fB 6Z n8 55")
property of	E PA-420-S-81 -100
2000 traverwood drive
by: Richard Rykowski, Dwight Atkinson, Daniel Heiser,
John McGuckin, David Fletcher, Jeff Alson , and
Murray Rosenfeld
Emission Control Technology Division
U.S. Environmental Protection Agency
2565 Plymouth Road
Ann Arbor, MI 48105
Over the remaining years of this century synthetic fuels will
play a key role in the nation's drive for energy independence.
Although self-reliance is indeed a desirable goal, many people believe
it cannot be achieved without significant compromises m environmental
quality. This may not be the case. One synfuel, methanol, could be
used to replace both gasoline and diesel fuel and yield environmental
benefits. This paper compares methanol with synthetic fuels from
other coal liquefaction processes m terms of the environmental and
economic consequences of their use.
Several factors must be addre
of an alternative motor fuel. These
categories, environmental and eco
would include the production, distri
fuel in question. In the reDort
address these issues for several alt
cially methanol, which could be
methanol from indirect liquefaction,
nologies were examined: the Mobil
liquefaction process, and the Exxon
Solvent Refined Coal (SRC-II) direct
ssed when considering the viability
can broadly be grouped into two
nomic. Each of these categories
bution, and in-use aspects of the
that follows, we have attempted to
ernative automotive fuels, espe-
oroduced from coal. In addition to
fuels from the following tech-
Methancl to Gasoline (MTG) indirect
Donor Solvent (EDS), H-Coal, and
liquefaction processes.
Of the subjects examined below, the environmental analyses of
production and distribution are the most general since the least
amount of information was available in these areas. Although more
detail is provided in other sections, the preliminary nature of the
entire report should be emphasized. More work is needed before final
conclusions can ue stated with confidence.


It shou
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coal itself contains many
to hydrogen and carbon,
and inorganic sulfur, and
ie conversion of coal to
.es for these pollutants to
rdless of the particular
One potential advantage of processes which gasify coal, such as
those leading to methanol or gasoline (via methanol), is that the
gasification itself places most of the potentially harmful elements
and compounds into forms which can be removed relatively easily. For
example, minerals and heavy metals are removed from the gasifier as
slag which cools to a solid. While the high concentration of metals,
etc. requires careful disposal, this disposal may not be as difficult
as that connected with coal liquefaction. With direct coal liquefac-
tion, these compounds are entrained in the heavy organic liguid and
must be separated from the liquid phase later in the process. This
solid-liquid separation is very difficult (basic research is still
underway in this area[1]) and the separation from a solid cannot be
made as completely as the separation from a gas. Inevitably, some
liquid will end up with the solid waste and some heavy metals will be
left in the crude fuels. Thus, not only may the solid waste disposal
problem be worsened by the addition of complex, polycyclic organic
material to the waste, but the fuel itself still contains more
minerals and heavy metals.
One factor which may mitigate or eliminate this problem for most
direct liquefaction processes is the high probability that most of the
heaviest liquid fraction will be gasified to produce hydrogen.[2,3]
If this is done, most of the minerals and heavy metals can be removed
from the gas fairly early, since tnis heavy liquid fraction should
contain most of the coal's impurities. Thus, the full extent of this
disadvantage may depend primarily on the fraction of the impurities
which can be removed via gasification and the fraction which must be
removed directly from the liquid itself.
Another potential advantage of gasification over direct liquefac-
tion is the fact that all of the organic nitrogen and sulfur is broken
down to simple compounds like ammonia and hydrogen sulfide. These are
relatively easy to separate from the carbon monoxide and hydrogen
which make up the major part of the synthesis gas. Also, since the
carbon monoxide and hydrogen must be essentially free of nitrogen and
sulfur before reacting over the catalyst to form methanol, there is an
economic incentive to remove these two elements. Although the nitro-
gen which is not removed prior to the catalyst will be removed by the

catalyst itself, slowly deactivating it, any unremoved sulfur would
rapidly deactivate the catalyst.
Coal liquefaction, on the other hand, inherently leaves most of
the sulfur and nitrogen in the liquid phase, bound with the organics.
The most effective technique to remove these compounds is hydrogena-
tion, which also is used to upgrade the fuel. However, hydrogenation
is expensive, because of the large amounts of hydrogen consumed, and
will likely ba limited to only the degree that is necessary to market
the fuel. [4] If the fuel is upgraded to gasoline or high quality No.
2 fuel oil, most of the sulfur and nitrogen will be removed and there
should not be any significant problems. However, that portion of the
synthetic crude which may be burned with little or no refinement could
contain relatively high levels of these elements and represents more
of an environmental hazard than gasification products.
The remaining distinct difference between the environmental
effects of coal gasification and coal liquefaction processes (prior to
end-use) is in exposure to the fuel itself, after production and in
distribution. While coal liquids are for the most part hydrocarbons
and, as such, are similar to petroleum, they are more aromatic and
contain significant quantities of polycyclic and heterocyclic organic
compounds. Some of these compounds are definitely mutagenic in bio-
assays and many have produced tumors in animals. Thus, while the non-
carcinogenic health effects of these materials would be more similar
to those of crude petroleum, they would definitely have the potential
to be more carcinogenic. There is also some evidence that much of
this bioactivity can be removed by moderate to severe levels of hydro-
genation which would occur if high grade products were produced.
Thus, again the potental hazard is dependent upon the degree of hydro-
genation given the products.
Indirect liquefaction products, on the other hand, do not appear
to exhibit mutagenicity or carcinogenicity. Methanol is neither muta-
genic nor carcinogenic and early tests run on M-gasoline have shown it
to be nonmutagenic, similar to petroleum-derived gasoline. Therefore,
either of these two products offers some degree of benefit over direct
liquefaction products. It is possible, however, that methanol pro-
duced from coal may contain impurities and that such impurities may
affect exhaust products when used. Research needs to be done in this
area, also.
Methanol, of course, is highly toxic in heavy exposures, leading
to blindness or death. Much of its notoriety in this area is due to
people confusing it with ethanol and drinking it in large quantities.
Hydrocarbon fuels, while also toxic, do not suffer from this confusion
and are not often taken internally. With proper education of the
public, confusion between methanol and ethanol should be minimized.
However, more work is still needed in this area also.

