The Department of Energy’s (DOE’s) announced support for the FutureGen project on Friday resurrected hopes for the Illinois gasified coal power plant and carbon capture initiative from which the Bush administration abruptly withdrew last year. If a decision is made to move forward with construction in 2010, however, the Mattoon, Ill., project will be initially designed for 60% carbon capture—not 90% as originally intended—and to gasify a single coal type.

The DOE on Friday said it had pledged $1.073 billion—$1 billion of which would come from Recovery Act funds for carbon capture and storage (CCS) research—under a “provisional agreement” between the agency and the FutureGen Industrial Alliance. The agreement also called for a “rapid restart” of preliminary design activities, including completion of a site-specific design and a detailed cost estimate. Added to that, it would require an expansion of the 11-member alliance to about 20 members, the development of a complete funding plan, and more subsurface characterization of the carbon sequestration pilot site.

Only after these activities are completed—as expected in January 2010—will the DOE and FutureGen Alliance make a concrete decision to move forward with the project, or discontinue it. “Both parties agree that a decision to move forward is the preferred outcome and plan to reach a revised cooperative agreement that will include a funding plan for the full project,” the DOE said in a carefully worded press release.

Finding Funding

“We’re back in business,” Sen. Dick Durbin (D-Ill.)—an avid FutureGen supporter who is now the Senate’s No. 2 Democrat—told reporters in a telephone press conference on Friday. “The fact that the Department of Energy has reached this point to make this commitment to move forward is a positive thing. I’m realistic enough to know the outcome could go the other way. I have a positive feeling about the outcome.”

The Bush administration withdrew from the five-year U.S. “clean coal” plant at the end of January last year—just after the FutureGen Alliance announced it would locate the project in Mattoon. The DOE had said that costs had doubled from the then-estimated figure of $950 million to $1.8 billion. It announced instead that it would pour its 74% share into smaller clean coal demonstration plants.

But this March, the Government Accountability Office (GAO) said in a report (PDF) that it had found that the “DOE compared two cost estimates for the original FutureGen that were not comparable because DOE’s $950 million estimate was in constant 2004 dollars and the $1.8 billion estimate of DOE’s industry partners was inflated through 2017.” The project was inflated $500 million, the GAO estimated, and should have cost $1.3 billion. It recommended the DOE review its decision. Energy Secretary Steven Chu had then publicly stressed the importance of the project for the future of U.S. coal-fired power. At the same time, he was quoted as saying that a grand project like FutureGen could cost too much, and that at a scale of over $2 billion, it could become “a very deep issue.”
 
Project costs now stand at about $2.4 billion, with construction expected to cost between $1.7 billion and $1.9 billion, Durbin said on Friday. Along with the DOE’s contribution of $1.073 billion, the FutureGen Alliance is expected contribute $400 million to $600 million to the revived project, based on a goal of 20 member companies. The public-private FutureGen partnership currently consists of 11 members, including some of the world’s largest coal companies and electric utilities such as American Electric Power, Anglo American, BHP Billiton Energy Coal, China Huaneng Group, E.ON U.S., Peabody Energy, and Consol Energy. Each company would contribute a total of $20 million to $30 million over a four- to six-year period.

Meanwhile, the DOE proposed that the alliance could close the “funding gap by increasing nonfederal contributions and/or monetizing the ownership rights to the facility, components, and systems of the project to capture the residual value that will remain after conclusion of the research project.” The options could include an auction—as early as this fall—of the facility with ownership transferred upon the project’s completion. Funding is expected to be phased and conditioned based on completion of a National Environmental Policy Act review.

Asked about why it had taken so long for the Energy Department to support the project, Durbin claimed that the energy secretary—a “scientist”—had been open from the beginning to hearing about the project, but he was “new to the job.” “He’d be the first to tell you he had to learn his department and his responsibilities. The president’s reinvestment plan passed within a week or two of him becoming secretary. We had to be patient with him until he got his feet on the ground.”

Making Technical Goals Achievable

The facility will continue to use integrated gasification combined cycle technology, seek to capture carbon dioxide emissions, and sequester them in a deep saline geologic formation, but it will be different from the “near zero–emissions” commercial-scale demonstration project touted by the alliance last year, Durbin said. A key difference is that the plant will be initially designed to capture 60% of carbon emissions, but with the option of upgrading capture to 90% later. “We have worked with DOE for a realistic need,” Durbin said. “If we can bring the use of coal for electric power generation to the same or near the level from natural gas, that is a significant improvement.”

The proposed project will also be designed only to gasify Illinois Basin coal because it is “plentiful,” Durbin said, adding that the demonstration would still yield an arguably “useful technology.” In the past, the FutureGen Alliance had proposed a plant design to operate “at its best” using either bituminous (Illinois No. 6 and Pittsburg No. 8) or subbituminous (Powder River Basin) coal—but it had expected to test a wide variety of coals to understand how they performed in gasification operations.

Coal from the Illinois Basin—which includes coalfields in Illinois, Indiana, and western Kentucky—is bituminous with 10,000 to 12,500 Btu per pound and mostly over 2% sulfur. The Southern Illinois University Carbondale Coal Research Center claims that Illinois coal is highly suitable for gasification—better even than western coal—because of its chemical composition, energy content, and moisture content.

Sources: POWERnews, DOE, FutureGen Alliance, Sen. Dick Durbin, Southern Illinois University Carbondale Coal Research Center