By John Reed / January 30, 2009 at 5:00 AM

After more than a year's worth of discussions, Air Force officials have decided to scrap their once-vaunted plan to build a multibillion-dollar coal-to-liquids (CTL) synthetic jet fuel refinery at Malmstrom Air Force Base in Montana.

Service officials claim the decision not to move forward with the privately owned plant was spurred by security concerns surrounding the base's role as home to dozens of Minuteman III ICBMs.

“The Air Force reviews cited possible conflicts with the wing's mission, including degradation of security in the vicinity of weapons storage area; interference with existing missile transportation operations; and issues with explosive safety arcs and operational flight safety,” the service said in a Jan. 29 statement.

The Air Force was supposed to make a decision on whether to build the plant on Jan. 16 after reviewing bids from industry vying to build the facility. The service delayed this decision by two weeks due to “technical issues and clarifications.”

The plant would have provided the Air Force with coal-based synthetic jet fuel at a significant discount in exchange for an inexpensive lease on the Air Force property. However, Congress has barred the service from buying large quantities of the fuel because its production pollutes far more than standard jet fuel. CTL industry officials have long maintained that they would need long-term contracts from the Air Force to offset the mammoth start-up costs associated with building and operating coal-to-liquids refineries.

Coal lobbyists tried unsuccessfully this year to get this ban overturned. They claim “clean coal” technology is right around the corner. Interestingly enough, the Air Force just announced a brand-new effort to certify its planes to fly on algae-based biofuels -- just as it's been doing with coal-based synthetic fuel for the last few years.

Questions remain: Did this have anything to do with the decision to abandon the Malmstrom CTL project? Also: What does the decision mean for the overall health of the service's plan to fly half its stateside missions using CTL fuel by 2016?