DOE Suspends Funding for California Clean Coal Project

The Department of Energy (DOE) has suspended funding for the Hydrogen Energy California (HECA) polygeneration clean coal plant, saying the company has failed to meet required milestones, according to a report in E&E Greenwire on July 10.

The HECA project, in development since the late 2000s, is intended as a next-generation integrated gasification combined cycle (IGCC) plant that would not only capture and sell its carbon dioxide emissions but also produce fertilizer and a variety of other chemical products from its emissions and waste streams. Though originally begun by BP and Rio Tinto, it is currently owned by Massachusetts firm SCS Energy.

In 2009, the DOE committed to supplying $408 million in cost-shared funding for the approximately $2.5-billion plant. HECA, however, has run into problems finding customers for its products, such as carbon dioxide for enhanced oil recovery (EOR). Though the location in Kern County is in the center of California’s oil industry, SCS Energy said recently that it has not been able to land buyers for its CO2.

About $153 million of the funding has been used, but this spring, the DOE decided to withhold the remaining $250 million because of the lack of progress. According to the E&E report, the DOE is not completely closing the door on HECA and remains open to reconsidering the decision depending on future developments.

The move does not mean the end for HECA, which is relying primarily on private financing. The company said it plans to continue development with or without federal support.

HECA marks the second clean-coal project to fall short of its benchmarks for DOE funding. In February, the DOE pulled out of the on-again, off-again FutureGen project in Illinois, which would have retrofitted an existing coal-fired unit at Ameren Energy Resources’ Meredosia Energy Center. That project consumed about $200 million in funding before being shut down.

One more clean-coal project remains in the funding program, the Texas Clean Energy Project (TCEP) under development by Summit Energy near Odessa. TCEP has made more progress than the other two—it has customers in place that HECA lacks—but it has still had its share of setbacks. Last January, CPS Energy let its power-purchase agreement with TCEP expire, though the two companies negotiated a new agreement in October. Summit is now hoping for a 2019 operations date.

The DOE has said the funds committed to these clean-coal projects have not gone to waste because of the knowledge and experience that has been gained. Critics have noted, however, that the Environmental Protection Agency had used the existence of FutureGen and HECA as support for its plan to require new coal plants to use carbon capture technology.

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