Coal To Liquids In Australia

Energy Minister Martin Ferguson has been talking about gas to liquids (a subject covered here previously) as part of a strategy to address Australia's dependence on imported fuels. The minister has also previously expressed enthusiasm about coal to liquids projects (declaring at a recent CTL and GTL Conference "I regard this industry as the key to securing Australia's energy future"), so in this post I'll have a look at a few CTL projects currently at various stages of development around the country.

MARTIN FERGUSON: Just think about the competitive difficulties at the moment confronting Australian industry and the ordinary motorists given the price of oil. If we don't actually come to terms with investing in our future, then this is going to raise serious questions about our competitive position internationally in a tough global market in a very short period.

GREG HOY: According to the Minister, the best hope may lie in applying a new technology to Australia's vast reserves of natural gas and coal to create a new fuel for Australia's motorists and transport fleet.

GREG HOY: Crucial trials at Queensland's Linc Energy will begin before the end of the month, where a coal seem at Chinchilla, north-west of Brisbane, will be ignited underground like so, with compressed air forced through the seem to form a synthetic gas of steam and carbon, which as it exits will be converted from gas to a clear liquid diesel, with enormous production potential, the same technology we are told, can be applied to natural gas reserves.

MARTIN FERGUSON: So it's about exploration, plus encouraging investment in downstream processing in Australia on gas liquids and coal liquids and thereby creating synthetic alternative fuels.

GREG HOY: Once again, the sceptics do not share the Government's optimism that a solution to Australia's oil crisis is at hand.

JIM BUCKEE: The conversion of coal and gas, gas to liquids, for example, are quite energy expensive of themselves.

Monash Energy

Monash Energy is a venture by Shell and Anglo American to jointly develop a "clean" coal to liquids project in the Latrobe Valley, "utilising the latest low-emissions technologies".

The Monash plant is to use local brown coal as a fuel source (gently lifted from the earth by the little machine shown above) which has a moisture content of more than 60%. Vaporising the moisture when the coal is used for power generation results in an energy loss that also results in higher CO2 emissions per unit of electricity generated (around 50% higher than using black coal), which presents a major problem for Victorian power generators with the commencement of carbon emissions trading looming in the not-too-distant future.

Monash promotes their CTL project by highlighting both energy security concerns and their plan to sequester the CO2 produced (approximately 13 million tonnes of CO2 per year) offshore beneath depleting oilfields in Bass Strait.

Roll-out of these technologies – particularly coal gasification and carbon capture and storage – is becoming critical at a time when official forecasts project a 60% increase in world primary energy demand over the next thirty years. These same forecasts also suggest fossils fuels remain one of the primary sources of energy, so the aggressive adoption of new and less carbon intensive technologies is vital. Critically, the technologies chosen by Monash Energy enable separation of a concentrated stream of CO2 that can be transported to injection wells in deep underground geological formations for secure storage.

The Monash Energy focus on the production of liquid fuels – such as an ultra-clean, virtually zero sulphur synthetic diesel – is also highly relevant to the emerging debate around energy security. The Project would be one of the largest single investments ever undertaken in Australia. Its size and complexity means that at least a decade from initiation to commercial production.

The first commercial plant is expected to produce about 60,000 barrels per day of synthetic fuel (80% of which is high-quality diesel). Commissioning of the plant is targeted for 2016. There has also been talk of the project producing hydrogen. According to the company (as of late 2006) the output of the plant has an indicative price of $US50/barrel - however I suspect this number has changed somewhat since then - and the Gippsland Basin brown coal resource is sufficient to support several such plants, each operating for 50 years.

The plan to sequester CO2 in Bass Strait has hit some snags, with Exxon announcing last year that the region still has more than 20 years left of oil production and more than 30 years of gas, prompting speculation that the carbon dioxide may need to find another home. Exxon continued to raise concerns about this plan at the APPEA conference this week.

A pilot onshore sequestration project recently started up which may provide an alternative option if it can be made to work.

Linc Energy

Linc Energy is a small player that is commissioning a demonstration plant to convert coal to liquids at Chinchilla, on Queensland's Darling Downs (and one which promotes its process as a solution to peak oil). The demonstration plant is due to prove at the end of the month that it can produce products such as diesel and aviation fuel.

The company is using underground coal gasification (UCG) to produce syngas, then converting the syngas into liquids using the Fischer Tropsch process.

