Luring FutureGen, the $1 billion federally funded near-zero-emissions demonstration coal plant, has turned into a game of high-stakes poker between Illinois and Texas, the only two players still sitting at the table.
Just four potential sites remain - Tuscola and Mattoon in Illinois - and Jewett and Odessa in Texas. The project will create about 1,000 jobs while under construction and about 150 permanent jobs when it goes into service in 2012.
Last year, Illinois sweetened the pot to a total package worth an estimated $80 million in incentives. Illinois’ ante includes $17 million in sales tax exemptions on materials needed to build the project and $50 million earmarked for low-interest loans to the FutureGen Alliance.
Illinois lawmakers are also debating a bill to indemnify the project from any adverse effects caused by the geological sequestration of captured carbon dioxide. That move is an attempt to “see” the indemnity law Texas passed last May, whereby the state will take possession of all sequestered CO2.
Now Texas has raised the ante again, first by committing an additional $20 million to the FutureGen Alliance in addition to the $5 million already promised if selected. And an additional incentive package has been proposed by state legislators from both Texas sites. An omnibus bill would establish sales tax exemption for all infrastructure related to the project and help create a market for power generated at the FutureGen plant by exempting all electricity it sells from commercial sales tax.
But by the time the dealin’s done, the Texas hold-em indemnity law could prove to be a literal ace in the hole, quite possibly trumping the much sweeter upfront stake of cash incentives promised by Illinois. In the initial selection that narrowed the candidates to the four current sites, those betting the biggest amounts of cash and tax incentives folded. FutureGen officials passed on Ohio, which put $164 million on the table, and Kentucky, which anted up $90 million. Kentucky also considered a Texas-style indemnity bill, but determined that it’s state charter doesn’t allow it to take possession of captured carbon dioxide. By contrast, the Texas indemnity law ended up being the only incentive specifically mentioned in FutureGen’s short-list report explaining its final four picks.
It won’t be long before we know who holds and who folds. Illinois and Texas will submit their final best value offerings to the FutureGen Alliance in June. And a final site selection will be made in September.
-Steve Blankinship