The final point which deserves mention here is the difference
between the effect of an oil spill and a methanol spill. The effects
of oil spills are well known; oil films stretching for miles, ruined
beaches, surface fires, etc. The effects of a methanol spill are
expected to be quite different, primarily because methanol is soluble
in water. While high levels of methanol are toxic to fish and fauna,
a methanol spill would quickly disperse to nontoxic concentrations
and, particularly in water, leave little trace of its presence after-
ward. [5] Sea life should be able to migrate back quickly and plant
life should begin to grow back quickly, though complete renewal would
take the time necessary for new plants to grow back. Also, if a
methanol fire does start, it can be effectively dispersed with water,
which is not possible with an oil fire. However, methanol flames can
be invisible, making them more difficult to avoid.
The various relative environmental aspects of synthetic fuels
production and use mentioned above are those which appear to stand out
at this time. More work, however, is still needed in most areas.
Although natural gas to methanol plants exist and have led to much
experience in handling methanol, questions related to methanol produc-
tion from coal are not known with absolute certainty since such large
scale facilities do not currently exist. Similarly, no real life
experience of the effects of the production of synthetic crudes
exists, nor of their use. Given these caveats and the need for fur-
ther research, however, the indirect liquefaction route to yield
methanol or gasoline (from methanol) appears to have some potential
environmental advantages over direct liquefaction processes.

The dat
nol engi

f u
presented below were obtained from tests of actual
However, it should be noted that these data were
es which were only roughly converted to use of meth-
zed engines would be expected to show further
The worst problem concerning methanol's actual use centers around
its low vapor pressure and high heat of vaporization. These proper-
ties make it difficult to start a neat methanol engine in cold wea-
ther. [6] Also, methanol has a very low cetane number of approximately
3, which means that it is very difficult to ignite in a compres-
sion-ignition engine (e.g., a diesel). Problems associated with
materials compatibility and lubrication also exist, but these problems
already appear to be solvable with existing technology, requiring only
that the auto designer know that methanol is going to be the engine
f uel.
Various techniques are already being tested which will improve
the cold-starting capability of gasoline engines operating on meth-

anol, such as better mechanical fuel atomization, electrical fuel pre-
heating, and the blending of volatile, low boiling point components
into the methanol. Methanol's ignition problems are more serious in
diesel engines, but several possible solutions are being investigated,
such as glow plugs and spark ignition. Brazil already has an experi-
mental methanol-fueled diesel running on the road which uses rela-
tively inexpensive glow plugs as ignition aids and H.A.N, in Germany
has designed a diesel bus engine with spark ignition which runs on
me thanol.[7,7a1
As will be seen later in the section on fuel consumption in the
economics section, the fuel properties of methanol which lead to these
difficulties also lead to many advantages, such as increased thermal
efficiency relative to gasoline engines. Past experience with both
gasoline and diesel engines has shown that the disad vantages of a fuel
can usually be overcome to allow exploitation of the advantages,
particularly when the advantages are as large as they appear to be for
Methanol engines promise improved emission characteristics over
gasoline and diesel engines in a number of areas. Especially impor-
tant are low emissions of nitrogen oxides (NOx) and an absence of
emissions of particulate matter, heavy organics and sulfur-bearing
compounds. One possible side benefit of methanol use could be that
precious metal catalysts might not be needed for emissions control.
Because methanol fuel will contain no sulfur, phosphorus, lead, or
other metals, base metal catalysts (e.g., nickel, copper, etc.) may
suffice. One likely negative impact of methanol engines would be an
increase in engine-out aldehyde emissions, particularly formaldehyde.
Catalytic converters, however, would be expected to reduce aldehyde
emissions to acceptable levels. The available data supporting these
effects are discussed below.
A search of the literature shows a general consensus that meth-
anol engines produce approximately one-half of the NOx emissions of
gasoline engines at similar operating conditions, with individual
studies showing reductions between 30 percent and 65 per-
cent. [8,9,10, 11,12] One of the major engine design changes expected
with methanol engines is the use of higher compression ratios to
increase engine efficiency. Experiments have confirmed the theoreti-
cal expectation that these higher compression ratios, with no other
design changes, will increase NOx emissions considerably due to the
higher combustion temperatures.[13,14] However, with high compression
ratios, less spark timing advance is needed. Retarding spark timing is
known to reduce both NOx emissions and engine efficiency. Fortuna-
tely, it has been shown that the combination of a much larger compres-
sion ratio with a few degrees of spark timing retard can both increase
thermal efficiency and decrease NOx emissions.[14] This raises the
possibility of methanol vehicles being able to meet the current 1.0
gram per mile NOx emission standard without the need for a NOx reduc-
tion catalyst.

