Energy Department scraps futuristic coal plant in Illinois

By H. Josef Hebert

WASHINGTON – The Energy Department on Wednesday canceled a futuristic, virtually emissions-free coal plant scheduled to be built in Illinois, saying it preferred to spend the money on a handful of projects around the country that would demonstrate the capture and burial of carbon dioxide from commercial power plants.

“This restructuring … is an all-around better deal for Americans,” said Energy Secretary Samuel Bodman in making the announcement to scuttle the FutureGen program.

Bodman said the Energy Department would solicit industry applications for participation in the new carbon capture projects. The idea is for the government to pay for building the carbon capture and storage facilities and industry to build the modern coal-burning power plant. Each project would be designed to capture 1 million metric tons of CO2, the leading greenhouse gas linked to global warming, officials said.

The shift has stunned officials in Illinois, where an industry group announced in December it would build the $1.8 billion FutureGen plant, three fourths of which was being paid for by the federal government – funds now no longer available.

The FutureGen program was envisioned as a unique research project that would trigger development of a virtually pollution-free coal plant where carbon dioxide emissions would be captured and buried deep beneath the earth. It would produce both electricity and hydrogen.

First proposed nearly a decade ago with an estimated cost of just under $1 billion, its cost has soared to nearly double that. The project for years had trouble getting adequate funds and some critics long ago dubbed it “Never Gen.” But in 2003, President Bush hailed it as a potential breakthrough in clean coal technology and a key to eventually achieve wider use of hydrogen as a fuel.

The FutureGen Alliance issued a statement saying it “remains committed to keeping FutureGen on track” but it was unclear how that would be possible without the federal funding.

Michael Mudd, the alliance’s chief executive officer, called the project “America’s best hope for near-zero emission coal technology” as quickly as possible. “It will take four to five years for DOE to evaluate new proposals, place contracts, and conduct environmental reviews for new projects,” said Mudd in a statement on the Alliance’s Web site.

The Energy Department on Wednesday cited its concern about the FutureGen cost escalation. Officials said it was preferable to pursue separate clean coal technologies instead of what one official called “a living laboratory” concept. It will begin a process leading to a solicitation of industry bids for projects by the end of the year.

“There was a consensus view that the price of this project will only increase,” said Deputy Energy Secretary Clay Sell of the FutureGen program.

Sell said FutureGen was viewed has having little prospect of commercial viability. If industry pulled out of the program at some point in the future “it would put taxpayers at risk,” said Sell.

The announcement to cancel the program came 43 days after the FutureGen Alliance, the private coalition developing the program, announced it would build the plant in Mattoon, Ill., winning a competition with two other sites in Texas.

Illinois’ congressional delegation waged a last ditch, and unsuccessful, appeal to the White House to keep the project intact.

Illinois Reps. John Shimkus and Timothy Johnson, both Republicans, contacted President Bush aboard Air Force I.

“President Bush did take the time to listen to our concerns,” said Shimkus.

Some Illinois officials, noting Bush’s connections to Texas, said they believe the plant was scuttled because the industry group had selected Mattoon, Ill., over a proposed side in Odessa, Tex.

Sell called such a charge “outrageous” and said the department had tried to keep the FutureGen Alliance from making a site selection on Dec. 18, so as not to give false hope to the people of Mattoon, where the project would have brought thousands of construction jobs.

Sell said he and Bodman learned only last March that FutureGen’s cost had escalated from an original $950 million to $1.8 billion. “I knew (then) that we were in to something that would not end well,” Sell told reporters in a conference call Wednesday.

The department will propose as part of its fiscal 2009 budget to be unveiled next Monday $241 million for demonstration programs involving carbon capture and storage from coal-burning power plants, including $156 million related to the FutureGen “restructuring.”