The Oil Drum

New Scientific American arrived yesterday...in it is an brief article about the "first U.S. coal-to-diesel production facility," now under construction.  It will use "waste" coal, i.e., low quality coal rejected for other uses.  It is claimed that the initial cost of the diesel fuel (I believe this is the cost to the state of Pennsylvannia, which has committed to buying half the plant's output) will be $54 per barrel.  The article goes on to quote Rudi Heydenrich, "business unit manager" of Sasol, that "You need a structure where there is government support to ensure sustainable economics in the long run."  

As to the economics of the plant in question, the Federal government is putting up a $100 million loan guarantee, and private investors another $500 million.  All this for a plant that will produce - drumroll - 5,000 barrels of diesel a day.  Hey, one plant and $600 million down, 3,999 plants and $2,399,400,000,000 to go, and we can replace our current oil consumption with coal, and increase our greenhouse gas emissions to boot.  

O.K., o.k., I know that last sentence was erecting a straw man, and conflated diesel barrels and oil barrels, but the point is that this is just a drop in the bucket compared to the scale of the problem.  Scaling this technology up at a rate that will offset declines in oil production will be expensive in dollars and horribly damaging to the environment, and may well be impossible due to constraints on materials and expertise.