Plan for Carbon Storage Dropped

By Steven Mufson
Washington Post Staff Writer
Thursday, January 31, 2008

The Energy Department said yesterday that it would ask for new proposals from companies seeking federal aid for capturing and storing carbon dioxide released by coal-fired power plants, officially shelving the FutureGen Alliance project that the Bush administration had supported for five years.

Michael J. Mudd, chief executive of FutureGen Alliance, said that the Bush administration's decision would set back the timetable for carbon capture and storage technology that is considered essential for meeting targets for greenhouse gas emissions.

"It took four years to get to where we are today," Mudd said, citing financing needs, project design and the preparation of environmental impact statements.

Deputy Energy Secretary Clay Sell said the administration was dropping the FutureGen Alliance project because costs for the planned 275-megawatt coal-fired plant had risen to $1.8 billion and because of advances in technology. Instead, the department said it would be willing to pay the cost of adding carbon capture and storage technology to new or existing coal plants bigger than 300 megawatts. Sell said that would lead to multiple projects and more sequestration.

Sell said Bush's fiscal 2009 budget proposal would seek $648 million for coal technology, a 25 percent increase.

The FutureGen project, a nonprofit venture that included 13 utilities and coal companies, involved construction of a plant that would turn coal to gas, strip out and store underground the carbon dioxide that contributes to climate change, and then burn the remaining gas to produce electricity and hydrogen. The industry group was to pay 26 percent of costs, and the Energy Department was to cover 74 percent.

As recently as December, administration officials were calling it a "centerpiece" of their strategy for clean coal technologies.

Bruce Nilles, a Sierra Club lawyer who has been fighting to stop new coal plants, said the flap over rising costs showed that solar and wind energy are more competitive than coal advocates say they are.

In December, FutureGen selected Mattoon, Ill., as the project's site over three other finalists, two of which were in Texas.

Members of Congress from Illinois blasted the Energy Department's decision, questioning whether it would have been made if the project had been awarded to one of the finalist sites from Texas, Bush's home state. Illinois GOP lawmakers appealed to Bush yesterday, but in a telephone call with Reps. John Shimkus (R-Ill.) and Timothy V. Johnson (R-Ill.), the president said he was standing by Energy Secretary Samuel W. Bodman.

In a conference call, Sell said the Illinois lawmakers "want to attack and berate the department for not proceeding . . . just so they can see a few hundred million dollars wasted in their districts."

Sen. Richard J. Durbin (D-Ill.) said that the Energy Department's new plan "cannot be taken seriously." He said project applications are due in December, weeks before the administration leaves office. "It makes no sense," Durbin said.

Sell said that the department's concern about costs date to last spring. He complained that the industry group's plan to borrow money against the plant put taxpayers at risk. But Mudd said that banks accepted the plant as collateral, posing no risk to taxpayers. He said that FutureGen's private partners had agreed to cover half of any cost overruns.

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