T. Boone Pickens is right about the strategic importance to stop spending $700 billion each year on imported foreign crude oil. This is the equivalent of a Federal bailout equal to the 2008 bailout every year. The Obama administration should include coal derived liquid fuel as a key component of the U.S. Energy Policy.

Coal-to-Liquids is proven technology. The U.S. does not have many coal gasification plants, because we’re a capitalist society. Our plants are built for profit by private for-profit companies. This means that as long as it is more profitable to use crude oil for energy, private for-profit companies will do so. But, this does not necessarily mean that this strategy is the best long term energy policy for the United States.

The best long term strategy for a domestic energy policy may not be utilization of whatever energy source is cheapest today. T. Boone Pickens hits a nerve with the American public with his television advertisements that the U.S. is going broke purchasing crude oil for its oil based energy.

The Chinese government refuses to be dependent upon foreign import crude oil and is building coal gasification plants to provide electricity, diesel, gasoline, jet fuel, substitute natural gas, fertilizer, hydrogen and other chemicals. South Africa used it’s coal reserves to develop energy through the operations of SASOL.

It’s reasonable to consider that the current U.S. energy policy based on purchasing foreign crude oil could bankrupt the county in the future. Most people still remember President Reagan’s famous speech towards the end of the Cold War with Russia, “Mr. Gorbachev knock down this wall.” The primary reason that the U.S. won the Cold War is that Russia went bankrupt. The specter of the U.S. going bankrupt by continuing to import foreign crude oil shoud be considered a national security risk.

The United States should develop coal-to-liquids energy projects as one component of a comprehensive energy policy designed to relieve national dependence on imports of foreign crude oil. These projects will cost between and $4 and $8 billion and Federal loan support is needed to get this industry jump started. The Federal government should provide loan guarantees for 50% of the cost of the projects.

The National Energy Technology Laboratory (NETL) is focusing research on combining coal and biomass for gasification. The goal is to improve efficiency and reduce the level of CO2 emissions.

Biomass can be many different types of natural products: corn stower, switchgrass, poplar, sugar cane stalks, even algae. The NETL is not considering any food crops, especially corn, because corn is an important source of food for not only this country, but also poor and developing countries. The combined coal and biomass feedstocks are being tested for gasification using slurry type gasification processes. The major gasification technology providers are GE, ConocoPhillips (E-Gas), Shell and Siemans, but there are other gasification technologies. The NETL is testing to determine which biomass products and what mixtures provide the optimum feedstocks for gasification.

The coal and biomass is converted to syngas using a gasification process. The syngas can be used to power gas turbines and generate electricity or with further processing it can be converted to liquid fuels such as jet fuel, diesel or gasoline. The syngas can even be converted to commercial grade H2, ammonia and other chemical products.

The use of natural occuring products that are abundant in the U.S. will help reduce the countries dependency on crude oil. This is important economically and strategically.

The environmental implications are outstanding. Environmentalists consider biomass a CO2 (carbon) neutral feedstock. This is because natural growing plants will decompose naturally and release their carbon into the atmosphere.

“With the blending of coal and biomass in the co-gasification process, you decrease the environmental impact because the biomass is carbon neutral. If you apply carbon sequestration technology, you actually have a process that is carbon negative – it consumes the carbon” said Brian Morreale researcher at NETL’s Office of Research and Development.