UCG differs from conventional above-ground gasification in a number of ways:

* Coal is not mined.

* Chemical processes are arranged to occur in the coal seam in situ.

* The injection and production wells must be connected within the coal seam by the links of low hydraulic resistance to allow production of commercial quantities of gas.

* Process water for gasification usually comes from the coal itself and surrounding rocks, and its influx must be carefully regulated.

* No ash or slag removal and handling are necessary since they predominantly stay behind in the underground cavities.

* The process must be confined within a hydraulic system created in the coal seam so that no leakage of the product is possible and no contamination of the underground environment can occur. Such a hydraulic system is called an underground gasifier, and its design is the most crucial part of a UCG operation.

The company is claiming it can produce syngas for about 70c a gigajoule, which The Australian claims is "causing some discomfort for Queensland's coal seam methane producers" (although they don't appear to be direct competitors, in the absence of any gas-to-liquids projects in the coal seam methane industry at present). The company also claims UCG produces 20 times more gas for a given volume of coal than CSM can.

If the demonstration plant is successful, the company hopes to develop a 20,000 barrels-a-day commercial operation - expected to cost around $800 million. The output would be trucked to Brisbane for distribution by BP.

Linc has formed a joint venture with a small Queensland based biotechnology company called BioCleanCoal to develop a bioreactor which will "convert CO2 into oxygen and solid biomass through a photosynthesis process" in the hope of reducing or eliminating CO2 emissions.

Some of the early proposals from Linc talked about a syngas fuelled power station as well, though this now seems to be on the back burner. The company claims this would produce fewer greenhouse gas emissions than regular natural gas fired power plants, which might be another reason why it promotes itself as a "clean coal" company.

According to a lifecycle analysis of UCG electricity production by BHP's Newcastle Technology Center in Australia (note that BHP is a very large producer of coal):

* UCG-CCGT (Underground Coal Gasification-Combined Cycle Gas Turbine) has the potential to be one of the lowest greenhouse gas (GGE) coal-based technologies, and compares with the emerging IGCC (Integrated Gasification Combined Cycle) and more radical ultra-supercritical developments — it would generate around 25% less GGE than the most efficient of Australian coal-fired power stations.

* UCG-CCGT, however, emits more GGE than does a natural-gas-fired CCGT process due primarily to the higher carbon to hydrogen ratio of the gasified coal product.

* NOx values are equivalent to other combined cycle type power stations.

* UCG-CCGT requires smaller amounts of water compared to other combined cycle technologies, as gasification water requirement is provided by controlling ingress of water from aquifers surrounding the wells and gasification voids. Some of this water is extracted as condensate and reused for cooling purposes.

The company is also expanding into Vietnam, recently announcing plans to build a UCG power plant there.

In addition, there are reports that Linc may be involved in plans to evaluate "huge but little explored coal reserves" in the Arckaringa Basin in South Australia's far north, with the goal of producing electricity and fuel for major resources projects - in particular Olympic Dam and its large new requirements for power (in a state already short of power generation capacity). According to The Age, no serious exploration work has been carried out in the basin since the 1980s, although the SA Department of Primary Industries and Resources has data from previous drilling indicating that billions of tonnes of coal could be contained in the region.

GulfX / Syngas Energy

GulfX is another company talking about building a CTL plant, again via gasification of coal, at a site 300 kilometres north-west of Adelaide. Apparently they partnering with geothermal energy hopeful Torrens Energy. The company says "We will have an on-site facility which will consist of a 30,000 barrel a day refining plant and a 500 megawatt power plant, of which 50 per cent would go into the national grid".

Both companies are minnows, so this project appears highly speculative.

Coal to Liquids Elsewhere

Until recent years, the only countries that have pursued coal-to-liquids programs have been those that have had difficulty obtaining sufficient oil supplies - particularly Nazi Germany and in apartheid-era South Africa by SASOL. Both used the Fischer-Tropsch process - a number of other coal-to-liquids processes have been explored in the years since.

South Africa has been producing fuel from coal since 1955 and has the only commercial CTL industry currently in operation. Around 30% of the country’s liquid fuel needs are produced from coal, with total capacity above 160,000 barrels per day.

