Copyright 2005 by the InterAcademy Council. All rights reserved.

Clean Coal Technology: Direct and Indirect Coal-to-Liquid Technologies Zhenyu Liu State Key Laboratory of Coal Conversion Institute of Coal Chemistry, Chinese Academy of Science Tel: +86-351-4053091, Fax: +86-351-4050320, zyliu@sxicc.ac.cn 1. Introduction Coal-to-liquid technology refers to chemical processes which convert solid coal into liquid fuels and chemicals [1]. Since the main components of coal and liquid fuels are carbon and hydrogen, the molecular size of coal is greater than 1000 while that of liquid fuels and chemicals are much smaller (about 200 for liquid fuels), and the hydrogen to carbon ratio (H/C, molar) of coal is about 0.8 while that of liquid fuels is about 2.0, the main functions of the coal-to-liquid processes are breakage of the coals molecular size and addition of hydrogen into coal, or, in other wards, destructive hydrogenation of coal. These processes are generally termed coal liquefaction. There are two types of coal liquefaction schemes in principle. One is direct coal liquefaction, which refers to decomposition of coal and addition of hydrogen directly to coal as stated above, involving gasification of about 1/3 of the coal for hydrogen and hydrogenation of 2/3 of the coal to liquid hydrocarbon products. Another one is indirect coal liquefaction, which refers to destruction of all the coal into gaseous carbon monoxide and hydrogen through gasification, and then hydrogenation of carbon monoxide to liquid fuels and chemicals. For both schemes, coal is usually ground into fine particles for better reaction, and the reactions have to be carried out at elevated temperatures and pressures, in the presence of catalysts. Destructive fractionation of coal commonly called pyrolysis of coal can also be categorized into direct coal liquefaction where solvent and catalyst are not used, and in many cases no hydrogenation is involved. Since coal always contains, besides carbon and hydrogen, inorganic materials, commonly refers to various types of metal oxides called mineral matter or ash, and sulfur, nitrogen and oxygen, etc. commonly called heteroatoms, coal liquefaction processes involve also rejection and/or capture and/or conversion of those materials. To meet the market standards and specifications for transportation fuels the liquefaction processes contain always various types of product upgrading steps after the formation of the primary liquefaction products. 2. History and current status Since the early 20th century, Chemists have dreamed of converting coal into clean liquid fuels that could compete with petroleum. In 1913, Friedrich Bergius invented the direct coal liquefaction process and was awarded the Nobel Prize for chemistry in 1931

for this pioneering work [2]. In 1923, Franz Fischer and Hans Tropsch discovered the indirect liquefaction process, which is addressed today as the FT synthesis [3]. Since then both of the coal liquefaction schemes experienced fast developments and went to commercial application in Germany and England in World II [4]. The peak production capacity in Germany was 4.23 million tons from direct coal liquefaction and 0.59 million tons from indirect coal liquefaction. In the same period of time, UK, Japan and France also built coal liquefaction plants. At the time, direct coal liquefaction process was operated at temperatures around 470oC and pressures around 70MPa, the FT synthesis was operated at 447-567oC and 10-13 MPa over iron catalysts [5]. The greatest successes in indirect coal liquefaction were made in South Africa since 1950s due to its limited petroleum reserves and abundant coal reserves, and political circumstances. The South Africa Coal Oil and Gas Corporation Ltd. (SASOL) had its first FT synthesis plant, Sasol I, in operation in 1955, the second and the third plants, Sasol II and Sasol III, in operation in 1982. During this period, the FT technology advanced significantly, from fixed-bed reactors and fluidized-bed Synthol reactors to fixed-fluidized-bed SAS reactors and slurry phase SSBR reactors. A fixed-bed reactor processes 30,000 m3/day of feed and produces 550 barrels of product per day. A slurry phase SSBR reactor produces 2400 barrels product per day. At the present time, the Sasol plants consume about 50 million tones of high ash coal annually, which results in production of about 5 million tones of transportation fuels and 2.6 million tones of chemicals. The Sasol plants are very complex with more one hundred products being produced. The products of Sasol I includes diesel, gasoline, light and heavy naphtha, liquid petroleum gases, fuel oil, cracking stock, paraffin, various types of waxes, various types of ketones and alcohols, fatty acids, phenols, creosote, pitch, ammonium sulfate, extrainer benzene, motor benzole, toluol, xylol, as