10 reasons why converting lignite coal to diesel is insane

The Parliamentary Commissioner for the Environment (PCE) has released a report "Lignite and climate change: The high cost of low grade coal"

The PCE report also covers using lignite to make urea and briquettes, but this post will focus on the insanity of plans by Solid Energy and L & M Group to convert Southland lignite to diesel


1. The taxpayer subsidy for one lignite-to-diesel plant would be likely to be billions of dollars over its lifetime, (and 1 billion dollars annually by 2020)

"In its current form the ETS exposes the Government – and therefore the taxpayer – to potentially enormous financial risk. This is because of the rules governing the allocation of free carbon credits. For ‘free carbon credits’, read ‘taxpayer subsidy’. New lignite developments may well qualify for significant subsidies under the scheme. The taxpayer subsidy for one lignite-to-diesel plant would be likely to be billions of dollars over its lifetime."(PCE)

2. It means a doubling of our Co2 emissions, compared to using crude oil and 20 times greater emissions than using biomass

3. It increases the gap between the international climate change commitment we have made and where our greenhouse gas emissions are headed by 20%.

If both proposed lignite-to-diesel plants were to be built, the gap would increase by 50% (PCE)

4. It will not lead to cheaper diesel because we will still pay the world market price, and lignite diesel will be at a price likely to be over $US100 a barrel. - the same prices that were the root cause of the global financial crisis. ... just like we don't have cheaper milk or cheese here

5. It does not mitigate against oil shocks.
Even if the projects could get approval, Solid Energy's General manager Brett Gamble admits there will no production for around 8 or nine years (more likely 15 years? ) ...meanwhile oil shocks and fuel shortages are forecast in the next 2-5 years, and prices have been moving steadily higher and are likely to reach triple digits soon. There is no "cushion against oil shocks" as the industry asserts.

6. Slim chance of necessary funding
 The chances of getting multi-billion dollar funding in the midst of ongoing global recession are very slim. More financial meltdowns are yet to come as the oil price spikes again and debt de-leveraging continues unabated

7. The projects are still in a pre-feasibility stage, have licencing problems, carbon storage and sequestration is unproven technology, and no site has been identified for it in Southland

8. It represent a return to 19th century "dig it up and burn it " thinking which trashes our tarnished but still vitally important clean green image

9. We can use wood rather than lignite with much lower emissions

"a plant making diesel, urea, or electricity from lignite could also run on wood as
well. When wood is substituted for lignite, emissions can be reduced. New Zealand’s existing plantation forests are a huge source of low-quality wood suitable for fuel. Wood can be at least as good as lignite, especially if pre-treated to make it easier to process and to improve energy density." (PCE)

10  It must be wiser to take adaptive measures and use conservation to tackle the looming oil shocks as recommended by the Dunedin City Council Peak Oil Report 

please add your reasons in the comments…