Report Looks at Costs and Benefits Associated with Fossil Fuel Production
Published By: The New York Times
October 8, 2008
The Costs of Unconventional Fossil
Fuels
By Kate
Galbraith
Producing fuel in
unconventional ways, such as from oil sands or
coal, would significantly increase carbon
emissions relative to conventional oil
production, according to a study released on Wednesday by the RAND
Corporation, the nonpartisan research institute
based in Santa Monica, Calif. (see also this
report summary).
The study also looked at the costs
of producing oil from oil sands (a vast
resource in Alberta, Canada), and fuel —
primarily diesel — from coal, a process often
referred to as converting “coal to liquids.”
It found that crude derived from
oil sands is already cost-competitive, and
would likely remain so even if policymakers
introduced a cap on carbon emissions that drove
up the price of the
fuel.
However, the economics of
coal-to-liquids are less certain, RAND found,
because the technology is largely untested and
its viability would be significantly affected
by fluctuation in oil prices. (The governor of
coal-rich Montana, Brian Schweitzer, is a big
proponent of coal to liquids; see this
op-ed in the New York Times three years
ago.)
The study avoided a determination
on the emissions profile and price of oil-shale
production, another unconventional domestic
energy source, due to technological
uncertainties.
On carbon, the study
measured the so-called “lifecycle emissions” of
those fuels — a term that captures not only the
fuels’ carbon content, but also the emissions
associated with mining, transporting and
otherwise manufacturing and delivering them. It
found that producing synthetic crude oil from
oil sands had 10 to 30 percent higher emissions
than conventionally produced crude. (Oil-sands
production also requires a huge amount of
water, another environmental concern.)
Coal to liquids carried more than
twice the emissions of conventional
crude.
The study also looked at carbon
capture and storage — the still early-stage
concept of capturing carbon emissions and
pumping them underground. This would reduce
emissions from unconventional fuels, but at a
high cost. Because of the concerns about
emissions, carbon capture and storage “would
basically have to be a pre-condition” of
coal-to-liquid fuels, said Paul Bledsoe of the
National Commission
on Energy Policy,
which sponsored the report.
“It’s clearly going to take a good
deal of government demonstration projects as
well as significant tax incentives for
commercial-scale application to begin,” he
said. The study found that carbon capture and
storage could add 25 percent to the cost of
coal to liquids
production.
The RAND study was concluded
before President George Bush signed into law
last week’s bailout bill, which included incentives for
dirty fuels such as oil shale and coal-derived
airplane fuel, as my colleague Jad Mouawad
wrote last week.
The law also includes incentives
for carbon capture and
storage.