well as nitrogen and oxygen, The chemicals produced in Sasol II and III include ethylene (560 t/d), alcohols (250 t/d), LPG (640 m3/d), sulfur (270 t/d), tar products (540 t/d) and ammonia (360 t/d) [1]. In 2000, Sasols annual profit was more than 1.3 billion U.S. dollars without government subsidy [6]. Different from the circumstances in South Africa, the discovery of the Middle East oil fields and the inexpensive petroleum available in early 1950s suppressed the development and application of coal liquefaction techniques in other parts of the world, until twenty years later in 1973 the Arab oil embargo revived the interest to cope with high oil prices. Since then many countries, including U.S., Germany, Japan, U.K., former USSR and China, had extensive government programs on coal liquefaction techniques. The major research and development of FT synthesis were made by Exxon, Mobil, Shell, Statoil, and Air Products, other than Sasoal, using coal feed or gas feed, with the largest being natural gas based at a capacity of 12,000 bbl/d (Shell Oil Company, Bitulu plant in Malaysia, 1993) [4]. Since early 1970s, many process concepts in direct coal liquefaction were developed and examined, including those listed in Table 1 [7]. By the mid of 1980s, demonstrations at scales of several hundred tons/d and conceptual designs of 23000 tons/d had been completed [7]. Although none of these processes went to commercial production due to low oil

price since the mid-1990s, generally between $15-20/bbl, the direct coal liquefaction techniques have advanced significantly as indicated by the decrease in reaction pressure, from 70 MPa to about 14-30 MPa, and increases in oil yield, from 44% (SRC-II) in late 1970s, to 58% (IGOR and NEDOL) and more than 60% (Catalytic/Catalytic Two-Stage Liquefaction) in 1990s [1, 5], and in economy, from an equivalent crude price of $50/bbl in 1970 to about $30/bbl in mid 1990s [4], to less than $25/bbl in 2000 (estimate at a capacity of 3 Mt/y, Shenhua, China) [5]. Table 1. Research and Development of Direct Coal Liquefaction [7] Country Process Capacity Time Location Company (t/d) U.S. SCRI/II 50 1974-1981 Tacoma Gulf EDS 250 1979-1983 Baytown Exxon H-Coal 600 1979-1982 Catlesburg HRI CTSL 2 1985-1988 Welsonville HRI Germany IGOR 200 1981-1987 Bottrop RAG/VEBA PYROSOL 6 1977-1988 SAAR Japan BCL 50 1986-1990 Australia NEDO NEDOL 150 1996-1998 Kashima NEDO U.K. LSE 2.5 1983-1995 Point of Ayr BC Former USSR ST-5 7.0 1986-1990 Pyrolysis as a mean of direct coal liquefaction had been thought to be a low cost process for liquid fuels and chemicals. During 1920s and 1930s there was a great deal of research and development in low-temperature pyrolysis, but interests dwindled in the mid-1940s when gas and oil became readily available at low prices. The interest renewed in early 1970s due to oil embargo and then declined again in 1990s with low petroleum prices [4]. Although it is relatively easy to obtained liquids from coal through pyrolysis, heating coal up under an inert environment to crack the coal structure with little heat consumption, the oil yields are low and significant portions of the product are solid chars, usually more than 50% by weight. The qualities of pyrolysis oil are also low, with low hydrogen-to-carbon ratio, generally less than one, with high fine-particulate matter content, with high oxygen and heteroatome contents that require extensive hydrogen addition to produce specification fuels, and with tendency to polymerize on standing that cause operational problems [1, 4]. Pyrolysis carried out in a hydrogen atmosphere is termed hydropyrolysis, which produces relatively more liquid with better quality compared to pyrolysis. However, the oil yields are also low, 29% from a subbituminous coal at a hydrogen pressure of 6.9 MPa, for example. Different from coking processes, which are carried out in batch reactors for production of metallurgical coke, the pyrolysis and hydropyrolysis are usually carried out in fluidized-bed reactors with the largest being a 270 t/d plant using non-caking coals [1]. Due to poor economics resulted from low oil yield and low oil qualities, there is no commercial coal pyrolysis plant in operation today. However, it is estimated that significant economic improvement could be realized by integration of coal pyrolysis with combustion of