Use of methanol in a diesel engine should also reduce NOx emis-
sions by the same degree as that described above. Diesel engines have
higher peak combustion temperatures and the effect of a cooler-burning
fuel should actually be even more apparent in a diesel than in a gaso-
line engine. Unfortunately, no data to confirm this is yet available
from a diesel engine running on pure methanol. However, emission
tests have been performed on a dual-fuel diesel, where a small amount
of diesel fuel is injected to initiate combustion of the methanol.
These tests have shown NOx emission reductions as high as 50 per-
cent. [15,16]
These lower NOx emissions would aid many areas of the country in
attaining the ambient standard for NO in the future. (Most areas
are currently under compliance with the NO ambient air quality
standard, but many are projected to exceed it in the future as NOx
emissions continue to rise.) Lower NOx emissions would also help
alleviate the acid rain problem, though the majority of this problem
appears to be due to stationary source emissions. Finally, the use of
methanol would also provide a method for heavy-duty engines to reduce
NOx emissions closer to the congressionally-mandated level without
giving up any of the fuel economy advantage of diesels, as will be
seen later .
The lack of hard data on diesels operating on pure methanol indi-
cated above will also be evident below as other aspects of meth-
anol-fueled diesel engines are discussed. The basic reason for this
lack of data is that until recently methanol has not been seriously
considered to be an acceptable fuel for a diesel engine because of its
very low cetane number. For many years, studies examining methanol as
an engine fuel concentrated on gasoline-type engines (fuel inducted
with combustion air). However, as the more recent studies are indi-
cating, it appears possible to burn methanol in a diesel accompanied
with some kind of ignition assist and, therefore, utilize the effi-
ciency of the diesel concept.
In addition to the positive effect on NOx emissions, use of meth-
anol engines should provide even greater benefits with respect to
emissions of particulate matter and heavy organics from diesels. Gaso-
line engines operated on unleaded fuel emit only small quantities of
particulate matter, composed primarily of sulfate particles. Thus, any
improvement in particulate emissions from switching to methanol from
gasoline would be small.
However, diesel engines emit large quantities of particulate mat-
ter consisting of solid carbonaceous particles (soot) and liquid
aerosols. The former are generally formed when the injected fuel
droplets are incompletely combusted, leaving carbon particles. These
solid particles can then serve as nuclei for more harmful organic
species to adsorb onto and as "vehicles" for such compounds to reach
(and possibly lodge in) the deep regions of the lung. Although reduc-
tions in diesel engine particulate have been reported, particulate

matter seems to be an inherent pollutant in diesel-fueled compression
ignition engines.
Methanol, on the other hand, is a "light" fuel relative to diesel
fuel and should produce far less carbonaceous particles, as do other
hydrocarbon fuels "lighter" than diesel fuel. In addition, since
methanol does not contain inorganic materials like sulfur or lead,
there should not be any other types of solid particulate formed.
Accordingly, with pure methanol there would be no nuclei for liquid
aerosols to adsorb onto and total particulate emissions would be
expected to be near zero.[17] This is certain to be the case with a
well designed methanol-fueled spark-ignition engine.[18] Unfortuna-
tely, however, we know of no studies which have measured particulate
from compression ignition engines burning neat methanol. Several
studies (all of which used a small amount of diesel pilot fuel) have
reported much lower smoke levels, both in single-cylinder tests and in
a 6-cylinder, turbocharged , direct-injected engine.[7,15,19] There
seems to be little question, however, that neat methanol combustion in
compression ignition engines would result in very low (and possibly
zero) particulate emissions. This would result in a very important
environmental advantage compared to diesel fuel combustion.
As mentioned earlier, formaldehyde emissions from methanol
engines are of some concern since formaldehyde is carcinogenic. For-
maldehyde is an intermediate specie in methanol oxidation and would be
expected to be emitted from methanol engines in greater quantities
than either diesel or gasoline engines. Many studies have shown total
aldehyde emissions (mostly formaldehyde) from methanol engines to be
two to ten times greater than aldehyde emissions from gasoline
engines. [20,21,22,23]
At the same time, catalytic converters have been shown to be
effective in removing approximately 90 percent of exhaust alde-
hydes .[ 9 , 1 0 , 2 3 , 24 ] Much research has been performed regarding the
parameters which influence aldehyde formation in gasoline engines,
with low exhaust temperatures and high oxygen concentrations identi-
fied as leading to higher formaldehyde formation rates, and this know-
ledge should facilitate aldehyde control in future engine
designs.[22,25] Aldehyde emissions from methanol combustion in diesel
engines are also expected to be greater than from diesel fuel combus-
tion .
The last benefit of methanol engines to be discussed concerns
sulfur emissions. Because of the way methanol is produced it contains
essentially no sulfur. And, if there is no sulfur in the fuel, no
emissions of suIfur-bearing compounds, such as sulfur dioxide, sul-
furic acid, or hydrogen sulfide, can occur. This is a slight improve-
ment over gasoline emissions, since gasoline does have a small amount
of sulfur in it. Catalyst-equipped gasoline engines currently emit
between 0.005 and 0.03 grams per mile of sulfate and this would dis-
appear with the use of methanol, even if catalysts were still used.


improvement over

Diesel fuel curre
This translates
a bo
sulfur fro
m diesel trucks (
5 gr
0.75 gram
s per mile of s
, e
this amount. Sin
expected to rise in the future, th
in the future. With the use of meth
appear altogether.
esel, however, would be more pro-
tains 0.2-0.5 percent sulfur by
ut 0.25 grams per mile of elemental
per mile of sulfur dioxide, or
guivalent). Diesel cars emit about
sulfur level in diesel fuel is
ese emission levels would also rise
anol these emissions would dis-
Although coal contains many substances which could be environmen-
tally damaging, it appears that indirect liquefaction processes, meth-
anol and Mobil MTG, can facilitate their removal easier than is pos-
sible through direct liquefaction routes such as EDS, SRC-II and
H-Coal. Further, since indirect liquefaction necessitates the removal
of all sulfur before the fuel is synthesized, the use of relatively
cheap base metal catalysts (as opposed to noble metals currently in
use) on automobiles is a possibility.
Neither methanol nor Mobil M-gasoline appear to exhibit mutageni-
city or carcinogenicity. It should be remembered, however, that com-
mercial coal-to-methanol plants are not yet available so the influence
of possible impurities is not yet known. Direct coal liquefaction
products are more aromatic and contain significant quantities of poly-
cyclic and heterocyclic organic compounds, some of which are muta-
genic. There is some evidence, however, that much of this bioactivity
can be removed by moderate to severe levels of hydrogenation. More
work needs to be done in these areas before definitive conclusions can
be reached .
The effects of a methanol spill are expected to be quite dif-
ferent from that of the classical oil spill since methanol is soluble
in water. Although high levels of methanol are toxic to fish, a meth-
anol spill should quicKly disperse to nontoxic levels.
Methanol engines promise emission benefits over both gasoline and
diesel engines. Lower emissions of nitrogen oxides, and the virtual
absence of particulate matter, heavy organics and sulfur bearing com-
pounds from vehicle exhaust are promising. A possible detriment of
methanol engines is that they emit higher amounts of aldehydes, prin-
cipally formaldehyde which is carcinogenic. Catalytic converters,
however, have been shown to be effective in removing 90 percent of
exhaust aldehydes. As was the case with the environmental conse-
quences of synfuel production, more work needs to be done in the vehi-
cle-use area as well.

