EPRI forecasts synfuels subsidy requirements

Journal Article · Mon Jul 30 04:00:00 EDT 1979 · Coal Outlook; (United States)

OSTI ID:6018347

A total production subsidy of about $16 billion would be needed between 1985 and 1995 to stimulate the capacity of 500,000 barrels/day of coal-derived liquids, according to the Electric Power Research Institute. In arriving at the $16 billion figure, EPRI assumed a general inflation rate of 6%/year and a real price escalation of 2%/year for imported crude oil. To achieve a mature commercial synthetic fuels production capacity of 2.5 million barrels/day comprised of 1.5 million barrels/day of coal-derived liquids, 0.5 million barrels/day of shale oil and 0.5 million barrels/day equivalent of intermediate-Btu gas, $40 billion to $70 billion in subsidies would be needed depending on the process, feed coal and production plant operating dates, according to EPRI. EPRI estimates it would require additional subsidies in the range of $20 billion to $40 billion to implement a technology program comprising about three coal-derived liquids plants, three gasification plants, two shale projects and two indirect liquids projects (such as methanol and Fischer--Tropsch). Without incentives, coal-derived liquids would become cost competitive with natural petroleum products 1996. Methanol, produced by gasifying coal and converting the resulting synthesis gas to methanol, will become cost competitive with natural petroleum products a couple of years later than coal-derived liquids because of its higher costs. Intermediate-Btu gas and shale oil are expected to become price competitive with imported oil in the mid- to late 1980s, with no incentives. Incentives would make these products price competitive with imported oil now, EPRI says. The assumptions involved in these estimates are defined. (LTN)

• OSTI ID: 6018347
• Journal Information: Coal Outlook; (United States), Journal Name: Coal Outlook; (United States); ISSN COOUD
• Country of Publication: United States
• Language: English

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