Alternative-Energy Grab

China Snaps Up Engineers And Materials

 

By WILLIAM MATTHEWS

01/15/2007

When the U.S. Air Force proved in December that a B-52 bomber can fly perfectly well on liquid fuel made from natural gas, the boosters of alternative fuels cheered the successful flight as an important step toward breaking U.S. dependence on foreign petroleum.

But even as the Air Force passed that milestone, a new roadblock emerged on the road to energy independence: China.

Like the Air Force, the Chinese government sees the value of producing synthetic fuel from domestic resources rather than relying on the volatile world petroleum market. But unlike the Air Force, China has billions of dollars to pour into building plants to produce liquid fuel from coal, natural gas and carbon-based substances from plant matter to animal manure.

Competition from China is a problem for John Rich, president of WMPI, a Pennsylvania company that hopes to build a plant that will turn coal into liquid fuel suitable for cars, trucks and aircraft.

Rich is seeking loan guarantees from the U.S. Energy Department to finance his $800 million plant, but his quest has been bogged down for more than a year in the department’s bureaucracy.

Meanwhile, Rich said, construction is under way or soon to begin at 14 Chinese coal-to-liquid plants, and at least 10 more are planned.

The aggressive Chinese push into alternative energy is causing worldwide shortages, construction delays and rising costs, he said.

“The engineering expertise [for alternative energy plants] in the world is limited, and the Chinese are tying up a great deal of it,” Rich said.

The Chinese building boom also makes it harder to get motors, pumps, structural steel, concrete and other materials needed to build coal-to-liquid plants, he said. The scarcity is driving up costs.

“If we had done this three or four years ago, our plant would cost about $600 million,” he said. “Now it’s about $800 million.”

As the cost of building a coal-to-liquid fuel plant increases, so must the cost of the fuel it will produce.

“Prices are going up,” Rich said. “I don’t think that it’s going to price itself out of affordability, but the cost advantage will diminish.”

There is, indeed, “a very serious” shortage of engineers and other highly trained specialists in the energy industry, agreed Herman Franssen, an energy consultant and researcher at the Center for Strategic and International Studies.

Part of the problem is that when energy markets are soft, companies lay people off and they find work in more stable fields. Another part of the problem is that universities are producing too few engineers, Franssen said.

The Chinese energy boom is no doubt making the problem worse, he said, but that’s not the only roadblock coal-to-liquid plants are likely to face in the United States, Franssen said. There also are environmental concerns.

“Carbon dioxide is something the industry is worried about,” Franssen said.

When coal is turned into liquid fuel, only about half the carbon becomes fuel. The rest is turned into carbon dioxide, the gas mainly responsible for global warming.

Water may be another environmental roadblock. It takes as much as five gallons of water for every gallon of fuel produced. The enormous water requirements may make coal-to-liquid plants impractical in the western United States, where coal is plentiful and cheap, but water is increasingly scarce, Franssen said.

A third environmental impediment may be the environmental damage done by coal mining itself. Environmental organizations have already begun mobilizing to oppose increases in mountaintop removal mining in the East and strip mining in the West.