Energy Department restructures clean coal program

For five years, the Bush administration has been touting a public-private partnership to build a coal-fired electric generation plant that could capture and bury greenhouse gases and also produce hydrogen for fuel. But this week, citing cost growth, Energy Secretary Samuel Bodman told members of Congress that the administration was backing away from the FutureGen program as originally conceived in 2003 and instead would seek to demonstrate carbon sequestration technologies at multiple commercial power plants.

"This restructured FutureGen approach is an all-around better investment for Americans," Bodman said. It would demonstrate clean coal technology in a way that would promote wider use and commercialization more rapidly, he said. The administration's 2009 budget request for the Energy Department will reflect the new priorities.

The decision is a huge blow to the industry alliance formed to build the demonstration plant, known as FutureGen, and to Illinois lawmakers, who sent a letter to President Bush protesting the decision, saying they "have lost confidence" in Bodman. After years of investment and rigorous competition, program officials last year selected Mattoon, Ill., as the most suitable site for the demonstration plan. Now funding for that program -- 74 percent of which was to be financed by taxpayers -- is in jeopardy, although industry officials say they remain committed to building the plant.

"FutureGen's progress has been remarkable, and it is America's best hope for near-zero emission coal technology," said Michael Mudd, chief executive officer of the FutureGen Alliance, a nonprofit organization of coal companies and electric utilities. He said the group is committed to building the plant: "We owe it to the people of Illinois, to the Alliance members who have contributed significant funds and resources to bring the project to this stage and to society, which depends on technology to provide clean, affordable and secure energy."

A fact sheet released by the Energy Department said the cost of FutureGen had almost doubled, and could rise even higher. The restructured approach will focus on technologies to capture and sequester carbon emissions, but will not include hydrogen production as originally planned, although the department will continue to invest in other research initiatives aimed at developing hydrogen as a viable commercial fuel.

In a statement, the FutureGen Alliance disputed some of Energy's assertions, including estimates that costs have doubled. "Project costs have increased, but DOE's share has not doubled -- not even close. When President Bush first announced FutureGen, the DOE share was $800 million. DOE's current estimated share is $1.1 billion with the increase due to inflation" largely related to rising costs for steel, concrete and power plant components, the industry group said.

On Wednesday, the Energy Department formally requested that industry provide, by March 3, information about the costs and feasibility associated with building clean coal facilities that achieve the goals of FutureGen. After reviewing the information, the department intends to issue a competitive solicitation to fund carbon capture and sequestration technologies at plants that generate at least 300 megawatts of power. According to the announcement, integrated gasification combined cycle (IGCC) "or other clean coal technology" commercial plants will be considered for the federal funding.

The distinction is important. IGCC technology works by turning coal into gas, from which nearly all pollutants can be removed. It is by far the cleanest commercially available technology for generating electricity from coal. But an IGCC plant is far more expensive to build than a conventional coal-fired power plant. There are only two such plants in the United States now, both of which were heavily subsidized by the federal government. This raises the question of how effective the restructured FutureGen program will be unless more utilities commit to building IGCC plants in the near future.

"It would take four to five years for DOE to evaluate new proposals, place contracts and conduct environmental reviews for new projects," Mudd said. "FutureGen has crossed these hurdles and is positioned for success."

Bodman said the administration is not backing away from its commitment to developing clean coal technology. The White House will request $648 million in funding for the Office of Fossil Energy's advanced coal technology research, development and demonstration program in 2009-the largest amount requested for Energy's coal program in more than 25 years, according to an agency statement.