Coal could be an important source of transportation fuel for the U.S. Air Force if Congress enables the Air Force to sign contracts that would help jump-start the industry, according to William Anderson, assistant secretary of the Air Force for installations, environment and logistics.

Coal-to-liquid, or CTL, aviation fuel fits squarely into the Air Force's energy strategy, Anderson said.

The USAF has been formulating its strategy since President George Bush called for an end to America's addiction to foreign oil in his 2006 State of the Union address.

The strategy is "driven off a catch phrase or a vision that the Air Force is going to make energy a consideration in everything we do," Anderson said.

It has three parts.

Supply, Demand and Culture

"From the supply side, the Air Force is going to use its position as a significant purchaser of energy -- and we are the largest consumer of energy in the federal government because of the intense flying that we do," Anderson said.

The Air Force already is the largest purchaser of "green" power in the federal government, he said, and also supports the development of emerging alternative sources as a host.

At Nellis Air Force Base in Nevada, for example, the largest solar array in North America currently is being installed by private industry.

"It's beneficial to us, to a developing industry and to creating domestic sources of energy," Anderson said. "It's a win-win-win, we believe."

On the demand side, the Air Force is implementing efficiency throughout its operations.

That means more efficient energy use in buildings, but also, "efficient loading of aircraft, efficient flying routes, minimizing taxi time and engine run time on the ground," Anderson said.

These efforts are benchmarked against industry leaders such as FedEx and UPS.

Air Force research also helps to reduce demand by working with commercial airplane manufacturers to develop more efficient engines and frames.

The third part of the Air Force's energy strategy is to change its culture.

"What we want to do is radically change the way that our airmen think about energy from the moment that they enter basic training all the way through their Air Force careers," Anderson explained.

CTL

In the context of the Air Force's comprehensive energy strategy, CTL, as a domestic fuel source, fits naturally into supply side efforts.

Petroleum-based jet fuel, Anderson said, packs a lot of energy for its weight. It has the high BTU-per-kilogram content jets need to fly fast and far.

The only commercially proven alternative, he said, is liquid fuel made from coal or natural gas using the Fischer-Tropsch process.

And coal, he said, is the more economical of the two and abundant in the U.S.

The Air Force began in 2006 to certify its entire fleet on Fischer-Tropsch fuel, a process that is expected to be complete in 2011.

One big obstacle: There is not yet a CTL industry in the U.S.

Would-be CTL producers say investors want assurance that, if the price of oil drops drastically, there will still be a market for the more expensive coal-derived fuels.

That coincides with the Air Force's interest in contracting to buy 400 million gallons annually by 2016, Anderson said.

That's about a quarter of the fuel the Air Force currently purchases and consumes in the lower 48 states.

It's also the output of a moderate-sized CTL plant: about 26,000 barrels per day, a bit more than the 20,000 bpd that Los Angeles-based Rentech is hoping to produce in Mingo County.

Air Force purchase contracts of that magnitude are not enough to make the industry, Anderson conceded. But they would help, he said, and would at the same time ensure a domestic fuel supply.

Energy Bill

To make such contracts possible, the Air Force needs Congress to extend its contracting authority from five years to 25 years, Anderson said, a measure that could be introduced in the energy bill that is about to go to conference committee.

Contracts could include both price floors and ceilings, he added, supporting the industry while protecting the Air Force as a buyer. Congress would also need to authorize that.

The Air Force will contract only for a fuel that is less polluting than petroleum-based jet fuel, Anderson said, acknowledging that the carbon dioxide issue is yet to be solved for CTL.

"We've got really smart scientists and engineers in this country, and we believe if we push them they ought to be able to figure it out in a relatively short time frame," he said.

He looks to lawmakers for the authority to move ahead.

"It's a decision Congress will have to make, and we'll have to live with," Anderson said. "From our perspective, domestic fuel is necessary for the security of this nation, and coal, in our minds, along with nuclear and renewables and the whole suite of various energy sources, is going to be necessary as we move into the future."

House and Senate negotiations to reconcile energy bills passed during the summer are expected to take several weeks.