Converting coal to petroleum substitutes could end U.S. dependence on foreign oil and could postpone "peak oil." But, "clean coal" based fuel is at least as dirty from an environmental perspective as petroleum, even with the best possible technological breakthroughs, and would be twice as dirty using realistic current technology.
[T]he mass production of [liquid] fuel from coal or natural gas would lead to the emission of more climate-changing greenhouse gases than the current oil-based economy. But even in the most optimistic scenarios, which assumed that breakthroughs in technology could be achieved, coal and gas would not help reduce emissions from transportation . . . Both coal and natural gas can be turned into syngas, a mixture of carbon monoxide and hydrogen. Engineers have known for almost a century how to turn syngas into liquids similar to gasoline or diesel fuel — a process Nazi Germany used during World War II to keep its economy going while it was unable to import oil.
Turning coal into syngas and then into liquid fuels could in principle enable the United States to free itself from its dependence on foreign oil, at least as far as transportation fuels are concerned . . . But it would come at a cost. . . .
Greenhouse gas emissions could, in some scenarios, almost double if natural gas or domestic coal were to replace foreign oil . . . But even if all potential ways of reducing emissions were implemented — for example, capturing carbon dioxide that’s a byproduct of syngas conversion — the alternative fuels would not help stem climate change.
From Science News.
While the process for converting coal to liquid fuels is more than six decades old, it wasn't economically feasible as a petroleum alternative until recent spikes in oil prices.
Environmentally, biofuels like biodiesel and plant based ethanol are better options than petroleum, and plug in electric vehicles powered by electricity from renewable sources and nuclear power are significantly better environmentally, than "clean coal" technologies.
In Colorado, Xcel Energy gets about 58% of its electricity from coal, most of the balance from natural gas, and about 5% from wind.