Montana's Gov. Brian Schweitzer sees energy salvation for America -- and economic rejuvenation for the dying small towns in his state's eastern half -- in converting coal into liquid energy.

An excerpt from the NYT article:

Governor Schweitzer, a Democrat, has a two-fisted idea for energy independence that he carries around with him. In one fist is a shank of Montana coal, black and hard. In the other fist is a vial of nearly odorless clear liquid - a synthetic fuel that came from the coal and could run cars, jets and trucks or heat homes without contributing to global warming or setting off a major fight with environmental groups, he said.

"Smell that," Mr. Schweitzer said, thrusting his vial of fuel under the noses of interested observers here in the capital, where he works in jeans with a border collie underfoot. "You hardly smell anything. This is a clean fuel, converted from coal by a chemical process. We can produce enough of this in Montana to power every American car for decades."

Coal-to-fuel conversion, which was practiced out of necessity by pariah nations like Nazi Germany and South Africa under apartheid, has been around for more than 80 years. It is called the Fischer-Tropsch process. What is new is the technology that removes and stores the pollutants during and after the making of synthetic fuel; add to that high oil prices, which have suddenly made this form of energy alchemy feasible. The coal could be converted into gasoline or diesel, which would run cars, or into other types of fuel.

With coal reserves of about 120 billion tons, Montana has one-third of the nation's total and a tenth of the global amount. Most of it is just under the prairie grass in the depopulated ranch country of eastern Montana. Mr. Schweitzer wants to plant coal-to-fuel factories in towns that have one foot in the grave. It may not provide enough fuel to wean the West off imported oil, but it may be enough to show the rest of the country that there is another way, he said.

"This country has no energy plan, no vision for the future," said Mr. Schweitzer, who spent seven years in Saudi Arabia on irrigation projects. "We give more tax breaks and money for oil, and what do we get? Three-dollar gas and wars in the Middle East. If you want to control the destiny of this country, it's going to be with synthetic fuels."