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Lawmakers Wednesday will hear from a panel about the pros and cons of turning coal into liquid fuels for transportation, a topic of particular importance to officials at the Defense Department, which is the single largest petroleum consumer in the world.

The House Science and Technology Subcommittee on Energy and Environment called Wednesday's hearing to help determine how best to allocate federal research dollars, primarily through the Energy Department, for what are known as coal-to-liquid technologies. Six witnesses will discuss the environmental, technical and economic challenges for producing synthetic fuel from coal, as well as the national security implications of reducing the nation's dependence on foreign oil.

The issue is of pressing concern at Defense, which relies on petroleum-based fuels to power virtually every major weapons system, from jets and ships to battlefield vehicles. Since the Sept. 11 attacks, the Air Force alone has seen the cost of energy for aviation operations double to more than $10 million a day, according to a recent study. To reduce both costs and the vulnerability inherent in its reliance on foreign petroleum, Defense has been aggressively experimenting with synthetic fuels, including those made from coal.

The reason is straightforward: Coal is cheap and abundant. With about a quarter of the world's coal, the United States is known as the Saudi Arabia of coal, and coal is increasingly seen by some as an attractive alternative to imported petroleum. Coal already is the source of about half the electricity produced in the United States, and proponents believe it could be used to produce transportation fuel on a broad scale as well.

But burning coal produces greenhouse gas and contributes significantly to global warming. While scientists are pursuing technologies that could greatly limit the carbon dioxide released by coal-fired power plants, such technologies have not been adopted beyond a few demonstration programs.

Among the panelists at Wednesday's hearing will be David Hawkins, director of the Climate Center at the Natural Resources Defense Council in Washington. Hawkins told the House Appropriations Committee in February that per unit of energy delivered, coal produces significantly more pollutants than every other fuel, including petroleum.

"Using coal to make liquid transportation fuel is simply not compatible with the need to achieve significant reductions in [carbon dioxide] emissions from the transportation sector over the next few decades," Hawkins said. Even if plants producing liquid coal were to capture and sequester their carbon dioxide emissions, the full fuel-cycle would still produce about 10 percent more carbon dioxide than gasoline produced from crude oil.

"If coal is to play a role in reducing oil dependence, it should do so by producing electricity at power plants that capture and dispose of their [carbon dioxide]," Hawkins said. "That electricity can be used to run plug-in hybrid vehicles with much lower overall pollution than using the same coal to make liquid fuel."

Hawkins' solution doesn't address near-term concerns at Defense, however, which is looking to buy as much as 200 million gallons of synthetic aviation fuel next year. Earlier this year, the Defense Logistics Agency issued a request for information from industry seeking to identify potential suppliers of synthetic fuels, specifically those generated using the Fischer-Tropsch process. Fischer-Tropsch is the coal-to-liquid conversion method exploited by German scientists following World War I to fuel the Luftwaffe in World War II.

A recent study of the Defense Department's energy needs and challenges by LMI Government Consulting concluded that synthetic fuels offer one of the most promising alternatives to petroleum in the near term, but noted that the environmental concerns are considerable, and capturing and sequestering carbon dioxide in the fuel-production cycle may increase costs by 25 percent to 40 percent.

James Bartis, a senior policy researcher at the RAND Corp., also will testify at Wednesday's hearing. In May, he told the Senate Energy and Natural Resources Committee that "successfully developing a coal-to-liquids industry in the United States would bring significant economic and national security benefits by reducing wealth transfers to oil-exporting nations." Bartis maintained that technology now exists to reduce carbon dioxide emissions to standards below those associated with producing conventional petroleum, but that without federal assistance, the private sector is unlikely to invest in coal-to-liquids production facilities.

The only nation to use synthetic fuel extensively is South Africa. SASOL, the South African energy company that produces liquid fuel from coal, is reported to be the largest carbon dioxide producer in Africa and possibly the world, the LMI study found.