_g _
We have analyzed a large number of studies in order to estimate
the costs associated with the production and use of synthetic fuels.
A superficial review of their conclusions quickly revealed a wide
variety of conclusions and recommendations. One reason for this is
that the economic bases used by the various studies often differ,
affecting costs by as much as 100 percent. Another reason is that
each study uses the best information available at the time of the
study. Since the product mixes, efficiencies and costs of many of
these processes, especially the direct liquefaction processes, change
frequently as more is understood about the process, studies performed
even 2 or 3 years ago cannot be compared to the latest studies.
Thus, we have attempted to go back in each instance to the ori-
ginal engineering studies to assess the viability of the cost esti-
mates. We also have compared the available designs of each process to
ascertain which are out-dated or based on now inaccurate assumptions.
After doing this, the projects were placed on the same economic basis
and adjusted for plant size.
While the difficulties and apparent discrepancies described above
primarily involve the costs of producing synthetic fuels, the overall
economic picture involves more. The entire process of producing syn-
thetic fuels and using them in motor vehicles will be broken down into
three areas. The first area consists of the production of a usable
liquid fuel from raw materials. The second area consists of distri-
bution of this fuel. Finally, the third area includes the use of these
fuels in motor vehicles. All costs will be presented in 1981 dol-
lars. It should be noted that the general approach followed in this
section is from a long-term perspective. That is, we have not identi-
fied any detailed costs associated with the implementation of methanol
as a "new" transportation fuel.
Determining the economics of the production of usable synthetic
liquid fuels is probably the most difficult of the three areas to be
examined. The engineering and financial bases that have been chosen
are shown in Tables 1 and 2. As shown in Table 1, two different sets
of financial parameters were chosen. These were selected from a sur-
vey of recent studies [ 26 ,27 , 28 ,29, 30,31] done on coal liquefaction
processes and represent two extreme cases for capital charge. The low
capital charge rate and accompanying parameters were chosen from the
ESCOE report[26] while the high capital charge data were taken from
the Chevron study. [28] The important factors yielding these two CCRs
are also shown in Table 1.
Table 2 shows the remaining input factors. All plants were nor-
malized to 50,000 fuel oil equivalent barrels per calendar day

(FOEB/CD)(one FOB equals 5.9 mBtu, higher heating value). The costs
selected for bituminous/ subbituminous and lignite coals are respec-
tively $27.50, $17.00, and $10.00 per ton. Because capital costs do
not usually vary in direct proportion to plant size, a scaling factor
(an exponent) is normally used to modify the ratio of plant sizes (by
yield). The scaling factor used here was 0.75, which is an average of
factors found from various studies.[29,31, 32,33] To adjust labor and
supervision costs a scaling factor of 0.2 was used.[ 26 ,32] The rest
of the operating costs were assumed to vary directly with plant size.
The inflation rate for adjusting the costs of studies to $1981 was
based on the Chemical Engineering plant cost index.
The product mix expected from each of the various synfuel pro-
cesses being investigated can be found in Table 3. In order to put
the discussion on costs into a more meaningful perspective, several
points should be kept in mind. First, indirect liguefaction processes
can yield a product mix which is either essentially 100 percent trans-
portation fuel or a 50-50 mix of transportation fuel and SNG. The
latter appears to be more efficient and economical for either methanol
or MTG-gasoline production, but the cost of producing essentially 100
percent transportation fuel will be used here since the nation's
energy shortfalls are primarily in the transportation area. Second,
the product mix from direct liquefaction processes depends largely on
the degree of refining applied. Each of the direct liquefaction pro-
cedures yields some SNG or LPG which can be sold without further pro-
cessing, while the remainder of the products in most cases must be
refined before marketing. This refining adds to the product's cost.
Third, the mixes reported in Table 3 were taken from available refin-
ing reports. The SRC-II study was based on maximizing gasoline pro-
duction while the EDS and H-Coal studies also considered No. 2 fuel
oil production. Fourth, none of the synfuel processes being examined
produce residual oil or diesel fuel. Residual oil could of course be
obtained by the direct liquefaction routes simply by applying less
refining. However, products from direct liquefaction plants appear to
be too high in aromatics to allow economical production of diesel fuel.
Turning once again to Table 3, it can be seen that capital costs
range from $2.04 billion to $3.3 billion. The methanol plants tend to
have the lowest capital costs ($2.0-2.5 billion), while that of the
EDS process is in the same range near the high end. Using the incre-
mental cost of the MTG process, a gasoline-from-coal plant would cost
between $2.6 billion and $3.1 billion. The H-Coal and SRC-II pro-
cesses are next at $3.3 billion. (The capital costs do not include
refinery costs since it is unlikely that new refineries would be
bulit. )
A product value approach was utilized to estimate costs for indi-
vidual products. This technique assumes that the future prices of
particular fuels will maintain a certain relationship, based on rela-
tive demand. All prices are normalized relative to a reference pro-

