Coal-to-liquid fuel feasibility studies are underway for lignite, the dirtiest coal, as the coal industry tries to dig itself out of a hole

Coal badly needs a new mojo, as Energy Minister Gerry Brownlee once recognised, and hasn’t since been allowed to forget.

Solid Energy and L&M Mining are investigating coal-to-liquid fuels, utilising Southland’s massive lignite deposits, on the promise of diesel fuel self-sufficiency, and security of supply for New Zealand. Coal as a hydrogen fuel source is also a possibility.

Hydrogen fuel cell vehicles, electric vehicles, and biofuel from forest biomass offer longer term transport energy options. But if, as George Monbiot elicited from Fatih Birol on behalf of the International Energy Agency (IEA), oil peaks as predicted some time between now and 2020, and if the assumption is correct that it will take 20 years at least to re-gear world economies, then we need a strategy to get us over the crude-oil dependence hump. Maybe, lignite offers that.

So this has been welcomed, as an exciting opportunity for New Zealand, and I don’t (necessarily) want to rain all over that parade. If — IF — coal could be reinvented, in an environmentally responsible guise, well, great. Bring it on, soon.

But just a passing shower, perhaps: a wee dampener on the coal fires of enthusiasm.

Dr Jan Wright — now the Parliamentary Commissioner for the Environment — in her former role as a researcher for the Lincoln Centre for Resource Management, co-authored an information paper in 1990, titled “Transport fuels in New Zealand after Maui — lignite on the back burner”.

In it, with some prescience, she and her colleague predicted a world with greenhouse gas emissions reduction targets, and also a world in which the oil shocks of the 1970s would recur, perhaps due to depletion, or concerns about pollution. In the event, we are facing both. They predicted price changes, and the future likelihood for New Zealand of the re-emergence of a transport fuel self-sufficiency policy.

They reviewed research from the late 70s and into the 80s, focused on reducing New Zealand’s dependence on imported oil. Lignite was seen as a source of particular promise; New Zealand has vast reserves. These are bound to be out of date figures now, but oil and gas reserves (Maui, etc) in their paper were estimated at 6,696 PJ; the estimated South Island lignite yield, by contrast, was 77,442 PJ.

Biomass (ie, biofuels) had also been considered, but much more work had been done on lignite. The authors therefore predicted it would be the first cab off the rank in another oil crisis, simply by virtue of being rather more advanced than other options.

And, twenty years later, here we are.

They compared carbon emissions profiles, taking into account lignite conversion processes, with those from conventional transport fuels. Liquid fuel — petrol — from lignite was almost three times more polluting, with an index of 2.9, than petrol sourced from crude (an index of 1). Testing three different conversion processes, the worst of them indicated an 80% increase in New Zealand’s transport fuel emissions profile, the best of them a 50% increase.

“The use of lignite as a feedstock for transport fuels would appear to make any greenhouse gas reduction target unobtainable,” Wright and Baines concluded.

I spoke to Wright, and she emphasised that her findings twenty years ago may not fully reflect her views today. Her office is doing some work on lignite, that is still a work in progress, and it was too early to be commenting on what the outcome of that might be.

However, albeit perhaps dated, the numbers in that paper are not out of line with two quite recent Ministry of Economic Development analyses (MED, 2007) — in fact, they’re pretty much spot on.

Although “the key components of CTL technology have been advanced significantly over the last 20 years,” both MED analyses acknowledge, relying on an IEA calculation, that without carbon capture and storage technology (CCS), lignite could more than double carbon emissions. They were assessing one of the same conversion methods previously considered by Wright and Baines: Fischer Tropsch.

Solid Energy, in particular, has repeatedly made clear that any future proposals would be contingent on capturing the CO2 produced during manufacture, and storing it permanently — underground or perhaps, less high tech, simply planting a lot of trees.

Don Elder wrote recently in The Press: “ Taking full responsibility for greenhouse gas emissions is a key consideration in all our lignite developments. Solid Energy expects its lignite-based plants to achieve full carbon compliance, using a range of options to reduce CO2 emissions ”.

Elder refers to carbon capture and storage as one option. According to the MED analysis (my emphasis): “Even with efficient (and as yet unproven) CCS technology, carbon dioxide emissions over the full life-cycle of the fuel would still be at least 5% higher than for crude oil based products”. But Elder also mentions bio-sequestration: perhaps, planting some extra trees.

This is not just about getting over the hump. How we do it matters. Monbiot had a stab at assessing how much more carbon the atmosphere can absorb, before reaching a global warming tipping point: less carbon, he concluded, than that available in fossil fuel reserves. It’s no good negotiating the rock in the road, only to find a bigger blockage on the other side.

The rationale being given for lignite extraction and conversion — diesel fuel self-sufficiency — could, in the not far distant future, be met and exceeded by woody biomass, as I reported here. When Wright and Baines tested their lignite emissions scenarios against a forestry biomass option, they found that biomass offered a 40% reduction on transport fuel emissions.

Coal-to-liquid fuel plants are a multi-billion dollar investment. The investors, therefore, must be looking long term, and large scale. Should we start with lignite in the short term, because we can, and move on to woody biomass later? But what if, on the other hand, you poured those multi-billions of dollars into woody biomass R&D, instead?

MED analyses were also contingent on not shifting the lignite round too much, which would tend to suggest any future plants might be in Southland. Compare land identified by Scion as suitable for biomass, not much of which is in Southland [at p.65].

Once you build there, the coal will come, and the plant would seem to be a remote not-quite-so-white elephant for wood-based purposes; and once you plant carbon-offsetting trees all over the scrap land you might have used for biomass trees, that might seem to somewhat undercut the prospects of the woody biomass proposal.

So no, I don’t want to close the door on the possibility of coal reinventing itself. But we should also be alive to the risk of coal getting in first, and shutting and bolting the thing behind them, against other better options.