Energy Dept. Might Drop Support for FutureGen Power Plant

By Steven Mufson
Washington Post Staff Writer
Wednesday, January 30, 2008

Energy Secretary Samuel P. Bodman told lawmakers yesterday that the Bush administration might drop its support for a $1.5 billion coal-fired power plant designed to store greenhouse gases underground, citing mounting cost estimates and other possible technologies.

The project, known as FutureGen, has long had the backing of the administration, which last year asked Congress to appropriate $108 million for the plant, and several states had competed for the site. On Monday night, President Bush said in his State of the Union message, "Let us fund new technologies that can generate coal power while capturing carbon emissions."

But in a meeting yesterday at the offices of Sen. Richard J. Durbin (D-Ill.), Bodman told the senator and six other lawmakers from Illinois, where the plant was to be built, that he did not believe in the project, which he said he "inherited," and that he was going to consider other carbon sequestration projects instead, according to a person in the meeting.

Both sides left the confrontational meeting upset. Durbin issued a statement saying Bodman "has misled the people of Illinois, creating false hope" in the project.

"In 25 years on Capitol Hill, I have never witnessed such a cruel deception," Durbin said. "For five years, the Department of Energy has urged our state and others to pursue, at great expense and sacrifice, this critically important energy project."

Bodman issued a statement last night saying that "the cost of the project has almost doubled, and we've seen technological advances over the past five years that require a reassessment to ensure that the FutureGen project delivers the greatest possible technological benefits in the most cost-efficient manner."

The project is a joint venture between a private industry alliance, which would cover 26 percent of the cost, and the Energy Department, which was supposed to cover 74 percent. The Bush administration has also solicited $10 million in contributions from several Asian governments.

A department spokesman, Julie Ruggiero, said "clean coal remains a cornerstone" of administration policy. Six weeks ago, James Slutz, the acting principal deputy assistant secretary for fossil energy, said that "FutureGen . . . remains a cornerstone of this vision."

FutureGen is one of the most advanced projects for determining whether emissions of carbon dioxide, a greenhouse gas, can be captured from coal-fired plants and stored, or sequestered, underground. Because half of the nation's electricity comes from coal-fired plants, carbon sequestration is considered essential to meeting targets for greenhouse gas emissions that scientists say are necessary for slowing climate change.

"FutureGen is so far ahead of any carbon sequestration project," said Michael Mudd, chief executive of the FutureGen Alliance. "It's essential for both our industry and our society in light of the need to address CO2 reductions." He said that he welcomed new projects but that they shouldn't be at the expense of FutureGen.

Mudd also defended the project's costs. He said costs had only gone up because of inflation. The cost was first estimated in 2004 at $950 million, he said. In 2008 dollars, he said, that comes to about $1.1 billion. He said that the $1.5 billion final cost estimate assumed that construction costs escalate at a 5.2 percent annual rate, below what actual construction inflation has been.

He said that the Energy Department was improperly citing a $1.8 billion figure by adding $300 million in operating costs that would be recovered.

There had been earlier hints of reluctance from the Energy Department. After the private partners in the project picked the Mattoon, Ill., site, the department refused to issue what is known as a record of decision on the environmental impact statement, effectively blocking progress.

The lawmakers, including Illinois Republicans from the House, plan to appeal to Bush to save the project. Durbin indicated that he might block nominations to fill two key vacancies at the Energy Department.

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