duct, which here was chosen to be gasoline. In this report, a rela-
tionship between various fuels similar to that reported in the ICF
report was used and-is as follows:
1.	If the cost of unleaded regular gasoline is $G/mBtu,
2.	The cost of No. 2 fuel oil is (0 .82)(G)/mBtu, and
3.	The cost of LPG is (0.77)(G)/mBtu.[29]
Since unleaded premium gasoline is produced in some cases (EDS
and H-Coal), a relationship between this fuel and regular gasoline is
also necessary. Unfortunately, a history of the relationship between
these two fuels was not readily available. The cost ratio of leaded
premium to leaded regular gasoline was used instead. This relation-
ship indicated a cost ratio of 1.075.[34] This product cost relation-
ship was then applied to premium and regular unleaded gasoline.
The cost for SNG was assumed to be (0.8)(G). This value was
obtained by averaging those for No. 2 fuel oil and LPG since SNG
should share markets with each, especially No. 2 fuel oil.
The product costs, along with capital costs discussed earlier,
are shown in Table 3. As can be seen, they follow a similar pattern
as capital costs, though not exactly. Speaking first of the low cost
scenario, methanol is the cheapest product, ranging from $5.25-$6.97
per million Btu (mBtu) for fully commercial gasifiers and $5.90-$6.16
per mBtu for the near commercial Texaco gasifier. Gasoline via the
Mobil MTG process would be $1.72 per mBtu more, or $6.97-$7.69 per
mBtu using fully commercial gasifiers and $7.62-$7.84 per mBtu with
the Texaco gasifier. H-Coal gasoline costs slightly more at $8.41 per
mBtu, while SRC-II gasoline is projected to cost $9.87 per mBtu.
Finally, EDS gasoline is projected to cost the most of the automotive
products at $10.11 per mBtu.
A similar order holds for the higher cost scenario. In this
case, SRC-II has replaced EDS as the process yielding the highest cost
product. This is primarily due to the higher capital costs involved
for SRC-II. It should also be noted that the absolute difference
between methanol costs and the cost of gasoline from the other pro-
cesses increases because the capital cost of the methanol plant is
lower. The same is true for MTG gasoline in most cases. A large
change occurs in the difference between EDS and H-Coal process costs.
While the EDS costs were 20 percent higher using the low CCR, they are
less than 3 percent higher using the high CCR.
Using all the studies which are publicly available, it would
generally appear that the indirect coal liquefaction processes can
produce usable fuel cheaper than the direct liquefaction technologies.

Sxnce distribution systems already exist for gasoline, the econo-
mics in this area would, of course, favor the continued use of this
fuel over the introduction of methanol. In addition, gasoline also has
the advantage of possessing a higher energy density: 115,400 Btu/gal
for gasoline compared with 56,560 Btu/gal for methanol. Thus, because
transportation costs depend primarily on volume, gasoline would neces-
sarily be less expensive to transport per Btu.
The costs of distributing a fuel can most easily be divided into
three areas; 1) distribution from refinery or plantgate (if no refin-
ing is required) to the regional distributor, 2) distribution from the
regional distributor to the retailer, and 3) distribution by the
retailer (i.e., the gas station). These three aspects of distribution
will be discussed below.
More detail could of course be added to this analysis to improve
the resulting estimates but such information has not yet been assi-
milated. However, the general conclusions reached below should not
change substantially.
To simplify the presentation here, long-range distribution is
approximated by that of pipeline transport to a distance of roughly
650 miles. [29] It should be noted that if pipelines are needed to
connect coal fields (where synfuel plants are likely to be located)
with major markets, then the total costs will be roughly the same
whether the plant produces methanol or synthetic gasoline. This is
evident since the pipeline must be built in either case and the con-
struction and operating costs increase only slightly with a doubling
in size. Further, right-of-way and engineering costs should not
change at all with capacity in this range.
In the case of distributing methanol, the total amount of energy
distributed would only be about 80 percent that of gasoline due to
vehicle efficiency improvements which will be discussed later. How-
ever, a gallon of methanol only contains half the energy contained in
a gallon of gasoline, so 60 percent more volume of methanol would need
to be transported than that of gasoline.
To determine the potential range of the cost of transporting
methanol, two bracketing assumptions can be made. One, the cost of
transport per volume of fuel can be assumed to remain constant. Two,
total distribution costs can be assumed to remain constant. With the
first assumption, the estimated cost for gasoline transportation is
$0.22 per mBtu.[29] Methanol transportation would cost twice this
amount or $0.44 per mBtu. Using the second assumption, where total
costs remain constant, the cost for methanol would be SO.27 per mBtu,
since only 80 percent as much energy is being transported. Thus, the
cost of long-range distribution of methanol is $0.27-0.44 per mBtu.

The costs involved with a switch to methanol will be more related
to the increase in volumetric capacity than differences in chemical
properties. Pipelines and	pumps are almost entirely made from steel
or brass, with which methanol is compatible. Rubber seals on pumps may
need to be replaced with	more durable rubber compounds, but this
should be a minor cost.
As mentioned earlier, the next
sists of storing fuel at the regio
to the retailers. This distribution
and is estimated to cost just ov
$0.46 per mBtu. If one conservative
ume remains constant, the $0.46
translate into a $0.92 per mBtu cost
step of local distribution con-
nal distributor and transporting it
is primarily done by tanker truck,
er $0.05 per gallon of gasoline, or
ly assumes that the cost per vol-
per mBtu cost for gasoline would
for methanol.
Here the cost of conversion to
even negligible.	The only change
and hoses, if they were not already
with methanol.
methanol should be very small,
required should be new rubber seals
made from a material compatible
The costs of retailing fuel (the last step) are more like that of
long-range distribution than local distribution. The costs of retail-
ing are primarily fixed costs, such as land or rent. Retailing dif-
fers from both long-range and local distribution, however, in that
fuel energy is the critical marketing factor, not volume.
Typical retailer mark-ups are estimated to be in the range of
SO.05-0.18 per gallon of gasoline.[35] However, since the lower
mark-ups are usually associated with the high-volume stations, the
average mark-up per gallon of gasoline sold in the U.S. should be
somewhere between $0.09-0.11, or $0.76-0.95 per mBtu. For methanol,
the cost would lie between this range and 25 percent more since the
total amount of energy distributed would be 20 percent less. Thus,
the cost of retailing methanol would be $0.76-1.19 per mBtu.
In deriving these retail costs,
for any additional costs the re
first introduced. For example, he w
allowance for the initial small vol
some instances will also incur costs
tanks if the existing ones are
large demands for the specific fuels
retailing costs should therefore
after the methanol market stabilizes
no attempt was made to account
tailer would bear when methanol is
ill have to make some monetary
ume of customers. The retailers in
associated with installing new
incompatible or unavailable due to
they contain. The abovementioned
be considered as long-terra costs.
The total cost of distributing methanol and gasoline can now be
calculated by simply combining the costs presented m the last three
sections. Nethanol would cost $1.95-2.55 per mBtu to distribute;
gasoline would cost $1.44-1.53 per mBtu. Gasoline has a significant
advantage over methanol in terms of percentage (26-36 percent lower),
but the absolute difference is only $0.51-0.92 per mBtu.

