To move beyond the national dependence on foreign oil imports and utilize the vast reserve of coal and renewable biomass in the U.S.A., we need to develop a new technology for conversion of coal and biomass to clean liquid hydrocarbon fuels. This new technology must also be environmentally friendly and cost competitive with petroleum-based fuels. Indirect coal or biomass liquefaction processes are expensive and emit large amounts of CO2 and other pollutants to the atmosphere. The current commercial process of direct coal liquefaction has inefficient and expensive reactor system. The biomass liquefaction processes produce bio-oils that are unstable and require further upgrading to be suitable to be used as liquid fuel. The Department of Energy is looking for an innovative process for direct liquefaction of coal and biomass that is cost effective, environmental friendly, and a potential major source of liquid fuel. Energy Catalysis Incorporated recently completed a Phase II Small Business Innovative Research (SBIR) program.