The interwebs are abuzz over a new study from RAND Corp., which finds that unconventional liquid fuels like oils sands and liquid coal would dramatically increase greenhouse gas emissions relative to regular oil. In other news, the earth is round.
It also found that Canadian tar sands are economically competitive given current (and expected) prices of oil, even in the presence of a price on carbon. Not good.
These fuels set "energy independence" and climate change in straightforward opposition. Our approach to them will reveal whether we take global warming seriously.
Here’s the report summary [PDF]. The key findings:
- Basic production costs for SCO [synthetic crude oil, from tar sands] are likely to be cost-competitive with conventional petroleum fuels.
- While basic production costs for CTL [coal-to-liquid] also appear to be competitive with conventional petroleum fuels across a range of crude-oil prices, CTL competitiveness is more sensitive to technology costs and to oil prices.
- Higher oil prices or significant energy-security premiums increase the economic desirability of SCO and CTL.
- Even with future policy constraints on CO2 emissions and their associated costs, SCO seems likely to be cost-competitive with conventional petroleum; the main potential constraint on SCO production is its local and regional impacts.
- The cost-competitiveness of CTL is more dependent than that of SCO on the costs of CO2 emissions and CCS.
- Unconventional fossil fuels do not, in themselves, offer a path to greatly reduced CO2 emissions, though there are additional possibilities for limiting emissions.
- Relationships among the uncertainties surrounding oil prices, energy security, CCS costs, and CO2-control stringency have important policy and investment implications for CTL.