"Most people are surprised to learn that we can produce gasoline, diesel, jet fuel and other petroleum products out of coal. Indeed, the process was used in America as early as 1928. In World War II, 92 percent of Germany's aviation fuel and half its total petroleum came from synthetic-fuel plants. South Africa has used a similar technology for 50 years, and now makes 200,000 barrels per day of synthetic gasoline and diesel.
"Synfuels" have remarkable properties: they are high-performing substances that run in existing engines without any technical modifications, and they burn much more cleanly than conventional fuels. The synfuel process, which is nothing like conventional coal use, removes greenhouse gases as well as toxins like sulfur, mercury and arsenic. And the technology has other applications: a synfuel plant can generate electric power, make synthetic natural gas, and produce the hydrogen that many (including President Bush) believe is the energy source of the future."
The article goes on to say we can make the synfuel for $35/barrel, so it finally makes economic sense. It's this kind of "reality-based" solution that will work.