chars, which utilizes the thermal energy of the hot char, and by integration of coal pyrolysis with oil refinery hydro-conversion operations, where the solubility characteristics of pyrolysis tar could improve the operability of hydrocarbon units [4]. Methanol synthesis from carbon monoxide and hydrogen is also considered as a route of indirect coal liquefaction, which was patented by Bayer in 1923. Methanol can be used as a fuel, an octane extender for gasoline, feed stock for the production of polymers and other chemicals. Since 1966, the traditional high temperature and high pressure methanol synthesis technique, which operated at 350-450oC and 25-35 MPa over a zinc oxide/chromium catalyst, has been replaced by the low temperature and low pressure technique, which operates at 220-280oC and 5-10 MPa over a Cu/ZnO/Al2O3 catalyst due to significant cost reduction in synthesis gas cleaning. The two main techniques are ICI with a multi-quench reactor and Lurgi with multi-tubular reactor, both of them currently have a space-time yield of 1 kg methanol/Ltr of catalyst per hour [4, 8]. In 2000 the annual methanol production in the world is around 28 Mt [9] with the largest single unit production of 1.65 Mt/y [10], and production cost of modern plants of $216/t [11]. Indirect coal liquefaction processes also include methanol-to-oil and methanol-to-olefin processes. An example of the methanol-to-oil process is Mobils Methanol-to-Gasoline, which uses ZMS-5 zeolite catalyst and was commercialized in New Zealand in 1986 with an annual oil production of 570,000 tons. It was not developed further, however, due to low petroleum prices. Representative works of methanol-to-olefin processes are pilot plant operation of UOP/Hydro-MTO at a scale of 0.5 t/d and commercial operation of Mobil MTO fluidized-bed technique in Germany at 2200 t/d using also zeolite catalyst. The methanol conversions were 90% or higher and the olefin selectivity may be greater than 80% [5, 12]. China has been considered to be a country most likely to commercialize coal liquefaction processes in the near future due to its un-balanced energy structure, deficient in petroleum reserve and fast increasing in oil demand. Projection [13] showed that Chinas petroleum demand will be 450-610 Mt/y with 60-70% been imported in 2020, this would cause significant energy, economical and national security problems. China had a FT plant producing 100 tons/y crude oil in 1943-1945, and 47000 tons/y in 1959 [14] before been dismantled due to the discovery of Daqing oil field. Stimulated by 1970s energy crises, the Institute of Coal Chemistry (ICC), Chinese Academy of Science resumed FT synthesis research with emphases on catalysts and reactors in 1980s. Since 2002, ICC had successfully operated a 1000 tons/y slurry phase FT synthesis unit, the largest by then in China, tested a number of catalysts and reactor configurations, and had thorough studies on reaction kinetics, catalyst engineering, product upgrading, hydrodynamics and processing simulation. Currently a 160,000 tons/y FT plant has been designed and is scheduled to be commissioned in 2008. The largest direct coal liquefaction demonstration project carried out ever in China is currently being deployed by Shenhua Group, the largest coal producer in China. A 6 tons/d PDU unit is currently being tested in Shanghai and the first production line of a capacity of 830,000 tons of ultra-clean and low sulfur diesel fuel and gasoline per year (20,000 barrels per day) is being constructed in inner Mongolia, which is scheduled to

be commissioned in the end of 2007. The investment of this production line is estimated to be $850 million USD. The second and the third production lines are to be built after completion of the first line [15]. 3. Challenges and works needed for further development in coal liquefaction As discussed earlier, coal liquefaction techniques, direct and indirect, have undergone significant advancement in the 20th century and there are incentives to commercialize the processes in a number of countries in the recent years, in addition to Sasol, South Africa. However, to further increase the efficiency of these processes, to be competitive with petroleum in the market and to meet the increasing stringent specifications for transportation fuels and requirements of the environment protection, many works need to be done. 3.1 Direct coal liquefaction The main problem in commercialization of direct coal liquefaction process is that the newer technologies, which are much more advanced and sophisticated than the technologies of 1940s, have not undergone demonstration at large scales. It is not quite sure whether the key equipments and the level of unit operation techniques would meet the requirements of long time and stable operation. One example which has caused a quite bit of suspicion on maturity of large scale direct coal liquefaction technology is insufficient mixing of solid (coal and catalyst), liquid (high-molecular-weight oil) and gas (mainly hydrogen) experienced in a large diameter slurry phase reactor, which may result in poor reactor performance, low coal conversion and, more importantly, sedimentation of solid coal particles in the reactor. A circulating pump, which is regarded to be the heart of the reactor and has to be installed