Rising oil and gas prices have caused Asian countries to start looking seriously at coal-to-liquids projects, with China expected to start its first large scale plant in the coal-rich region of Inner Mongolia, using the Bergius process. The plant will reportedly have a daily output of 20,000 barrels, rising to 100,000 barrels a day in future years.

A study last year by the Chinese Academy of Sciences said: "Production of liquid fuels from coal is practically the most feasible route to cope with the dilemma in oil supply." It concluded: "Establishing large-scale CTL plants on the pitheads of several main coalfields is feasible and competitive when oil price is well over US$25 per barrel." According to The Guardian, at least two more commercial scale coal-to-liquids plants are under construction in China, although the Chinese government has expressed concern about the possible environmental impact of uncontrolled expansion, and has taken steps to limit the number of smaller facilities.

The IEA is predicting that by 2030, China's non-conventional oil supply from CTL plants will reach 750,000 barrels a day. An IEA report on CTL, due to be published this spring, will highlight other projects planned or under way in Japan, the US, Australia, China, India, Botswana, Indonesia, the Phillippines and South Africa.

The Indian government recently approved a joint venture between Tata and Sasol.

There is an organisation pushing adoption of coal-to-liquids processes in the United States called the Coal To Liquids Coaltion (also known as FutureCoalFuels.org").

The US Air Force seems to be showing a keen interest in synthetic fuels from CTL and is reportedly encouraging the creation of a CTL industry that could leverage local coal reserves based on energy security concerns. They apparently have plans to lease property at Malmstrom Air Force Base in Montana for the construction of a CTL plant.

The Governor of Pennsylvania is also pushing for federal funding to establish a CTL plant in his state - a plan not without critics.

Environmental Concerns

Coal mining has always attracted a large amount of criticism from environmental groups because of the devastation it causes to both mined and surrounding areas and as a result of the pollutants emitted when burning.

Carbon dioxide emissions have been the number one concern in recent years, with critics pointing out that even if "clean coal" power plants can be built and operated successfully, CTL plants will always be major sources of emissions because the fuel produced is burnt where it cannot be sequestered - in vehicles.

While some scenarios have been considered that combine peak oil models with deliberate efforts to reduce our use of coal in order to reduce our carbon emissions to levels that are considered safe, accelerating the use of coal via coal-to-liquids schemes (in a knee-jerk reaction to peak oil) will achieve the opposite effect - rapidly increasing emissions as we use coal to make up for shortfalls in oil supplies.

Known coal supplies have the potential to increase carbon dioxide levels to almost 1000 ppm, which is far in excess of levels considered safe by the IPCC, leading some global warming activists to declare "coal is the enemy of the human race".

Some observers are already predicting the "beginning of the end for coal" in the US as a result of government and finance industry obstacles to new coal based energy developments.

Peak Coal ?

Australia's largest export is coal. The country is the world's fourth biggest coal producer, behind China, the United States and India, and largest coal exporter - with plans to dramatically increase supply by eliminating the infrastructure bottlenecks that exist in the major ports servicing the industry at Port Waratah in Newcastle (to 140 million tonnes per year) and Dalyrmple Bay in Queensland (to 85 million tonnes per year), weather permitting. A new port at Wiggins Island in Queensland capable of handling 85 million tonnes per year is also planned.

In 2006, Australia produced around 310 million tonnes (Mt) of coal, of which 230 Mt was exported. Australian coal reserves are estimated (by the EIA) to amount to 86,530 Mt, or just under 9% of world reserves, with deposits primarily located in Queensland and NSW.

There was a report in the SMH last year that NSW could run out of coal "within 35 years", based on a production growth rate of 3.2% per year - but this was using a resource estimate of 10,600 Mt, whereas the official estimate from Geoscience Australia is 34,100 Mt (of black coal). I'm not sure where the disconnect is here.

The Australian Coal Association, on the other hand, estimates Australia's identified black coal resources would last more than 200 years at current rates of production. Obviously current production rates are a foolish baseline to use, given the steady increase in domestic consumption and the expansion of export capacity, but even if we assume production rapidly increased to 1,000 Mt per year, this would still last for 70 years using the Geoscience Australia black coal figure (brown coal reserves are much larger) - and there does seem to be some scope for increases in resource estimates given that the huge known reserves haven't provide a lot of incentive for going out and scouring prospective areas that haven't been well explored so far.

