Ethanol from coal? If it works, it could solve three major problems for the energy industry.

Researchers at Louisiana State University, along with colleagues from Clemson University and Oak Ridge National Laboratories, are trying to develop catalysts and processes that would allow energy companies to convert coal into a mix of carbon monoxide and hydrogen, and then convert those gases into ethanol.

The ethanol could then be used as a liquid fuel additive or, alternatively, shipped as a liquid and then be converted into hydrogen for hydrogen fuel cells, said LSU's James Spivey, who is heading up the project.

Right now, ethanol is primarily made out of corn or sugarcane. It's expensive and time-consuming to make, a problem. A gallon of ethanol derived from plant matter also only has around two-thirds of the energy content of a gallon of gas. A gallon of ethanol derived from coal-created synthetic gases could provide more energy.

"You could avoid an energy penalty" with coal ethanol, Spivey said.

The U.S. is also sitting on massive reserves of coal that dwarf even the oil reserves of Saudi Arabia. Coal-fired power plants, however, are a major source of pollution. Using coal (in tightly controlled factory situations) to make ethanol would solve the issue of how to exploit the domestic coal supply in a way that doesn't harm the environment drastically, problem number two.

Problem number three, of course, is the hydrogen transportation problem. Hydrogen corrodes pipelines and the extremely small size of hydrogen molecules makes it tough to come up with pipelines that don't leak. Transporting it as a liquid helps solve that.

Now they just have to find the catalysts.

The Department of Energy and ConocoPhillips are underwriting the $2.9 million cost of the project.