ABSTRACT
This chapter aims to clarify the industrial decisionmaking process as it affects coal conversion. Real world industrial decisions on which fuels to use vary substantially from the predictions of economic modelers. The industrial capital budgeting process sets strategic objectives for allocating resources, and for gaining a certain amount of management consensus on objectives and future accomplishments. Capital budgeting has a tremendous impact on industrial fuel-use decisions. Industry has conducted surprisingly little systematic review of coal potential. The economic feasibility of a coal conversion project depends upon the spread between coal and oil and gas prices. This spread is extremely sensitive to the price at which natural gas equilibrates with oil prices, the level of world oil prices, and the competitiveness of the coal industry. The industrial capital budgeting process contains some of the same elements as budgeting in the public sector. Industries have been buffeted by expert opinion from almost every direction.
