Transcripts

Considering Coal As A Fuel Source

SUSIE GHARIB: General Motors said today it will spend $100 million to develop a cleaner, more fuel efficient diesel engine. The new engines will go into GM's pickup trucks and Hummer H-2's and will be made at a plant in Tonawanda, New York. That $100 million will buy new machinery and equipment and a renovation of the plant. GM says production of the new engines should begin by the last quarter of 2009 and is part of a continuing effort to cut fuel usage and carbon dioxide emissions.

One possible source of fuel for cars and trucks is coal. The U.S. has a huge supply of it and as gasoline prices rise, there's now a growing push to use liquefied coal as a replacement. Government support for that process called coal to liquid could be tacked to the energy bills now moving through Congress. But as Stephanie Dhue explains, the idea is controversial.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: South African company Sasol is the world's largest maker of coal to liquids. First begun in the 1950s to supply fuel under apartheid economic sanctions, the company now is considering projects in the U.S. It's not alone. John Ward is with Headwaters, a company that also wants to develop coal to liquid plants. He says investing in the technology will benefit the U.S.

JOHN WARD, VP, GOVERNMENT AFFAIRS, HEADWATERS, INC.: We've sent $70 trillion to the Middle East in the last 30 years. Do we want to keep some of that here to make jobs work here and increase our independence or do we want to double down again and say, oh, gee, we're worried that the price of oil might go down again. We don't want to take the risk on that so we'll just continue to be more and more dependent on people who don't really have our best interests at heart.

DHUE: Lawmakers are also considering proposals that would grant $10 billion in construction loans for coal to liquid plants. Those proposals would also guarantee a price floor for the new fuel if oil drops below $40 a barrel and would provide a $0.51 per gallon tax credit. The proposals have run into stiff opposition by environmental groups. They say processing coal for gasoline will produce twice the carbon emissions. And even if the carbons can be captured, Alice McKeown of the Sierra Club says coal still damages the environment.

ALICE MCKEOWN, CLEAN AIR & COAL CAMPAIGN, SIERRA CLUB: We're really concerned about the impacts of coal mining from mountaintop removal to water pollution.

DHUE: Congress spent $15 billion in the 1980's to fund coal-to-liquid projects, but abandoned the effort when gas prices dropped. Taxpayers for Common Sense President Ryan Alexander says there's no reason to try again.

RYAN ALEXANDER, PRESIDENT, TAXPAYERS FOR COMMON SENSE: For taxpayers, this is not a great investment. The coal industry has been profitable for quite a long time. If there's a way that they want to use their product that's not commercially viable, it really shouldn't be the taxpayers' job to make that happen.

DHUE: Still, people in the coal business predict coal to liquid plants will get built here even without taxpayer support. But it will take sustained higher gasoline prices to drive investor interest. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.