Synthetic fuel: A perfect energy fix?

Business 2.0 Magazine details how a 1920s technology could end up curing one of the 21st century's biggest ills.

By Mary Jane Irwin, Business 2.0 Magazine

(Business 2.0 Magazine) -- In the search for clean-burning alternatives to gas, many fuels have had their moment in the sun: ethanol, diesel, hydrogen.

Now add to the list synthetic fuel, made from carbon-based products like natural gas and coal in a process that dates back to the 1920s. In December the Air Force successfully tested synthetic jet fuel in a B-52 bomber; it plans to test the fuel's cold-weather performance early this year.

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ENERGY SAVER: Syntroleum turns coal into liquid fuel that burns cleaner and more efficiently than gas. Any diesel vehicle can use it.

That's a boon for Syntroleum, the Tulsa, Okla., company that manufactures the fuel. "The technology is ready," says Ken Agee, founder and CEO of the 22-year-old company. With the United States holding 27 percent of the world's coal reserves, he adds, "it's exciting to think we could control our energy destiny."

Better yet, the fuel will work in any vehicle powered by a diesel engine without any retooling. And the price is right: Coal-to-liquid fuel should cost about $45 a barrel. A government tax credit would then kick back $21 a barrel to Syntroleum, making the fuel very competitive anytime oil prices are above $30 a barrel.

Only one snag: scale. Agee says it would take at least $1 billion to build a plant capable of producing 10,000 barrels per day.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.