to enhance the slurry circulation in the reactor at temperatures as high as 475oC and pressures about 20-30 MPa, has not been tested at the actual scale for sufficient time period. Direct coal liquefaction has a thermal efficiency of around 60%, which is higher than that of FT synthesis, 50-55%. The products of direct coal liquefaction, however, are high in aromatic. Although it can be refined to meet all current specifications for transportation fuels derived from petroleum, it would be more difficult to keep up with the increasingly stringent fuel specifications in the future. For example, production of marketable diesels requires additional hydrogenation (therefore, hydrogen) to decrease smoking tendency and to increase the cetane number. While it is achievable to increase the cetane number to 40s with affordable cost increase at the present level, further increase in cetane number to meet the future specification would be more costly. Productions of high-quality gasoline are also somewhat difficult, while hydrogenation reduces the fuels aromatic content as required by the Clean Air Act amendments of U.S. for motor fuels, it reduces also its octane number. The octane numbers of the gasoline are in the range of 70-80 with aromatic contents of 20-30% after hydrogenation, and about 100 with aromatic contents of about 80% after reforming [16]. After significant cost reduction for direct coal liquefaction since early 1980s, future improvements in economics are unlikely to be attributed to any single breakthrough but rather to accumulation of improvements. This has been demonstrated recently by [4]:

 Development of controlled precipitation for solids removal from the liquid product, which is more effective and reliable than a filtration process. Relocation of the second catalytic reactor from downstream of the solids removal and distillation systems to upstream, which improved operation and gave better control over the chemistry of liquefaction. Bypassing some of the recycled liquid around the solids removal unit to slurry the feed coal, this increases the efficiency of the unit. Improved catalysts for higher yield and better selectivity, and lower cost and less usage. Co-production of direct coal liquefaction fuels and electricity with advanced gasification systems (IGCC) are expected to reduce the cost of the liquid fuel. The estimated cost reduction is significant and likely to be in the range of $5/bbl [4]. Co-processing of coal with other hydrocarbon streams, either a resid fraction of petroleum processing or a waste, such as post-consumer plastic material and tire rubber, is also to be effective in cost reduction of direct coal liquefaction fuels, because it may reduce the severity of the liquefaction conditions compared to a stand-alone coal hydrogenation process, recycle to extinction the low value and heavy fractions, take advantage of synergies of operation, and the favorable economics and/or politics in elimination of unneeded streams [1]. 3.2 Indirect coal liquefaction: FT synthesis Reactions between carbon monoxide and hydrogen for paraffinic hydrocarbons and oxygenates are all exothermic, and the heat evolved is approximately 20 percent of the heat of combustion of the product. Therefore, control of reaction temperature is a major engineering challenge [4]. Development of catalyst, which provides satisfactory selectivity to the desired product in a narrow temperature range and is chemically and mechanically stable for long period of time, is another challenge in chemistry and in engineering. FT synthesis produces a wide range of products, including light hydrocarbon gases, paraffinic waxes, and oxygenates. Further processing of these products is necessary to upgrade the waxy diesel fraction, the low-octane-number gasoline fraction, and the large amounts of oxygenates in the produced water. A great current interest is in the production of high-molecular-weight material for premium diesel and jet fuels, which can be adjusted by choice of catalyst and operating conditions [4]. Much of the research and process development on indirect coal liquefaction after 1990s is aimed at matching the synthesis conditions with modern, efficient coal gasifiers such as those developed by Texaco, Dow, and Shell. Whereas the newer gasifiers are considerably more efficient, the gas produced has a much lower hydrogen/carbon monoxide ratio [1]. Slurry reactor has been a choice since it can accept the low hydrogen/carbon monoxide synthesis gas produced from these modern coal gasifiers without the additional step of shifting the ratio required by the traditional fixed-bed systems, and provide better reaction heat removal and temperature control. Separation of the catalyst from the slurry medium and the waxy products are important engineering challenge in large-scale FT synthesis.

