Sure coal-to-liquid is a dead end — but dead ends never stopped the Pentagon before. Heck we now spend nearly $10 billion a year pursuing Star Wars weapons!

But here comes the (potentially) amazing news from the Aug. 5 Defense Environment Alert ($ub. req’d):

The departure of key Air Force officials is casting doubt on the future of the service’s controversial synthetic fuels program and raising questions about industry’s ability to use the military as a springboard for the development of a fully-fledged coal-to-liquids (CTL) program in the country.

Already, a source close to DOD indicates, the Air Force’s new leadership may be dropping its request to Congress for long-term contracting authority for fuel purchases beyond the five years currently allowed. Air Force officials could not confirm this, but if true it would be a blow to the CTL sector’s hopes of guaranteeing a revenue stream — and hence investment — through the military.

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Semi-kudos to the Air Force if they abandon their pursuit of a climate-destroying fuel source for its planes. Here is the rest of the story:

The resignation July 28 of the Air Force’s top energy official, William Anderson, means the service has now lost its two most prominent advocates of coal-based synthetic fuels, following the firing earlier this year of Air Force Secretary Michael Wynne. Anderson’s departure, set for mid-August, will mark the beginning of a new period of uncertainty for developers of CTL fuels, who have pinned their hopes on large military contracts to jump-start commercial CTL fuels production.

In his letter of resignation to President Bush, Anderson wrote that the recent changes in Air Force leadership have created “constraints on my ability to serve you,” adding “I can no longer draw on a critical mass of leadership within the Pentagon who share your vision for the support necessary to lean forward to aggressively” support the service. A vocal proponent of alternative fuels, from both coal and biomass sources, Anderson was seen as a key driver behind the service’s goal of sourcing half of its domestic fuel requirements from domestic non-petroleum sources by 2016.

That target is now in question, as the new acting Secretary of the Air Force, Michael Donley, has told lawmakers that the time is not yet right to move beyond the exploratory phase of the fuels program, involving feasibility studies, to full implementation of the plan. Although he has pledged to continue the Air Force effort to certify its aircraft fleet to fly on synthetic fuels, Donley harbors doubts about the ability of the market to supply the service’s needs at a competitive price. The Pentagon in July released its fiscal year 2008 omnibus budget reprogramming that includes a $7 million increase for the synthetic fuel certification effort. This brings the program’s total funding to $27 million.

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At his July 22 confirmation hearing Donley told members of the Senate Armed Services Committee that the synthetic fuel program’s long-term survival depends on the service’s ability to find a market-based alternative fuel that costs the same or is cheaper than standard jet fuel. Donley has yet to be confirmed in his post by Congress. “As we approach this problem going forward, synthetic and blended fuels, even at the higher costs of — [standard jet fuel] per barrel that we’re experiencing today, as I understand it, will be higher yet per gallon for us to operate with these synthetic fuels,” said Donley during his July 22 confirmation hearing.

“So we need a market-based solution across the government and across the commercial aviation sector that will help drive that change and push down the cost.” Donley said the Air Force would have to consult further with other federal agencies and industry on the viability of the fuels program before implementing the full-blown fuel requirement. He said the same also applies to plans being studied by the service to site small nuclear reactors on Air Force bases, following a request that this be considered by Sens. Larry Craig (R-ID) and Pete Domenici (R-NM). This throws into question whether the Air Force will issue a letter of intent this year to talk to industry over the specific of the reactor plan, as promised by Anderson before his departure.

The source close to DOD says he believes that Donley’s approach effectively punts the debate over military support for CTL to the next administration, and possibly a new Air Force leadership, next year. Under questioning from GOP senators during a July 22 hearing, Donley indicated a lack of familiarity with a key policy issues for the sector. He told Sen. Jeff Sessions (R-AL) that he was not familiar with section 526 of the 2007 energy law, which prohibits the federal government from purchasing alternative fuels that emit high “lifecycle” greenhouse gas (GHG) levels than conventional petroleum. The measure was introduced by Rep. Henry Waxman (D-CA), chairman of the House Committee on Oversight and Government Reform, specifically to block military sponsorship of coal-based fuels, which emit more GHGs than petroleum if the gases are not trapped and stored during production. Republican lawmakers have made attempts to repeal the measure, without success, although Waxman has been forced into a clarification of the intent of section 526, claiming its was never supposed to block purchases of fuel from certain sources, such as oil shale, that could be construed as “non-conventional.”

A spokesman for the CTL industry says “we are sorry to see Bill Anderson go,” but the departure of Anderson and Wynne does not mean the end of military backing for CTL technology, and neither does the change of administration next year. “We would expect that regardless of who wins in November, the Air Force is still going to have a significant issue” with high energy prices, the spokesman says, adding that coal-based fuels still offer the best domestic solution.

The spokesman points to a new bill — S.3345 — recently introduced in the Senate by Sen. Jay Rockefeller (D-WV) that seeks to support the CTL industry. The bill contains a raft of measures designed to foster the industry, including tax incentives, a standby loan program to support producers if oil prices fall below a threshold level to be set by the legislation, a publicly funded Future Fuels Corporation to conduct research into CTL fuels, and a measure allowing CTL companies to sequester methane from their mining operations instead of carbon dioxide. Methane is a more potent GHG than CO2. Rockefeller includes provisions to spur the development of carbon sequestration in such geological features as saline aquifers.

The CTL spokesman admits that with time running out on this administration, and many democrats opposed to CTL technology, Rockefeller’s bill stands little chance of passing in this Congress. “Trying to move anything through this year is very difficult,” he says, but insists that interest in CTL is still alive. He offers as proof the plan, announced in July by CTL developers CONSOL and SES, to open West Virginia’s first ever CTL plant in Benwood, WV. Under the plan, which has Sen. Rockeller’s blessing, the Benwood plant would use methanol to produce CTL fuel, rather than the Fischer-Tropsch process more commonly touted as the way to derive liquid fuels from coal.

It is unclear how other aspects of the Air Force’s broader energy program will be affected by the switch in leadership. The service is investing in renewable energy technologies such as solar power, wind energy and biomass to reduce its dependence on traditional fossil fuel sources. Meanwhile, efforts continue at DARPA, DOD’s long-rang technology research arm, to create viable jet fuel from a variety of biomass feedstocks. Jet fuel forms the bulk of the Air Force’s fuel requirement, accounting for a huge chunk of the service’s total budget.

This post was created for, a project of the Center for American Progress Action Fund.

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