Based on these numbers, it would seem that the only thing likely to constrain the growth of CTL plants in Australia as a response to rising oil prices is climate change policy limiting or heavily taxing carbon dioxide emissions.

Australia, along with India, is apparently the exception in terms of managing to find new coal reserves. According to a report on "Coal: Resources and Future Production" (pdf) from the EWG (Energy Watch Group), since 1986 all other nations with significant coal resources that have made the effort to update their reserves estimates have reported substantial downward revisions. Some countries - including Botswana, Germany, and the UK - have downgraded their reserves by more than 90 per cent. Poland’s reserves are now 50 per cent smaller than was the case 20 years ago.

The EWG report resulted in a slew of articles on "peak coal" predicting that coal production will peak in the 2020 - 2025 timeframe.

The Australian Disease ?

Woodside CEO Don voelte recently said Australia had a "raw, fragile, non-manufacturing and extraction-based economy". By some estimates, the North West Shelf gas project now represents about 3% of Australia's gross national product. If the Gorgon, Browse, Ichthys, Wheatstone, Pilbara, Gladstone and Darwin Phase 2 LNG projects all came to fruition, this would likely rise to over 10% of GNP.

With coal exports worth 5 times those of LNG in 2006, the weight of coal in Australia's economy is even greater.

Soaring coal prices - BHP, Rio Tinto and other Australian miners expect prices for exports to Asia to triple this year, before falling back a little in subsequent years - will further increase the share of the economy devoted to fossil fuel extraction.

Mineral exports are also causing the Australian dollar to appreciate sharply, with US dollar parity expected in the near future. These factors are having a large impact on other sectors of the economy, with exporters that can't command these sorts of price rises being severely squeezed by the rising currency.

These issues raise the spectre of Australia suffering from what is known as "The Dutch Disease" - the theory that an increase in revenues from natural resources will deindustrialise a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive. The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of natural gas in the 1960s.

This potential fate has already been raised in the Australian Financial Review, The Age and others, but it is hard to see any government action to try and prevent this.

I'm not sure if there is a term for the converse of the Dutch disease - what happens to economies that become dependent on consuming a cheap and plentiful resource - but I think that would be an interesting area of study on its own.

Cross posted from Peak Energy.

I recall the machine in the photograph; at the time it was in Germany. It obviously is capable of anything, so maybe it jumped to Australia.

How shall driving gain nuclear cachet?

Still trying so hard to keep doing the same old thing over and over and over again. This is how the human race will exit the space. Only those with long vision will vault the division.

Australia should take a page from MIT and UAE's Masdar project. Take the coal $$ and build a carbon-free city as an experiment for new ideas. This can serve as a template for new development and a future post-carbon economy. The MIST university is opening next year and will be certified by MIT.

Thanks for the excellent summary. One of the big issues in China's clamping down on the proliferation of CTL projects is the intense water requirement. According to China's own figures, 11 tonnes of water are required for the production of 1 tonne of CTL liquids. In contrast, 71% of China's coal reserves are in 4 provinces with only 2% of China's water reserves, and North China is already considered to be "physically scarce" in terms of water. Is water an issue with the proposed Australian plants?

Thanks for noting the water issue - I hadn't considered that aspect.

I couldn't find anything about water shortages and dying cattle in Mongolia after a few minutes in Google, but I did come up with this post at Biopact, which touches on the subject and refers to an intersting study at Carnegie mellon University :

http://biopact.com/2007/06/china-considers-discontinuing-coal-to.html
http://wpweb2.tepper.cmu.edu/ceic/papers/ceic-07-04.asp

Water is always an issue in Australia - not so much with the Monash plant - but very much so with the unlikely plant proposed in northern South Australia. I'm not sure about Chinchilla, but I'd imagine getting hold of large quantities of water would be competitive - though I think the economics of CTL would be more compelling than growing rice (for example) when bidding for water rights.

According to figures I've seen on Green Car Congress the well-to-wheels CO2 emissions for CTL are 1.8 to 2.3 times that of petrol. I recall someone pointing out that cattle were dying of thirst in Inner Mongolia while their Bergius plant kept devouring water.

Fortunately the output numbers for CTL in Australia are currently small. It seems implausible that captured CO2 could be re-injected into the same formation from which gasified coal was removed. This reinforces the case for a tough carbon cap, if Rudd ever has the political will to implement it properly.

