Those hoping to understand energy politics in the coming decades would be well advised to read up on the Fischer-Tropsch process. This chemical process uses catalysts to convert carbon monoxide and hydrogen into liquid hydrocarbons. Basically, it allows you to make gasoline using any of a large number of inputs as a feedstock. If the input you use is coal, this process is environmentally disastrous. It combines all the carbon emissions associated with coal burnings with extra energy use for synthetic fuel manufacture, not to mention the ecological and human health effects of coal mining. If the feedstock is biomass, it is possible that it could be a relatively benign way to produce liquid fuels for transport.
The process was developed in Germany during the interwar period and used to produce synthetic fuels during WWII. The fact that it can reduce military dependence on imported fuel is appealing to any state that wants to retain or enhance its military capacity, but feels threatened by the need to import hydrocarbons. The US Air Force has shown considerable interest for precisely that reason, though they are hoping to convert domestic coal or natural gas into jet fuel – an approach that has no environmental benefits. By contrast, biomass-to-liquids offers the possibility of carbon neutral fuels. All the carbon emitted by the fuel was absorbed quite recently by the plants from which it was made.
Such fuels are extremely unlikely to ever be as cheap as gasoline and kerosene – even with today’s oil prices. The fact that there are parts of the world where you can just make a hole in the ground and watch oil spray out ensures that. That said, Fisher-Tropsch-generated fuels could play an important part in a low-carbon future, provided three conditions are met: (a) the fuels are produced from biomass, not coal or natural gas (b) the energy used in the production process comes from sustainable low-carbon sources and (c) the process of growing the biomass is not unacceptably harmful in other ways. If land is redirected towards growing biomass in a way that encourages deforestation or starves the poor, we will not be able to legitimately claim that synthetic fuels are a solution.