Sasol’s coal-to-liquid technology (CTL) is making headlines from Johannesburg to Beijing and New York. It has scored big with the coal industry as a way for coal-rich countries such as the United States, China and South Africa to reduce their dependency on imported fuel from hotspots such as the Middle East and Nigeria. But it has also run into intense controversy because of its relatively high contribution to global warming.
Sasol is busy expanding its giant plants at Secunda, adding 20% in capacity from 150 000 barrels a day to 180 000 barrels a day by 2014. It has also mooted a new inland refinery, Project Mafutha, said to be the equivalent of a ”Sasol four” plant to complement the two already at Secunda. Mafutha, which is currently the subject of a pre-feasibility study, would produce about 80 000 barrels a day of synthetic fuel, and would probably take eight or nine years to build.
Sasol’s coal-to-liquid technology, which uses the Fischer-Tropsch process discovered in Germany, has come in for a good deal of criticism overseas. Wikipedia says the United States-based National Renewable Energy Laboratory found that full-fuel cycle greenhouse gas emissions for coal-based synfuels are nearly twice as high as the petroleum-based fuel cycle.
The New York Times reported this week on intense political lobbying from the coal industry, which argues that the US’s huge coal reserves provide a viable alternative to foreign oil. ”Congressional and industry proponents of coal-to-liquid plants argue that the same technologies that may someday capture and store emissions from coal-fired plants will also be available to coal-to-liquid plants,” the newspaper said in an editorial. This means the technology would, at best, be carbon neutral, when warnings from scientists to slash emissions have never been higher on the world agenda.
According to The New York Times, massive subsidies are proposed for CTL. These include loan guarantees for between six and 10 plants, each likely to cost at least $3-billion; a tax credit of 51c for every gallon of coal-based fuel sold until 2020; automatic subsidies if oil prices drop below $40 a barrel; and permission for the Air Force to sign 25-year contracts for almost a billion gallons a year of coal-based jet fuel.
Although the cost of Mafutha has not been made public, CTL doesn’t come cheap. Sasol says an 80 000 barrel a day plant in the US would cost between $8-billion and $9-billion, compared with between $5-billion and $6-billion in China.
Back home, the windfall-tax task team, which has investigated the possibility of imposing windfall taxes on the synthetic and fuel industry, was also inclined to avoid jumping on the CTL bandwagon.
In its report, released in February, it noted that Sasol argued unequivocally that ”the best option for the South African economy was a new coal-to-liquids plant” and that the company had already initiated discussions with the government. ”An overly hasty response, which closes off energy supply options, is unwarranted at this stage and we believe that there is ample time for a range of policy responses to be debated and developed,” it said.
The task team recommended that government support for specific investments should consider a range of factors, including capital costs, energy efficiency, operating costs and sustainability, logistics constraints and transport costs, and job creation opportunities.
Synfuels, unlike biofuels, are highly capital intensive with low labour intensity. ”[A] large synfuel/refining facility carries greater capital risk … A number of smaller biofuel plants carry lower risk,” the report said. The team also suggested moderating demand for fuel through more efficient vehicles and the introduction of electric cars.
In a presentation last year looking at the possibility of a CTL plant in the US, Sasol said it was ”committed to building safe and clean plants” and would meet all plant safety and environmental regulations and that water, infrastructure, utilities and waste would be priorities. It admitted that ”the existing technology is not a match for clean coal technology”. ”Secunda, Great Plains and PetroSA confirmed the ability to design and operate these technologies but [these] were 1970s and 1980s technologies,” the company said. New plants, it promised, ”will demonstrate many advances”.
”Technical challenges on greenhouse gas emissions will receive dedicated effort. CO2 capture is a given for clean CTL; CO2 storage and/or enhanced oil recovery depends on site characteristics,” the presentation continued. But as yet there is little evidence of carbon capture technology.