Ferguson seems increasingly like the fat guy who explodes in the Monty Python movie. He swallows every little nibble his minders feed him.

Mr Creosote - I always thought he was more a heavy oil / tar sands kind of guy...

I think I need a bucket !

http://www.youtube.com/watch?v=BlK62rjQWLk

I've always thought your work was good, Gav, as in this excellent report, but when you whipped out Mr. Creosote, my favorable opinion was confirmed beyond any doubt.

Here's my view of coal-to-liquids, underground or not.

Dave

Thanks Dave.

That Holy Grail scene is another classic - "its a mere flesh wound !".

Also, it might be of interest here to read my column on the U.S. Air Force's plans to partially convert its jets to CTL by 2015.

They seem to be a bit worried about peak oil effects on available jet fuel and its price going forward.

In the meantime, U.S. air carriers are dropping like flys...

Dave

The government and coal industry risk shooting themselves in the foot with CTL. There are many useful technologies for the clean(er) exploitation of coal resources: UCG, CSG and even the energy intensive process of LNG conversion result in lowering emissions relative to coal-fired power. CTL is not one despite the industry's disingenuous branding of these fuels as "ultra-clean". What is the point of trying to introduce emissions trading at the same time as encouraging this kind of retrograde technology? In a properly functioning carbon market presumably it would not be viable, though there are always ways around this (export exemptions etc).

They are treating the public like idiots with this play. Will be interesting to see if they get away with it.

Coal to synthetic natural gas is cheaper. One of the largest delivery companies in the world, United Parcel Service, has used compressed natural gas in its trucks for years. Some public buses and taxis around the world were operated using natural gas.

A chart at this site shows the countries currently using compressed natural gas. The four largest users of CNG are Argentina, Brazil, Pakistan, and Italy.

http://www.oes.net.au/compressed-natural-gas-cng-system.shtml

South Africa has been using coal to liquids technology for years. The company SASOL is profitable using coal to gas, then the gas to liquids for fuel and petrochemicals. The up front investment is high and the capital markets have been flooded with people needing to borrow money, while the public government sector has sought to take away profits from energy companies that were being reinvested in energy projects.

Excellent post Gav.

Australia will soon be little more than a quarry for Asia. We no longer ride on the sheep's back, we profit from the enemy of the human race.

Makes me proud.

Here's an article on CTL in New Zealand from the NZ Herald today :

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10503632

It is the sleeping giant of New Zealand's energy resources, the billions of tonnes of lignite beneath the verdant downs of Southland. Solid Energy, the state-owned coal miner, wants to build a plant to convert that low-grade coal to diesel. Transforming coal into a liquid consumes a lot of the energy in the lignite mined, in order to upgrade the rest into a more valuable fuel.

So the plant would produce a lot of carbon dioxide, over and above what would come out of the exhaust pipes of vehicles it supplied. In a warming world, where the costs of greenhouse gas emissions are increasingly being sheeted home to those responsible for them, the viability of the project is likely to depend on a technology still in its infancy: carbon capture and storage. ...

The proposed plant would produce about 40,000 barrels of diesel a day. It is not intended to displace output from the Marsden Point refinery, but rather the growing proportion of diesel - about a third lately - which is imported as refined product. At current prices its production cost would be about US$60 a barrel. With crude oil trading above $US100 a barrel, and refinery margins and transport costs on top of that, that leaves a fair amount of headroom to cover the cost of the plant's carbon emissions.

Solid Energy reckons it could produce diesel for about $1 a litre. "That's a very round number, based on current costs," Elder says. "But it would certainly be competitive with diesel at $1.30 a litre."

The company has already gone looking for potential storage sites in Southland. "The sites nearby are either smaller, or would be harder, than we would prefer," says Elder. But he is optimistic about the Great South Basin offshore, which is now being explored by the oil industry.

Internationally, places which were very prospective for oil and gas have also been very promising for carbon storage. Britain's North Sea fields, for example, are being investigated as potential storage sites for Co2 (see page 18). "It is fortuitous the Great South basin is being explored. If they drill a dry hole it might still be good for CO2 injection. But it is probably 10 years too late as far as the Southland project is concerned," Elder says.

Well at least it's better than corn ethanol.

In that it doesn't cause people to starve ?

Of course - it depends if climate change eventually results in sufficiently large damage to crop going areas - in that case, CTL may prove to be just as bad as corn ethanol...