Recently it is commonly recognized that integration of FT synthesis with electricity generation offer opportunities for significant overall efficiency increase and cost reduction such as those proposed in Vision 21 of U.S. DOE, Syngas Park by Shell, and EAGLE by Japan in later 1990s. Studies of once-through F-T synthesis with co-production of electricity in an advanced IGCC facility indicated an equivalent crude cost reduction of $5 to $7/bbl [4]. Successes of this configuration may rely on close integration of the two processes and advancements in unit operation, including: Improved catalysts, reaction conditions and reactor configuration for once-through reaction. Integration with modern gasifiers. Low cost and high efficiency synthesis gas cleaning technique. Sulfur resistant synthesis catalysts. High efficiency membranes for separations for O 2, H2 and CO2. Understanding of reactor behaviors for gasification, synthesis and upgrading. 3.3 Indirect coal liquefaction: Methanol synthesis and methanol-derived fuels The current methanol synthesis technology, fixed-bed, low temperature and low pressure over Zn/CuO/Al2O3 catalyst, has been considered to be very efficient with very high selectivity (commonly greater than 99.5%). Since it is restrained by thermodynamic limitation on reaction conversion and poor heat transfer in the catalyst bed for reaction heat removal, the single pass conversion of carbon monoxide in a fix-bed reactor has been limited to around 12 vol.% and the methanol concentration in the reactor effluent to about 6 vol.%, this made a large amount of un-reacted synthesis gas recycle a must for the technology. In this regard, researches have been focused on new catalysts and new reaction route for lower temperature operation (lower than 220oC to reduce the thermodynamic limitation), slurry phase and supercritical phase operation for higher conversion and better heat removal and temperature control, and fluidized-bed operation for higher conversion. However, up to date, none of the newer processes developed were commercialized due to limited improvements achieved on overall economy. Research and development for converting methanol to gasoline, olefins, and diesel fuel has been extensive worldwide, including Mobil Research and Development Corporation, Union Rheinische Braunkohlen Krafstoff AG, Uhde Gmbh, Haldor Topsoe, Mitsubishi, and Lurgi. Demonstrations for methanol to gasoline were made in various scales based on coal or natural gas, with the largest being natural gas based Mobil process in New Zealand at 14,500 bbl/d. Conversion of methanol to olefins has been demonstrated in Germany at a 100 bbl/d scale with high quality gasoline as side product. At present, however, these processes seem do not have major advantages over the FT synthesis for hydrocarbon fuels [4]. 4. Controversial and questions needs to be addressed Although tremendous progresses have been made in past decades on advancement of coal liquefaction processes and the technologies are competitive or near competitive with petroleum-derived fuels depending upon the oil price, the coal liquefaction

processes by nature are characterized by complexity and large scale operations (by far the most complex and largest plants), and are energy and investment intensive, these have led to doubt and misconceptions on the processes, and exaggeration of the problems in general public, even in scientific communities not directly dealing with coal conversion. It is important to note that some of these questions are not technical, but have had crucial influence on policy making and on long-term planning on the development of clean coal technology. To overcome these problems some key facts need to be addressed and made known to the public, policy makers, government officials and to the general scientific community. 4.1 Coal liquefaction is a realistic choice to the countries heavily dependent on imported oil There is considerable uncertainty about the volumes of coal and oil that exist worldwide and the amount of these resources that can ultimately be recovered. However, the current proven reserve assessments and the annual demand of these resources for the world, shown in Table 1 for 2000 and 2020, assure that there is enough oil to comfortably meet demand for the next two decades and enough coal to meet the demand for this century and the next. In this regard, there would have no need to convert coal into liquid fuels at least in the next 20 years. Table 1. Proven reserves and annual demand of coal and crude oil [17] Source Proven Reserves