Lawmakers of both parties are proposing amendments to the so-called energy independence bill that would massively subsidize the coal industry to produce liquid coal as a replacement for foreign oil. (The admirable original bill is designed to increase fuel efficiency in cars and light trucks, encourage production of biofuels, and provide funds to develop technology that will capture carbon dioxide emissions from power plants.)

Senator Jeff Bingaman, Democrat of New Mexico, opposed big subsidies for coal-based fuels until mid-June, when he moved to offer up to $10 billion in loans for coal-to-liquid plants. At the same time, Senator Barack Obama, from coal-rich Illinois, abruptly shifted his support for subsidizing coal-derived fuel production to concentrate on another bill he had been sponsoring that would cut greenhouse gas emissions and reduce carbon content in transport fuel.

The shifting positions of Bingaman and Obama underscore the tension between efforts to reduce dependence on foreign oil and to slow global warming. Liquid coal—produced when coal is converted into transportation fuel—would at best do little to rein in climate change and would at worst be twice as bad as gasoline in producing the greenhouse gases that blanket the earth and lead to warming.

The conversion technology is well established (the Germans used it during World War II), and liquid coal can power conventional diesel cars and trucks as well as jet engines and ships. Coal industry executives contend that it can compete against gasoline if oil prices are $50 a barrel or higher. But liquid coal comes with substantial environmental and economic negatives. On the environmental side, the polluting properties of coal—starting with mining and lasting long after burning—and the large amounts of energy required to liquefy it mean that liquid coal produces more than twice the global warming emissions as regular gasoline and almost double those of ordinary diesel. As pundits have pointed out, driving a Prius on liquid coal makes it as dirty as a Hummer on regular gasoline.

One ton of coal produces only two barrels of fuel. In addition to the carbon dioxide emitted while using the fuel, the production process creates almost a ton of carbon dioxide for every barrel of liquid fuel. Which is to say, one ton of coal in, more than two tons of carbon dioxide out. Congressional and industry proponents of coal-to-liquid plants argue that the same technologies that may someday capture and store emissions from coal-fired plants will also be available to coal-to-liquid plants. But even if the carbon released during production were somehow captured and sequestered—a technology that remains unproven at any meaningful scale—some studies indicate that liquid coal would still release 4 to 8 percent more global warming pollution than regular gasoline.

Liquid coal is also a bad economic choice. Lawmakers from coal states are proposing that U.S. taxpayers guarantee billions of dollars in construction loans for production plants, guarantee minimum prices for the new fuel, and guarantee big purchases by the government for the next 25 years. Their mantra is that coal-based fuels are more American than gasoline. But no operating coal-to-liquid plants exist in the U.S., and researchers at the Massachusetts Institute of Technology estimate it will cost $70 billion to build enough plants to replace 10 percent of American gasoline consumption. Some energy experts worry that the scale of the incentives could lead to a repeat of the disastrous effort 30 years ago to underwrite a synthetic fuels industry.

The country would be spending billions in loans, tax incentives and price guarantees to lock in a technology that produces more greenhouse gases than gasoline does. This is unacceptable at a time when leading scientists from all over the world are warning that greenhouse gases must be cut by at least 60 percent over the next half a century to avert the worst consequences of global warming. Instead of spending billions to subsidize a massively polluting industry, we should be investing in efficiency and in renewable energy technologies that can help us constrain global warming today.