In order to determine in-use costs associated with methanol, it
is necessary to know its fuel efficiency characteristics. There is
general agreement among researchers that methanol is a more energy
efficient vehicle fuel than gasoline. There are at least two theore-
tical reasons why this is so. One, methanol's lower flame temperature
reduces the amount of heat transfer from the combustion chamber to the
vehicle coolant system. Two, its high heat of vaporization acts as an
internal coolant and reduces the mixture temperature during the com-
pression stroke. These characteristics are realized in experiments
without having to make any major design changes in current gasoline
engines. Studies have shown these inherent properties of methanol to
increase the energy efficiency of a passenger vehicle by 3 to 10 per-
cent with a middle range of about 5 percent.[9 ,12,13]
Other properties of neat methanol combustion allow even greater
efficiency improvements. Its wider flammability limits and higher
flame speeds relative to gasoline allow methanol to be combusted at
leaner conditions while still providing good engine performance. This
lean burning capability decreases the peak flame temperature even
further and allows more complete combustion, improving energy effi-
ciency. Early testing on a single-cylinder engine yielded estimated
energy efficiency improvements of 10 percent due to leaning of the
methanol mixture as compared to gasoline tests.[36] Subsequent vehi-
cle testing has shown relative efficiency improvements of lean meth-
anol combustion of 6 to 14 percent.[8,9] Given these results, it
would appear that methanol 's lean burning capability yields approxi-
mately a 10 percent efficiency improvement over and above the 3-10
percent improvement mentioned above. Of course, stratified charge
engines have been developed to allow leaner combustion of gasoline as
well, and this efficiency advantage of methanol would be lessened with
respect to a stratified charge engine.
Methanol's higher octane number also allows the usage of higher
compression ratios with correspondingly higher thermal efficiencies.
Early single-cylinder testing have estimated the thermal energy effi-
ciency improvements of the higher compression ratios to be in the
range of 16 to 20 percent.[14,36] Unfortunately, little vehicle data
exist to confirm these figures, but it must be expected that improve-
ments of at least 10 to 15 percent are likely.
Adding up the	possible	improvements indicates that methanol
engines may well be	25 to 30	percent more energy efficient than their
gasoline counterparts	when the	methanol engine is designed specifi-
cally for methanol.
However, since such methanol engines are not available for mass
distribution today, this section will use a more conservative fuel
efficiency advantage for methanol engines over their gasoline counter-

parts of 20 percent. Using a fuel economy of 30 miles per gallon for
the average gasoline-fueled vehicle, this average vehicle would
require about 0.0038 mBtu per mile to operate. A methanol-fueled
vehicle would be expected to use at least 20 percent less energy or
about 0.0030 mBtu per mile.
Using 12,000 miles per year and the average delivered fuel costs,
calculated by combining production and distribution costs, the annual
fuel savings relative to gasoline produced via indirect liquefaction
(Mobil MTG process) were determined (see Table 4). These savings
include two separate effects. One, they include the effect of dif-
ferences in at-the-pump fuel costs. Two, they also include the effect
of methanol engines being more fuel efficient than gasoline engines.
For consistency, all fuels were assumed to be derived from bituminous
Following this procedure and using the lowest fuel cost (based on
the low CCR) and the highest fuel cost (based on a 30 percent CCR),
methanol would produce a savings of $131-240 per year compared to
gasoline from the Mobil MTG process. Direct liquefaction gasoline
would cost an extra $36-410 per year over MTG gasoline, because of its
potentially higher at-the-pump cost.
To this fuel savings must be added any difference in engine or
vehicle cost. While a methanol-fueled diesel engine may be developed
with a fuel efficiency advantage comparable to that of a standard
diesel, the conservative 20 percent efficiency advantage over the
gasoline engine should be attainable with engines similar to the gaso-
line engine in terms of both design and cost. While a larger fuel
tank and a special cold start system may increase costs, savings
should be attained with respect to emission control, particularly if
NOx reduction catalysts are no longer needed and if base metal oxida-
tion catalysts can be used instead of platinum and paladium. Thus,
whether a methanol engine will cost more or less than a gasoline
engine in the long run is still an open question at this time. It
would be rather safe to project, however, that any potential extra
cost would not override the kind of fuel efficiency benefit described
The results of the past three sections are shown in Table 4. As
can be seen when the results are combined , methanol compares favorably
to the other fuels. With respect to synthetic gasoline, methanol
appears to cost less at the plant gate. This is true whether the low
CCR is used or the high CCR. Higher distribution costs lower the dif-
ference, but even after distribution, methanol appears to still hold
some advantage. This advantage is $1.21- $2.25 per mBtu over MTG
gasoline and $2.00-$6.41 per mBtu over direct liquefaction gasoline.
For vehicles driven 12,000 miles per year and achieving 30 miles per

gallon (gasoline), methanol would save $131-$240 per year over MTG
gasoline and $167-$429 per year over direct liquefaction gasoline if
allowances are made for the increased efficiency of methanol engines.
Without including the improved engine efficiency, annual savings would
be $55-5103 relative to MTG gasoline and $91-292 over direct liquefac-
tion gasoline.
It should
e stated th
at no cosipar
and diesel fuel
nee none of
the coal c
produces diese
fuel of
engines. All of
hese econom
ic results a
ich have
been stated
being that the d
ail of the
across processe
and that
cost estimat
development for
fferent syn

n was made between methanol
ersion processes examined
ality for today's diesel
of course subject to the
reviously; the primary ones
igns could not be compared
reflect different points of
Looking back over the topics addressed in this paper, it can be
concluded that at this point m time methanol appears to have environ-
mental and economic advantages over other synthetic transportation
fuels derived from coal. The ultimate viability of this conclusion
depends on a number of key events or findings. One, a cost-competi-
tive methanol engine must be able to meet the driveability needs of
most of the U.S. (e.g., cold-starting in nearly all climates). Two,
aldehyde emissions must be controllable at low cost. Three, no other
unique and uncontrollable environmental problems of methanol use or
production are discovered. Four, the production and distribution cost
comparisons made here must hold up against future scrutiny.
The probability of these events occurring can only be estimated
by a review of the support for each presented m this study. At this
time, we believe the evidence available suggests that the benefits of
methanol outweigh its costs.

