GAO: DOE Overestimated FutureGen Cost Before Canceling It
The Department of Energy’s decision last year to withdraw from FutureGen—the first “clean coal” plant in the U.S.—largely because costs had doubled and would escalate substantially, was rooted in faulty calculations, the Government Accountability Office (GAO) said in a report released last week.
At the end of January 2008—just after the FutureGen Alliance announced it would locate the zero-emissions demonstration plant in Matoon, Ill.—the DOE pulled out of the $950 million project, saying costs had doubled to $1.8 billion. It announced instead that it would pour its 74% share into smaller clean coal demonstration projects.
But in its report, “Clean Coal: DOE’s Decision to Restructure FutureGen Should Be Based on a Comprehensive Analysis of Costs, Benefits, and Risks” (PDF), the GAO 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.
Based on its comparison of the original and restructured programs, and its analysis of whether the decision to withdraw from FutureGen was based on sufficient information, the GAO recommended that the DOE reexamine its decision.
“As its restructuring decision did not consider a comprehensive analysis of costs, benefits, and risks, DOE has no assurance that the restructured FutureGen is the best option to advance CCS,” the report said.
The DOE initiated the commercial-scale coal-fired power plant project to incorporate integrated gasification combined cycle (IGCC) with carbon capture and storage (CCS). The plant was to capture and store underground about 90% of its carbon emissions. The FutureGen Alliance, which was to fund 26% of the project, consisted of some of the world’s largest coal companies and electric utilities. These included American Electric Power, BHP Billiton Energy Coal, China Huaneng Group, E.ON U.S., PPL Energy, Peabody Energy, and Consol Energy.
Bloomberg last week reported that Energy Secretary Steven Chu acknowledged that finding commercially viable ways to capture and store carbon was a necessity, given that coal was an abundant energy resource. But Chu also reportedly said that a grand project like FutureGen could cost too much.
“I’ve seen estimates as high as $2.3 billion, based on today, with escalation,” Bloomberg quoted Chu as saying. “At the scale of over $2 billion, that is becoming a very deep issue with me. We need to invest in a portfolio of projects.”
Sources: GAO, Bloomberg