Demand in 2000 Demand in 2020 (Mtoe) (Mtoe) (Mtoe) Coal 456,000 2300 3300 Oil 3500 5400 136,000 assessments made in 2001. including natural gas liquids. However, the oil and natural gas reserves are not well dispersed geographically as coal, and many regions in the world are deficient in oil and nature gas reserves but abundant with coal reserve, such as South Africa, China and India, as indicated in Table 2. Compared to the annual demands of oil and coal, South Africa has no oil but enormous coal reserves. The oil reserves of China and India are low, equivalent to 12 and 6 years demand, respectively, but the coal reserves are sufficient for more than 100 years use at the current consumption levels. Since energy security requires the affordable, reliable and sustainable supply of energy, for commercial and household use, and a low-cost and uninterrupted energy supply is fundamental for economic development and political stability [18]. The huge oil demand resulted from fast economical development in these countries had made oil supply a national energy security problem in addition to economic and other problems. The successful operation of Sasol, South Africa, has demonstrated the suitability of coal liquefaction for this type of countries. Its experience has shown that an un-balanced energy structure can be balanced by conversion of coal at acceptable costs if it is determined to do so.

Table 2. Proven reserves and demand of coal and oil in South Africa, China and India Coal ( Mtoe) Oil (Mtoe) Country Proven Demand Proven Demand Reserve (2001) Reserve (2001) South Africa [19] 42,000 123 4 23 P. R. China [20] 85,000 644 2700 227 India [19] 52,000 290 639 100 Nuclear and hydro energies have steadily constitute about 10% of the world primary energy supply in past decade and are assessed to be in the similar scale in the decades to come. Renewable energies such as biomass, solar and wind energies will constitute even smaller share in the worlds overall primary energy makeup, about 2-3% in 2020 [17]. More importantly these energy forms can not be used directly in the dominant motor vehicles or transformed at reasonable cost to liquid hydrocarbon fuels in the foreseeable future. Since it is not expected to have revolutionary changes in the means of motor vehicles, and the use of motor vehicles are expected to increase in the coming decades, especially to the countries deficient with oil, the supply of liquid hydrocarbon fuels based on coal conversion inevitably becomes the only logical choice to these countries, in addition to importing oil, especially in the first half of the 21st century. 4.2 The thermal efficiency of coal liquefaction is acceptable in comparison to other energy systems One of the obstacles in development and commercialization of coal liquefaction processes is the misconception in public and decision-makers that coal liquefaction is by nature wasting of energy because that production of one ton of oil will generally consume about 3.5 tons coal in direct coal liquefaction and close to 5 tons coal in indirect coal liquefaction. These alarming weight ratios, while being true by number, are improper and misleading descriptions for energy processes, since the energies contained in one ton of coal are much lesser than the energies contained in one ton of oil, and any types of coal contains significant amounts of ash which has no heating value. Theoretical calculation and actual practices have shown 50-55% overall thermal efficiencies for indirect coal liquefactions and about 60% for direct coal liquefaction [4]. The current state of art of coal-fired power generation, in contrast, has thermal efficiencies of 45% for ultra-supercritical steam conditions greater than 31MPa and 600 [21]. Although it is not logical to compare thermal efficiency of power generation to C that of coal liquefaction due to the fact that electricity is a more efficient end-user energy form than oil, but again liquid fuels are what deficient in many countries not electricity. Co-generation of liquid hydrocarbon fuels with electricity from coal via gasification has been a hot topic recently, Vision 21 of U.S. DOE, for example, which is projected to increase the overall energy conversion efficiency of coal significantly further. 4.3 High investment of coal liquefaction processes does not necessarily mean

