near-term.

A relatively quick way to implement low-CO2 CTL would be to use hydrogen produced by wind power, with an algae component added later. A CTL plant could be built with this addition in mind. For instance, space could be reserved for the algae.

As global warming is, in fact, a global issue, we should also consider the actions of other countries. Recently, China opened a CTL demonstration plant. It appears likely that China, India, and South Africa will be significant foreign CTL producers within ten years. Their stance on greenhouse gas issues suggests that they are willing to use a high-CO2 process. But if an economical low-CO2 CTL process is available, these countries might use it instead. If the US develops low-CO2 CTL and makes it available to foreign countries, it could help to curb CO2 emissions.

Sincerely,
Stephen Leibowitz
Sheffield, Massachusetts