The waste-coal-to-diesel plant is planned for Mahanoy City, Schuylkill County, with construction to start next spring. Waste coal will be used as feedstock to produce as much as 40 million gallons of clean-burning diesel annually.

Currently, an estimated 258 million tons of waste coal covering more than 8500 acres in north-eastern and south-western Pennsylvania pose an environmental threat. Waste coal also contributes to the problem of acid mine drainage and is a public health hazard.

Rising fuel prices have helped investments in new technology and alternative fuels become more competitive. The price of diesel produced by the Mahanoy plant - break even is estimated at around $US1 per gallon - will be well below current market costs; current wholesale prices for diesel fuel start at around $US1.65 a gallon.

The plant’s diesel will burn with no sulphur emissions and with a high level of energy efficiency, making it more economical for drivers. The plant will use state-of-the-art control technology in its manufacturing process to control air emissions.

In addition, the waste heat from making the liquid fuels will be used to generate 41MW of low-cost electric power that will be fed into the grid, a concept known as polygeneration.

A fuel consortium will be established to buy nearly all of the diesel fuel that will be produced.

Governor Edward Rendell said the move placed Pennsylvania in the lead in addressing US dependence on foreign oil.

“Every day we see the necessity for a national policy to address America’s energy needs,” he said. “We only have to look at rising fuel prices to feel the impact. Working with the private sector, Pennsylvania is going to build its own energy and keep the money it now spends on foreign energy to make investments here.”

The plant construction will provide an estimated 1000 jobs while the plant will provide 600 permanent jobs.