poor economy Compared to current chemical industries especially oil refineries the coal liquefaction processes are significantly more complex and more investment intensive. It was estimated that [5], at an oil production capacity of 2.5 Mt/y, an oil price of $21.5/bbl and a coal price of $10.0/t, the overall investment per unit product of a direct coal liquefaction plant is about 4.72 times that of an oil refinery. The utility consumption of the direct coal liquefaction is also higher than the oil refinery, 5.95 times for fresh water, 7.3 times for electricity, and 7.52 times for fuel. However, the overall profit of the direct coal liquefaction is 3.96 times the oil refinery, indicating better economy for coal liquefaction. It is important to note that the above economic comparison is influenced by the prices of oil and coal, but the price of coal plays a less important role compared to that of oil, because the major parts of the direct coal liquefaction cost is the processing. For example, at a direct coal liquefaction cost of $32.9 per barrel of oil, the cost of coal (at a unit price of $22.7/ton) corresponds to about $12.4 per barrel of oil produced. A 50% increase in coal price (to $34/ton) would result in about an 16% increase in oil cost. It is also important to note that coal liquefaction plants are more likely to be located at the vicinity of coal mines, where the price of coal is low and stable, and not influenced by fluctuations in transportation/shipping cost. But the oil price is expected to increase in general, although not as fast as we have experienced in 2004 and 2005, due to cost increases in exploration, extraction and transportation. These would further make coal liquefaction more economical in the future. 4.4 Use of methanol directly to fuel automobile may not be a realistic choice The direct used of methanol as a gasoline blending agent has been practiced since 1970s in many countries, but this use is limited by its relatively low solubility in gasoline and its tendency to be extracted by any water present in the gasoline distribution system [4]. Its use as the primary fuel component offers good performance but is limited by [4]: Cost in competition with coal liquefaction fuels (The production cost of methanol in a modern methanol synthesis plant is about $216/t [11], corresponding to an oil equivalent price of $53.5/bbl, assuming that the heating value per unit weight of methanol is about 55% of that of oil, and that one ton of oil equals to 7.35 barrels). Its high toxicity and a potential problem with formaldehyde emissions. The difficulties of establishing an adequate distribution system and availability of automotive systems designed to use this fuel. Potential reaction with elastomers used in the automobile fuel system. The fact that it burns with an invisible flame. The potential for ground water pollution. Almost doubled storage and transportation load and a limited driving range because of the low energy content per unit volume (about 55% of that of oil). 4.5 Combination of direct coal liquefaction with FT synthesis may be

synergistic on thermal efficiency and fuel quality It is generally accepted that fuels produced from direct coal liquefaction contains more aromatic and is of lower quality than the fuels from FT synthesis. With increasing environmental concern and increasingly stringent emission regulations, fuels produced from direct coal liquefaction will be less competitive, with cetane number of 40-45 after hydrogenation for diesel [16]. The fuels from FT synthesis, however, are of super-high qualities with cetane number as high as 75-80, much exceeding the current market specifications, but with somewhat lower thermal efficiency (50-55%) compared to direct coal liquefaction (60%). Blending of FT diesel with petroleum-derived diesel has been proposed for meeting the fuel specification at the lowest cost. Blending FT diesel with direct coal liquefaction diesel would certainly be a choice. 4.6 Pollutants (sulfur and nitrogen, and ash) removal and CO 2 separation are an overlooked plus compared to direct combustion of coal Coal contains significant amount of sulfur (usually in a range of 1-3%) and nitrogen (usually in a range of 1-2%). To meet the fuel specifications coal liquefaction processes contain steps for sulfur and nitrogen removal, after gasification of coal and formation of the primary liquid products. The sulfur and nitrogen contents of the diesel and gasoline produced are usually in a range of 2 ppm [16]. Conversion of the sulfur and nitrogen into marketable products inside the coal liquefaction plants is convenient, efficient and contributes significantly to the overall sulfur and nitrogen reduction of coal utilization. Coal liquefaction processes, direct and indirect, involve hydrogen making, i.e. conversion of a portion of carbon in coal into hydrogen through gasification and/or water-gas-shift reaction. In principle about 1/3 of the carbon in coal needs to be used for hydrogen making, which suggests a conversion of 1/3 of the carbon in coal to carbon dioxide, a greenhouse gas which is mainly released from the use of coal. This carbon dioxide is in a much pure state in comparison to that in flue gases from combustion of coal, less than 15 vol.