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Environmental

Coal-to-liquid and oil-sand-extraction may become economically viable in the future, but they are unlikely to help the environment, says RAND Corp.

Both high import payments for petroleum motor fuels and concerns regarding emissions of carbon dioxide (CO2) are motivating interest in possible fuel substitutes. Petroleum products derived from conventional crude oil constitute more than 50 percent of end-use energy deliveries in the United States and more than 95 percent of all energy used in the U.S. transportation sector, according to a recent RAND Corp. study. Almost 60 percent of liquid fuels are imported. Emissions from the consumption of petroleum account for 44 percent of the nation's CO2 emissions, with approximately 33 percent of national CO2 emissions resulting from transportation-fuel use. Thus, there is an interest in various alternative fuels to both fill any gap that may appear, and as a means to decrease CO2 emissions. If the U.S. faces future fuel shortages, then coal-to-liquid and oil-sand-extraction technologies may become economically viable. However, it is unlikely that they will provide any environmental benefits, says the recent RAND Corp. study, particularly since the production technology for each produces substantial CO2. If there is no cost imposed on carbon dioxide emissions in the future, then both technologies are likely to be cost-competitive with petroleum, assuming that in 2025 oil is around $56 per barrel or more. Taking CO2 costs into account, then oil sands may still be viable in 2025, but coal-to-liquid is unlikely to be so. From the environmental perspective, these fuels are not a solution, says the RAND study, absent the development of technologies to limit emissions (e.g., carbon capture and storage). These are fuels for shortage scenarios, not for yielding lower CO2 emissions. For information on the study, see http://www.rand.org/pubs/technical_reports/2008/RAND_TR580.pdf and http://www.eurekalert.org/pub_releases/2008-10/rc-rsa100708.php.