1.	O'Leary, J.R. and G.C. Rappe, "Scale-Up of an SRC Deashing
Process," Chemical Engineering Progress, Vol. 77, No. 5, May 1981,
pp. 67-72.
2.	"EDS Coal Liquefaction Process Development, Phase V, EDS
Commercial Plant Study Design Update/Illinois Coal," FE-2893- 61,
Ma rch 1981.
3.	Schmid, B.K. and D.H. Jackson, "The SRC-II Process,"
(Pittsburg and Midway Coal Mining) presented at discussion meeting on
New Coal Chemistry, Organized by the Royal Society, London, England,
May 21-22, 1980.
4.	"Catalogue of Synthetic Fuels Projects in the U.S.," Energy
Policy Division, U.S. EPA, April 1981.
5.	D'Elisen, Prof. P.N., "Biological Effects of Methanol
Spills into Marine, Estuarine, and Freshwater Habitats," Presented at
the International Symposium on Alcohol Fuel Technology, Methanol and
Ethanol, Wolfsburg, FRG, November 21-23, 1977, CONF - 771 175.
6.	"Methanol Fuels in Automobiles  Experiences at Volks-
wagenwerk AG and Conclusions for Europe," Dr. Ing. W. Bernhardt,
Volkswagenwerk AG, Wolfsburg, Germany.
7.	"B-39, Use of Glow-Plugs in Order to Obtain Multifuel
Capability of Diesel Engines," Instituto Maua de Tecnologia, Fourth
International Symposium on Alcohol Fuels Technology, October 5-8, 1980.
7a. "Results of MAN-FM Diesel Engines Operating on Straight
Alcohol Fuels," A. Neitz, MAN AG, Nuremberg, Germany, at Fourth
International Symposium on Alcohol Fuels Technology, October 5-8, 1980.
8.	"Methanol as a Motor Fuel or a Gasoline Blending Compo-
nent," J.C. Ingamells and R.H. Lindquist, SAE 750123.
9.	"Vehicle Evaluation of Neat Methanol - Compromises Among
Exhaust Emissions, Fuel Economy and Driveability," Norman D. Brinkman,
Energy Research, Vol. 3, 243-274, 1979.
10.	"The Influence of Engine Parameters on the Aldehyde Emis-
sions of a Methanol Operated Four-Stroke Otto Cycle Engine," Franz F.
Pischmger and Klaus Kramer, Paper 11-25, Third International Sympo-
sium on Alcohol Fuels Technology, May 29-31, 1979, published by DOE in
April 1980.

11.	"Research and Development - Alcohol Fuel Usage in Auto-
mobiles," University of Santa Clara, DOE Automotive Technology
Development Contractor Coordination Meeting, November 13, 1980.
12.	"A Motor Vehicle Powerplant for Ethanol and Methanol Opera-
tion," H. Menrad, Paper 11-26, Third International Symposium on
Alcohol Fuels Technology, May 29-31, 1979, published by DOE in April
13.	"Development of a Pure Methanol Fuel Car," Holger Menrad,
Wenpo Lee, and Winfried Bernhardt, SAE 770790.
14.	"Effect of Compression Ratio on Exhaust Emissions and Per-
formance of a Methanol-Fueled Single-Cylinder Engine," Norman D.
Brinkman, SAE 770791.
15.	"A New day of Direct Injection of Methanol in a Diesel
Engine," Franz F. Pischinger and Cornelis Havenith, Paper 11-28, Third
International Symposium on Alcohol Fuels Technology, May 29-31, 1979,
published by DOE in April 1980.
16.	"Alternative Diesel Engine Fuels: An Experimental Investi-
gation of Methanol, Ethanol, Methane, and Ammonia m a D.I. Diesel
Engine with Pilot Injection," Klaus Bro and Peter Sunn Pedersen, SAE
17.	"Alcohols in Diesel Engines - A Review," Henry Adelman,
18.	"The Utilization of Alcohol in Light-Duty Diesel Engines,"
Ricardo Consulting Engineers, Ltd., for EPA, May 28, 1981, EPA-460/3-
8 1-010.
19.	"The Utilization of Different Fuels in a Diesel Engine with
Two Separate Injection Systems," P.S. Berg, E. Holmer, and B.I.
Bertilsson, Paper 11-29, Third Symposium on Alcohol Fuels Technology,
May 29-31, 1979, published by DOE in April 1980.
20.	Hilden, David L. and Fred B. Parks, " A single-Cylinder
Engine Study of Methanol Fuel-Emphasis on Organic Emissions," SAE
760378 .
21.	"Driving Cycle Economy, Emissions, and Photochemical Reac-
tivity Using Alcohol Fuels and Gasoline," Richard Bechtold and J.
Barrett Pullman, SAE 800260.
22.	Browning, L. H. and R. K. Pefley, "An Analytical Study of
Aldehyde Formation During the Exhaust Smoke of a MethanolFueled SI
Engine," Paper B-62, Fourth International Symposium on Alcohol Fuels
Technology, Oct. 5-8, 1980.