% in general, and can be easily recovered. This allows significant cost reduction in carbon dioxide sequestration, and will be a more significant factor improving the overall assessment of coal liquefaction. Coal contains a large fraction of inorganic materials (ash), usually in the range of 10-30% by weight. Amount of inorganic material produced in the form of gasification and combustion ash from a coal liquefaction plant is similar to the amount of oil it produced. The rejection of this amount of ash not only reduces the transportation cost otherwise to be paid if coal is to be shipped and facilitates utilization and/or disposal of the ash because a coal liquefaction plant is likely to be located in the vicinity of coal mine. Environmental benefits gained in this area are also important. 5. Conclusions and suggestions The brief discussion presented in this paper results in following conclusions: Coal liquefaction is a realistic choice for countries deficient with oil but abundant with coal reserves. Coal liquefaction processes are complex and characterized by heavy investment, but they are economically competitive at oil price of $25/bbl and at

cost of coal at coal mines (without cost of shipping and handling). Thermal efficiency of coal liquefactions is reasonably high, 60% for direct coal liquefaction and 50-55% for indirect coal liquefaction. Liquefaction of coal significantly reduces shipping and handling cost of coal, a reduction of 75-80% on thermal energy equivalent bases. Liquefaction of coal produces ultra-clean fuels and converting the polluting elements such as sulfur and nitrogen into marketable products at low cost. High concentration carbon dioxide rejected from coal liquefaction plants provides a good platform for carbon dioxide sequestration at low cost. Integration of direct and indirect coal liquefaction processes and blending of the fuels produced in these two processes will result in fuels that meet the increasing stringent specification requirement at high thermal efficiency. Integration of coal liquefaction plants with modern electricity generation via gasification of coal will result in about 15% reduction in fuel cost. Use of methanol directly to fuel automobile may not be a realistic choice due to various types of problems, and the cost of methanol production is not significantly different from, or even higher than, that of direct coal liquefaction and FT synthesis on energy base. The brief discussion presented in this paper results in following suggestions: Industry participation and government funding for large-scale pilot plant are necessary. A broad range of fundamental and exploratory researches are needed to advance understanding of coal conversion chemistry, such as low pressure operation, direct use of gasifier product, use of low-cost subbituminous coal or lignite, removal of oxygen in coal, and elimination of product hydrocarbon gases, better use of the heavy product, co-liquefaction of coal with low-value carbonaceous materials, integration of direct coal liquefaction with existing petroleum refineries, and co-generation of coal-liquefaction fuels with gas based electricity generation. Environmental beneficiations from coal liquefaction, including reduced cost for carbon dioxide sequestration, should be fully considered in assessment of coal liquefaction. References 1. D.B. Dadyburjor and Z. Liu, in Kirk-Othmer Encyclopedia of Chemical Technology, Fifth Edition, 2004, Editor-in-Chief: Arza Seidel, Wiley-Interscience, John Wiley & Sons, Inc., Hoboken, New Jersey, ISBN 0-471-48494-6(set) - ISBN 0-471-48517-9 (v. 6), Vol 6: 832. 2. G. P. Huffman, Remarkable transmutation: CFFLS researchers turn coal and waste into oil, http://www.ntcce.wvu.edu/news/remarkable.htm 3. H. Schulz, Short history and present trends of Fischer-Tropsch synthesis, Applied Catalysis A: General, 186: 3-12, 1999. 4. Coal: Energy for the Future, Committee on the Strategic Assessment of the US Department of Energies Coal Program, Nation Research Council, ISBN:

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