The ongoing creep in fuel prices, resulting from global demand, is a problem which is not going to vanish any time soon. The pain it is causing Australian consumers, and ultimately, the losses it will cause the Australian economy, have seen a recent flurry of alternative energy proposals. Ethanol, LPG, bio-diesel, wind farms… Whether viable or not, these technologies have made the press.

What is perhaps most remarkable is that the most obvious alternative energy solution simply has not made the headlines in the current policy debate. Why the policy debate continues to skirt around the issue of synthetic fuel produced from coal or natural gas remains a mystery.

At this time the cost per barrel of synthetic petrol, and synthetic gas turbine fuel, sits at about one half the cost of natural crude based fuels of these types. The synthetic fuels are cleaner, due to the absence of sulphur, heavy metals and other unwanted impurities.

The technology used to make synthetic crude oil from coal or natural gas feedstock is based on 1920s German Fischer-Tropsch techniques. There is nothing new or unusual about synthetic fuels, which were mass produced by the Germans 60 years ago, and more recently by South Africa.

China recently contracted a consortium led by South Africa’s SASOL to construct the largest synthetic fuel plant complex to date, intended to use coal. Canada has been manufacturing a very competitive domestic synthetic crude oil using oil shale as feedstock. The state governments of several coal producing states in the US are currently raising investment funds to construct large scale synthetic fuel plants. The US Air Force, the world’s biggest consumer of aviation kerosene, is currently trialling coal-derived synthetic fuel in a B-52 bomber.

Australia is ranked fifth globally in coal reserves, and second in the Asia-Pacific, and is one of the world’s largest coal exporters. In gas reserves, Australia was ranked 15th globally, but this will soon change as the latest North West Shelf discoveries are counted in.

This begs the question as to why synthetic fuels made from coal or gas have not been a feature of the current alternative fuels debate in Australia. This is despite Linc Energy’s ongoing trials in Queensland.

If synthetic fuels made from coal, shale or natural gas are good enough for Chinese, Canadian or American consumers, why are they being resolutely ignored in Canberra?

The Federal Government has a golden opportunity to take a leadership position in this debate and actively promote the development of a synthetic fuels industry in Australia. If they decide not to, it is only a matter of time before enterprising State Governments understand what is happening in the US states, and walk away with the political kudos, and votes, which will result from doing the obvious.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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