DOE Pulls the Plug on FutureGen

The Department of Energy (DOE) announced on Feb. 3 that it was ending its involvement with the troubled FutureGen 2.0 clean coal project, concluding that it had run out of time to finish development before federal funding expires in September.

First proposed under the Bush administration in 2003, suspended in 2008, then revived and allocated $1.1 billion in funding under the 2009 stimulus law, FutureGen was a public-private partnership intended to showcase possibilities for oxy-combustion and carbon capture and sequestration (CCS).

The partnership planned to purchase and retrofit one unit of Ameren Energy Resources’ Meredosia Energy Center, near Meredosia, Ill. The repowered 168-MWe unit was to capture at least 90% of its carbon dioxide emissions, with the captured CO2 sent via a 30-mile pipeline to a storage facility and injected about 4,000 feet below ground into the Mt. Simon formation, one of the Illinois Basin’s major deep saline formations.

Funding Roadblocks

But with total costs estimated at nearly $1.7 billion, project backers needed to secure substantial additional financing, something they have been unable to do. A proposed plan by the Illinois state government to assess a surcharge on the state’s electricity consumers (about a dollar a month) for 20 years ran into substantial opposition, including that of Exelon, the state’s largest power generator. A lawsuit against the plan was slated to be heard by the Illinois Supreme Court later this year.

About $200 million of the funding has been spent—$116.5 million on the plant and $86 million on the underground storage site—and the DOE concluded that it was time to withdraw. It would say only that the decision was made to “protect taxpayer interests.”

Ken Humphreys, CEO of the FutureGen Alliance, said in a statement that the group was “profoundly disappointed” with the decision and that the failure of the project “questions U.S. resolve” in supporting the development and deployment of CCS technology.

Controversy Ahead

The move came as something of a surprise to many in the coal sector. The DOE had formally committed to funding FutureGen as recently as January 2014, and the Environmental Protection Agency (EPA) approved the permit for underground storage last September.

In addition, there may be repercussions from the decision given that the EPA had highlighted FutureGen as one justification for its New Source Performance Standards rule. That inconsistency was blasted by the American Coalition for Clean Coal Electricity in statement, calling the move “hypocrisy” and the administration’s treatment of clean coal technology as “misleading double-talk.”

The administration’s proposed 2016 budget restores about $6.6 million for clean coal technology funding that was cut in the final 2015 appropriations bill but also includes about $2 billion in eliminated tax preferences for coal mining through 2020. The DOE requested $561 million in funding for fossil energy research in 2016.

Slow Going for CCS

The move is only the latest mixed news for CCS. The still-uncompleted Kemper County integrated gasification combined cycle plant in Mississippi saw its projected costs rise another $45 million on Feb. 3, now putting it more than 120% over its original $2.8 billion budget. Owner Mississippi Power still expects that plant to come online this year.

Several other projects in the U.S., such as Summit Power’s Texas Clean Energy Project, though still alive, remain stalled for lack of financing, while a number of other high-profile projects, such as Norway’s Mongstad facility and AEP’s Mountaineer Power Plant in West Virginia, have been shelved.

There have been some bright spots, however. The first full-scale power-plant project, SaskPower’s Boundary Dam Power Station in Canada, reached commercial operation in October. NRG Energy also began construction on its W.A. Parish CCS Project near Houston the same month.

Meanwhile, a study released in January, funded the DOE and conducted by the Massachusetts Institute of Technology, found that previous assumptions about mineralization of sequestered CO2 may be in error and that substantial amounts could remain mobile and return to the surface.

—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).