23.	Baisley, W.H. and C.F. Edwards,"Emission and Wear Charac-
teristics of an Alcohol Fueled Fleet Using Feedback Carburetion and
Three-Way Catalysts/ B-61, Fourth International Symposium on Alcohol
Fuels Technology, Oct. 5-8, 1980.
24.	"Alcohol Engine Emissions - Emphasis on Unregulated Com-
pounds," M. Matsuno et al., Paper 111-64, Third International Sympo-
sium on Alcohol Fuels Technology, Kay 29-31, 1979, published by DOE in
April 1980.
25.	"Methanol and Formaldehyde Kinetics in the Exhaust System
of a Methanol Fueled Spark Ignition Engine," Kenichito and Toshiaki
Yaro, Paper B-65, Fourth International Symposium on Alcohol Fuels
Technology, Oct 5-8, 1980.
26.	K.A. Rogers, R.F. Hill, "Coal Conversion Comparison,"
ESCOE, DOE FE-2468-51, July 1979, pg. 59.
27.	"Methanol From Coal, An Adaptation From the Past," E.E.
Bailey, (Davy McKee) , presented at The Sixth Annual International Con-
ference; Coal Gasification, Liquefaction and Conversion to Electri-
city, University of Pittsburgh, 1979.
28.	Sullivan and Frankin, "Refining and Upgrading of Synfuels
from Coal and Oil Shales by Advanced Catalytic Processes," March 1980,
Chevron Research Co., for DOE, FE-2315-47.
29.	"Methanol from Coal: Prospects and Performance as a Fuel
and a Feedstock," ICF, Inc., for the National Alcohol Fuels Commis-
sion, December 1980.
30.	"Economic Feasibility Study, Fuel Grade Methanol from Coal
for Office of Commercialization of the Energy Research and Development
Administration," McGeorge, Arthur, Dupont Company, for U.S. ERDA
31.	"Methanol Use Options Study," (Draft) DHR, Inc. for DOE,
December, 1980; Contract No. DE-ACOI-79 PE-70027.
32.	Peters, Max S. and Timmerhaus, Klaus D., Plant Desig_n and
Economics for Chemical Engineers, McGraw-Hill Co., 2nd Ed., 19 68.
33.	Kermode, R. I., A. F. Nicholson, D. F. Holmes, and M. E.
Jones, Jr., "The Potential for Methanol from Coal: Kentucky's Per-
spective on Costs and Markets," Div. of Technology Assessment, Ken-
tucky Center for Energy Research, Lexington, KY, March 1979.
34.	Monthly Enerai Review, U.S. DOE, DOE/EIA-0035 (8 1/04),
April 1981.

35.	Ayling, John, personal communication, 2/11/81, Lundberg
Survey Inc., North Hollywood, California.
36.	Most, W. J., and J. P. Longwell, "Single-Cylinder Engine
Evaluation of Methanol Improved Energy Economy and Reduced NOx," SAE

Financial Parameters
Capital Charge Rate,
Debt/Equity Ratio
Discounted Cash Flow
Rate of Return on In-
vestment, Percent
Project Life, Yrs.
Construction Period, Yrs.
Investment Schedule,
Plant Start Up Ratios
Debt Interest, Nominal
Rate, Percent
Investment Tax Credit, %
Depreciation Method
Tax Life, Yrs.
Low Cost Case!26]
Not Available
50, 90, 100...
High Cost Case[28]
Sum of Year's Digits
Sum of Year's Digits

Cost Inputs and Other Factors
Product Yield
Bitumin ous
Subbitu minous
Operating Costs
a)	Utilities
b)	Working Capital
c)	Fuel Cost
Scaling Factors
a)	Capital Costs
b)	Labor Costs
c)	Maintenance, Taxes,
Insurance, General
d) Coal, Catalysts and
Chemicals, Utilities,
Fuel, Natural Gas
By-Product Credit
a)	Sulfur
b)	Ammonia
c)	Phenol
Contingency factor
Inflation Rate
a)	1976
b)	1977
c)	1978
d)	1979
e)	1980
Real Cost Increases
a)	Fuel Oil
b)	Natural Gas
c)	Coal
( % / ye a r )
50,000 F0EB/CD
$0.0 3 5/kw-HR
6% of working
capital per year.
Same percentage
of plant invest-
ment as specified
by each individ-
ual study.
Amount varies
directly propor-
tional to plant
$112 .6/bbl
9 %

Dicect Liquefaction
EDS (Bituminous)
Product Mix
11.5% 30%
32.7%	Reg. Gasoline	10.11	16.57
14.0%	Prem. Gasoline	10.87	17.81
25.6%	No. 2 Fuel Oil	8.29	13.*9
9.6%	LPG	7.78	12.76
18.1%	SNG	8.09	13.26
Cost *
of Dollars)
H-Coal (Bituminous)
50.7%	Reg. Gasoline	8.41	16.13
11.0%	Prem. Gasoline	9.04	17.34
20.1%	No. 2 Fuel Oil	6.90	13.23
18.2%	LPG	6.48	12.42
SRC-II (Bituminous)
64.7% Gasoline
12.1% LPG
2 3.2% SNG
Texaco (Bituminous)
Koppers (Bitum.)
Lurgi (Subbit.)
Modified Winkler
Lurgi Mobil MTG
Mobil MTG
Incremental Cost
100% MeOH**
100% MeOH**
47.9% MeOH**
49.7% SNG
2.4% Gasoline
100% MeO H * *
41.2% Reg. Gasoline
5 3.3% SNG
5.5% LPG
85-90% Reg. Gasoline
10-15% LPG
5.90-	9.80- 2.06
6.16	10.00
6.97	11.73 2.51
5.82	10.02 2.32
6.03	10.55
7.54	13.19
5.25	9.12 2.04
7.54	13.19	2.92
6.03	10.55
5.80	10.16
1 .72	3. 17	0.6
*	Capital costs are instantaneous costs. Capital costs do not
include refinery capital costs.
** MeOH = 95-98% methanol, 1-3% water, and the remainder higher

Cost at Pump
AT $9.06-16.53 per MBtu)**
$131-240	$0	S-(36-189)
0	0	0
Indirect Coal
Direct Coal
0 .27-0.44
7 .85-14.28
0 . 46
0. 46
9 .85-20.69
* Range of plantgate cost is the lowest cost using the low CCR
and the highest cost using the high CCR for bituminous feed-
stocks .
** Includes effect of increased engine efficiences and dif-
ferences in at-the-pump fuel costs.