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More than two decades ago, in the wake of the energy crises of the 1970s, Congress enacted a tax break to spur the creation of a broad-based synthetic-fuels industry to ease U.S. dependence on foreign oil. The idea was to turn plentiful coal into synthetic natural gas to heat homes and run factories or into synthetic crude oil that could be refined into gasoline and other petroleum products. The law was supposed to encourage new technology and the building of giant plants each costing upwards of $1 billion to turn coal into liquids or gas. For a variety of reasons, including falling oil prices and changing administrations, Washington lost interest, and the industry never materialized as it was envisioned. The original goal wasn't folly, as demonstrated across the border in Canada, where the government and industry persevered with synfuel development and built a thriving business that today sells millions of barrels of synthetic crude oil to the U.S. annually (see following story). Meanwhile, the U.S. synfuels tax credit stayed on the books, dormant until the 1990s, when those who comb the Internal Revenue Code for opportunities came up with a new kind of synfuel plant, one that would cost a few million dollars and be portable.
What happens inside them? To alter coal's chemistry so it qualifies as a synthetic fuel even though it looks and burns like regular coal, some plants merely spray newly mined coal with diesel fuel, pine-tar resin, limestone, acid or other substances. Others mix coal waste with chemicals, coat it with latex and blend it with untreated coal to form briquettes. And plant operators in some extreme cases do nothing at all. Whatever the process, it's still coal.
This may explain why synfuel owners, in addition to being reluctant to talk about their processes, are not eager to let anyone actually see one of these so-called plants. Half a dozen electric utilities contacted, from DTE in Detroit to Progress Energy in Raleigh, N.C., declined to give TIME a tour. As did plant operators.
Actually, plant is a grandiose term for such operations. The facilities consist of little more than a collection of conveyor belts, nozzles, mixing vats, a few small buildings and sometimes equipment to convert the coal into pellets or briquettes. The spraying equipment is fairly simple. According to an industry consultant who asked not to be identified, it resembles "what you go through in a car wash, like the sprayers that wash your car." The plants can be easily taken apart and trucked hundreds of miles and then reassembled. "It's not that complicated to take one of these apart, load it on trucks and take it someplace else and put it back together," says an industry official. If the process seems flimsy, keep in mind that the real product is not synfuel but tax credits. And lots of people are cashing in.
FUEL FOR THE BOTTOM LINE