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Coal the answer to petrol crisis, says indust -

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Coal the answer to petrol crisis, says industry

The World Today - Tuesday, 3 June , 2008 12:18:00

Reporter: Jane Cowan

ELEANOR HALL: Some members of the coal industry have a message for the Prime Minster as he
struggles to deal with the problem of soaring petrol prices.

They say that their resource is the forgotten solution to the crisis with the technology now
available to turn coal into diesel fuel.

It's already done in places like South Africa and proponents say it's commercially viable here as
Jane Cowan reports.

JANE COWAN: Allan Blood says Australia is making the petrol crisis harder than it has to be. As the
chairman of the Australian Energy Company he says the key to cheaper fuel is coal and there's
plenty of it.

ALLAN BLOOD: There is no reason why Australia could not be totally self-sufficient as petroleum
needs using coal as a (inaudible).

JANE COWAN: Allan Blood is the man behind a $2-billion project being launched today in Victoria's
Latrobe Valley, to turn brown coal into the fertiliser urea.

He says the same technology could also be used to turn coal into diesel for the transport industry.

ALLAN BLOOD: South Africans have been doing it since 1968 in a firm called Sasol. They have been
making 150,000 barrels a day and historians forget of course, but a lot of the diesel for the
German war effort came from coal as well.

JANE COWAN: This has traditionally been regarded though as a very expensive way to produce diesel
though hasn't it. How viable is it?

ALLAN BLOOD: Look, in the current climate it is extremely viable. We are actually doing a study in
the United States at the moment on a large plant to produce up to 150,000 barrels a day and we know
the numbers very well and believe me that anything around the $60 a barrel mark, this is an
extremely economic process.

JANE COWAN: And Allan Blood says coal could be used to replace petrol sooner than people might
imagine.

ALLAN BLOOD: Well, within three to four years if buttons got pressed today, you could have a plant
producing any number of barrels of diesel or gasoline today that one wanted.

JANE COWAN: Optimistic perhaps.

But the Executive Director of the National Generators Forum, which represents electricity
generators and, in Victoria, coal miners says using coal to make diesel is realistic.

JOHN BOSHIER: Oh it's very realistic. Australia has a lot of brown coal and it is very realistic.
The cost of course is the issue but it is commonly believed that with oil prices over $100 a
barrel, that it would be commercially viable.

JANE COWAN: The Federal Resources Minister was unavailable to comment.

But a spokesman says Martin Ferguson is very interested in the role coal might play in moves to
insulate Australia from world oil prices.

JANE COWAN: John Boshier, from the National Generators Forum, says the production of transport fuel
hasn't been on the political radar until now but sustained high petrol prices will ensure that
changes.

JOHN BOSHIER: The major difficulty for investors is how long will these high prices last and there
seems to be a feeling now in the world that prices could stay high for quite some time so it is
being looked at much more seriously.

JANE COWAN: But Ray Prowse from the Centre for Sustainable Energy Systems at the Australian
National University says using coal to replace petroleum would be a case of same problem, different
resource.

RAY PROWSE: We've come across this problem with oil running out. Now all we are going to do in
terms of transferring the emphasis across to coal is to accelerate the rate at which the coal is
used and just transfer the viability from oil through to coal and fairly soon we are going to find
that we are running out of coal in exactly the same way that we are running out of oil at the
moment.

JANE COWAN: That's a false argument according to John Boshier from the Generators Forum.

JOHN BOSHIER: If we can make this process work and it works well for 30 years, then that is
actually quite a long time and there is no way in 30 years that the coal resource would be
seriously depleted. There is hundreds and hundreds of years of use of brown coal so I would imagine
that one project could be followed by another, could be followed by another.

JANE COWAN: But John Boshier estimates it will take 10 or 15 years before coal is converted to
diesel on a commercial scale.

JOHN BOSHIER: These projects will take a long time to clear the environmental hurdles. People can
be satisfied they are clean and safe. To get them funded from the banks, to build the projects so I
think you can take it for granted that this is not a quick fix at all.

ELEANOR HALL: John Boshier from the National Generators Forum ending Jane Cowan's report.