Yes, but CTL is still better than corn ethanol because the latter can't replace a majority of global oil even when pushed to the maximum, and doing that will certainly result in a major die-off in the global population. While not even solving the oil conundrum to a reasonable degree, thus exposing societies to chaos [just a bit of pleasing the doomer audience here] which can lead to even greater die-off.

There is also a reasonable chance that atmospheric CO2 capture becomes a viable technology; such a technology would be useful for future generations to save themselves from GhG disaster. On the corn ethanol side, what technologies do we have to mitigate famine? How do we bring people who have died from lack of food back to life?

Of course, CTL plants are expensive and take a long time to build, so this brings up the important question if a major push towards plug-in hybrids and electric mass transit would be a more useful allocation of our scarce time and resources.

I believe the answer is yes, even if the coal is used to power the plug-in hybrids and electric mass transit. Higher efficiency and fuel flexibility (in the broader sense of the word, eg including wind and solar 'fuel') are key advantages over a CTL based strategy. Also, the emissions from coal-electric transport might be sequestered completely, which isn't possible with CTL as the vehicle part will still have significant emissions even if the processing (CTL) part uses 100% sequestration. Of course, the above mentioned atmospheric CO2 capture might fix that.

The remaining liquid fuel portion (the non-plugin part of hybrids, boats, airplaines) could be supplied by CTL, but I think that, overall, advanced biofuels, or even completely synthetic fuels (derived from wind etc), would be a better choice for this purpose.

Well, I see everyone is repeating the mantra; CTL is Evil, CTL is Evil.

Yes it is. But think about the consequences.

The way I look at it, coal only costs 10-20% of what oil does on a BTU basis. Which is why it is so popular with power stations. CTL provides a way to transform cheap coal into expensive oil.
One tonne of coal ($50-$100) will produce 5 barrels of oil ($500 worth at $100 per barrel). CTL can never hope to replace more than a couple of million barrels per day of oil supply, so it is not a "solution" to peak oil, but it may be a solution to the problem of "cheap coal".

If CTL ever takes off in a big way, it has the potential to push up the price of coal (now an oil feedstock...) to the point where coal power stations become as expensive as renewables.

Suppose that a few years down the track, oil costs $200 per barrel, and that you can make 5 barrels of oil from 1 tonne of coal at a cost of $300. What would you be prepared to pay for coal? Your gross on 5 barrels of oil is $1000, your operating costs are $300, so you could pay $500 for a tonne of coal and still make a 20% margin.

Suppose it costs $1billion to build a plant that produces 5 million barrels per year. On the numbers above, that's a 20% return, $200 million per year. Coal companies will go for that.

So now you have a mechanism to push the marginal value of coal from $50 per tonne up to $500 per tonne. What does that do to the economics of coal-fired power stations versus solar or nuclear?

I see CTL as a knife through the heart of coal power plants.

...didn't you want to make burning carbon expensive? Here's the equivalent of a 1000% carbon tax.

That's interesting thinking TenThousandMileMargin - that's certainly what happened to grain prices once biofuels became popular. Unfortunately there is so much coal and its quality so varied its just as likely to have the opposite effect. Technologies like UCG mean we can now access coal seams hundreds of metres underground that would never have been mined due to the poor economics. Additionally the very common low grade coals (brown coal or lignite) that are not in demand for export, are likely to remain outside the pricing regime that applies to the higher grade exportable coal.

As oil prices are now in a major speculative bubble (the cost of production is typically around $20/barrel) large scale production of CTL could easily turn this situation around. This may even threaten the viabilty of CTL itself as CTL is a much higher cost alternative.

This is fundamentally flawed thinking. You can as well say that if you set all coal mines on fire this will be good for GW because the price of coal will rise. Never mind that the CO2 from those fires will still enter the atmosphere (and coal fires can last centuries).

CTL is not likely to cause significant coal price rise. The constraints on coal are mostly infrastructural - not enough rail lines, ports, loading capacity etc. CTL will allow liquification facilities to be built near mines that didn't have the capacity to bring their product to market before. Then their end-product (diesel) will be transported or piped much more cheaply and efficiently. This will ultimately allow much more coal that was hardly reachable before to be eventually used and burnt.

Thermal coal, designated for existing coal power plants will hardly be affected by CTL plants.