Big Coal has a case of the jitters. Concerns over climate change have captured the public consciousness, and coal-fired power plants are serious CO2 belchers, outpacing auto emissions by a wide margin. A recent Supreme Court decision identifying CO2 as a pollutant paves the way for heightened EPA regulation. Recent coal plant cancellations underscore the uncertainty of the demand picture. But coal's salvation may come from renewed calls for U.S. "energy security" -- independence from foreign oil.

The coal lobby has latched onto this broadly popular notion like a baby joey to a mama kangaroo. There are a lot of "coal states," which explains the bipartisan support forming behind coal as a cornerstone of the alternative energy picture. Renewable it ain't, but there's a whole lot of it.

In Congress, lawmakers are reportedly drafting "energy independence" legislation that seeks to dole out extremely large subsidies to create a domestic coal-to-liquids (CTL) industry. The plan would support construction of up to 10 multibillion-dollar CTL plants, a price floor, and a long-term supply contract with the U.S. Air Force, a major fuel consumer.

CTL is a very attractive proposition for coal producers. Peabody Energy's (NYSE:BTU) CEO reportedly stated that the value of the company's reserves would increase nearly tenfold if sold in the form of liquid fuels. No wonder the coal companies are pushing hard for CTL subsidies, rather than merely settling for help in developing carbon capture and sequestration technology for power plants.

We tried something like this once before, with the Synthetic Fuels Corporation in 1980. That really didn't go well. Some may argue that things are different this time, because we'll never see cheap oil again. That's certainly possible, given the dangerous curves the oil majors face today. But I can also imagine OPEC getting downright giddy at the opportunity to bankrupt another of our country's uneconomic efforts to wean ourselves off of Middle Eastern crude.

Incubating a domestic CTL industry is a pretty big gamble. The more that gamble can be shifted to taxpayer dollars, the better for coal miners like Peabody and Arch Coal (NYSE:ACI), and of course CTL players like Sasol (NYSE:SSL) and Headwaters (NYSE:HW). Given that it will likely cost far more than $200 billion to displace a mere 10% of oil demand with CTL -- as estimated by the coal companies themselves! -- the public benefits of such an initiative are far from clear today.

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Sasol is a Motley Fool Global Gains recommendation, while Headwaters is a Motley Fool Rule Breakers recommendation. Check out a 30-day free trial to any of our investing services.

Fool contributor Toby Shute would like to give a shout-out to Environment Connecticut, who urged him to do his part to stop global warming while he was in the middle of writing this piece. The Motley Fool's disclosure policy runs on pure, non-polluting Foolishness.