By Steve Blankinship
A report by the Government Accounting Office (GAO) urges the Department of Energy to reconsider a 2008 Bush administration decision withdrawing support for the FutureGen clean coal project. GAO cited math errors that it said misrepresented the project's cost escalations by a half billion dollars.
The report, released March 11, says DOE should reexamine its 2008 decision withdrawing support of the near-zero emissions power plant, which was to be built at Matoon, Ill. The math error led DOE to say FutureGen had nearly doubled in cost – a cost increase the Bush administration (which initially proposed the project) deemed too expensive. In ending its support, the Bush administration said the cost had nearly doubled to $1.8 billion from $950 million. GAO auditors in March said FutureGen's cost had risen to $1.3 billion, up 39 percent.
According to the GAO, the Energy department mistakenly compared two numbers that should not have been used together. One cost estimate was made in so-called "constant dollars," reflecting the purchasing power of a dollar in 2005. The other used dollars as they would have been spent over the following few years, worth less each year because of inflation.
In January 2008, after investing $174 million in FutureGen, the Bush administration withdrew its support. Staff of a House of Representatives committee found internal communications suggesting Energy department officials were looking for reasons to kill the project.
The GAO report said the overall goals of the original and restructured FutureGen programs are similar. Both programs aim to produce electricity from coal with near-zero emissions using carbon capture and storage (CCS) techniques. They also aim to make that process economically viable for the electric power industry. However, the two programs would differ in achieving their goals resulting in what knowledgeable stakeholders said were two largely distinct programs that could affect aspects of CCS's commercial advancement.
Both programs' goals for storing CO2 and limiting other emissions, such as mercury and sulfur, are also similar. One difference is that the requirement for the amount of carbon to be captured has been reduced from 90 percent in the original program to 81 percent in the restructured program.
Energy Secretary Steven Chu said he will consider renewing DOE's support for FutureGen, but that changes will be needed. He did not immediately specify what those changes would be.
In February 2003, President Bush announced FutureGen as a cost-shared project between DOE and industry to create the world's first coal-fired, zero emissions electricity and hydrogen production power plant. The hydrogen component was to support the president's Hydrogen Fuel Initiative, whose goal was to create a hydrogen economy for transportation. FutureGen was planned to operate at a commercial scale as a 275 MW Integrated Gasification Combined Cycle (IGCC) facility. The IGCC would capture and store at least 1 million metric tons of CO2 a year. In December 2005, DOE signed a cooperative agreement with a nonprofit alliance to pursue development.
Under the deal, the private sector would pay 26 percent of FutureGen's costs. The other 74 percent would have been paid mostly by the federal government, although 8 percent would have come from foreign government partners, including China and India, two countries that Washington had hoped to persuade to use carbon capture with their coal plants.
Some utility executives not involved with FutureGen have said the arrangement was too generous to the private partners. But the cancellation was costly, too. Internal documents found by congressional staff members predicted that killing the Illinois project would set back carbon capture technology development by 10 years.
What the Energy Department proposed instead was to support carbon capture technologies that would be added to coal plants already built or in the planning stages. But that effort bogged down, partly because a number of planned plants were canceled because of high costs. The stimulus bill passed by Congress may provide money for the original FutureGen project.
In a statement released by the FutureGen Alliance, CEO Michael Mudd of Columbus, Ohio-based AEP said the alliance is looking to the future and planning for success. Mudd said he was very encouraged by Secretary Chu's comments and looked forward to an objective evaluation by the Energy department.
"Once they review the project, we believe they will conclude FutureGen at Mattoon is shovel ready and will deliver carbon capture and sequestration technology the fastest to the world," said Mudd.