February 22, 2008
The clean coal facility to be co-sponsored by the federal government and private enterprise may turn to dust. The plant, dubbed FutureGen, has been scrapped for now in favor of building smaller coal gasification units around the country that could minimize harmful pollutants and capture and bury carbon dioxide emissions.
The decision dismays those who say that FutureGen is further along than other coal gasification facilities that promise to be non-polluting. Those proponents say that they will first try and work with the U.S. Department of Energy to assure that the plant is built in Mattoon, Ill. But if the differences cannot be resolved, then they plan to ask Congress to force the agency's hand.
At issue is whether FutureGen has become a boondoggle and whether a series of smaller projects could deliver the same benefits for less money. For its part, the 13-member FutureGen Alliance, says that they will come up with more funds to pay for their proportional share through a combination of bank financing and plant revenues -- an idea rejected by the Energy Department.
Cost overruns, resulting from rising cement and steel prices, are the reason why the Energy Department has said it would halt its participation in the Mattoon site. In 2003, the feds said they would pay 74 percent of the project's cost, or $800 million, while the group of 13 private companies said they would chip in 26 percent. But now the estimated price tag is $1.8 billion -- pushing up the Energy Department's share to $1.33 billion.
While the agency says that it is committed to promoting research and development into clean coal technologies, it now says that it will shift its focus from the large-scale 275-megawatt FutureGen project to a handful of smaller projects. It says that its goal remains to deliver the "greatest possible technological benefits in the most cost-efficient manner."
The demand for electricity is expected to rise by 22 percent by 2030, according to the North American Electric Reliability Corporation. Policymakers face questions as to how to meet that growing need while doing as little harm as possible to air quality.
Traditional coal, which emits twice the level of pollutants as alternative fuel sources, may well lose ground to other fuel forms. Coal plant cancelations have accelerated since the 2007 U.S. Supreme Court ruling that carbon dioxide is a pollutant that must be regulated. At the same time, U.S. lawmakers are grappling with enacting limits on greenhouse gas emissions thought by scientist to cause global warming.
All that has prompted CitiGroup, JPMorgan Chase and Morgan Stanley to recently adopt tougher lender standards on utilities that want to build coal-fired plants -- a move they say is not just necessary to preserve the environment but to also safeguard their balance sheets. Investors, they say, need to recognize fully the risks associated with building coal-fired plants in an era that will restrict heat-trapping emissions.
Altered Plan
The administration defends it position, saying that it has steered since 2001 $2.5 billion toward coal gasification projects that have the potential to capture and sequester carbon dioxide emissions. It adds that its fiscal year 2009 budget allocates $648 billion toward more efficient gasification and turbine technologies as well as new innovations for existing coal-fired power plants.
Federal officials say that they notified the alliance of its concerns related to cost-overruns as early as April 2007. That may explain why they were not present at the December press event announcing the Mattoon site. The new focus will delay the schedule but will achieve the same results, the administration says. Smaller plants that have the ability to cut the level of harmful emissions regulated under clean air laws by 90 percent will reach fruition by 2016.
"This restructured FutureGen approach is an all-around better investment for Americans," says U.S. Energy Secretary Sam Bodman. "Each of these plants will sequester at least one million metric tons of carbon dioxide annually and help meet our nation's rapidly growing energy demand."
The FutureGen Alliance says that the administration's policy shift will take too long, all at a time when the nation needs cleaner and more electric generation. It adds that the project has made lots of progress, noting that the Mattoon site has all the required attributes for success that include a secure water source and the ability to inject carbon dioxide on-site to eliminate the need for an extended off-site pipeline.
The major challenge facing the project developers is to convert coal into hydrogen and electricity. If the hydrogen can be separated from the other the elements, it could then be used to power everything from vehicles to electric generators. Beyond the technical tests, the facility must pass through all the legal and regulatory mazes, something that proponents thought they had accomplished.
"The FutureGen project at Mattoon is in the best position to move ahead with the urgency that the energy and climate change challenges demand," says Michael Mudd, CEO of the alliance.
FutureGen's immediate future is unclear. While the project could well be divvied up into smaller facilities spread among critically-located states, key Illinois lawmakers will first try to get legislation passed that mandates construction at the Mattoon, Ill. site. If that possibility is exhausted, members of Congress from Texas have said they will make another attempt to win at least part of any new contract -- and to do so in a way that promises to keep costs in line.
No matter the form, advancing coal gasification projects is necessary. Coal provides more than half of this nation's electricity and every effort must be made to make it cleaner and carbon neutral. If the idea succeeds, the technology could be replicated worldwide.
More information is available from Energy Central:
• Generation Technologies Topic Center
• The Promise of IGCC - Innovations in Extracting Power from Coal, EnergyBiz, May/June 2005
• FutureGen's Promise: Center Promotes Research, EnergyBiz, July/Aug 2007
• Coal Research Urgent: Federal Agency Cooperation Urged, EnergyBiz, July/Aug 2007
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