Nov. 15 (Bloomberg) -- Ameren Corp. is in talks to hand over control of an Illinois carbon-capture project backed by $1 billion in Obama administration stimulus funds, to keep alive an effort to prove power can be generated from coal with almost no emissions, according to three people familiar with the talks.
The board of directors of the FutureGen 2.0 project is meeting for the second day today to negotiate the transfer of a $730 million grant given to St. Louis-based Ameren in 2010 by the Energy Department, said two of the people familiar with the deliberations who weren’t authorized to speak about them.
The FutureGen Industrial Alliance Inc., a nonprofit group that consists of seven coal mining companies and two PPL Corp. utility subsidiaries, would take over as lead developer of the $1.3 billion project near the town of Meredosia, 250 miles (400 kilometers) south of Chicago, said the people. The agreement may be announced this week.
The reassignment would keep alive an initiative dating back to 2003 to capture and store carbon-dioxide emissions from a coal-fired power plant. FutureGen 2.0, the world’s first commercial-scale plant using oxygen-combustion technology, would help prove that coal can continue to supply power in the U.S. without boosting emissions that cause global warming.
Ameren won the grant to convert an oil-fired boiler at its Meredosia power plant to a coal unit, at which 90 percent of the carbon-dioxide emissions would be captured and stored. Federal officials also awarded funds to build a 30-mile pipeline, storage facility and a visitor center.
The FutureGen Alliance is in talks to lease the coal unit from Ameren, which is expected to continue to play a role in the project, said two people familiar with the talks.
Ameren has told its partners that it can’t continue to lead the effort to retrofit the Meredosia plant because of financial constraints, Lawrence Pacheco, a spokesman for the Jacksonville, Illinois-based FutureGen Alliance, said in a telephone interview. Ameren doesn’t intend to bow out of the project altogether, he said.
“All discussions that Ameren has had with the Alliance are about moving the project forward,” Pacheco said. “Those continue.”
The FutureGen 2.0 project was created to replace a stalled Bush administration plan to build a coal-fired power plant with carbon capture and storage capabilities in Mattoon, Illinois. Southern Co. and American Electric Power Co., two of the largest U.S. utility owners, backed out of the effort in 2009 and decided to work on their own projects.
U.S. ‘Remains Committed’
Last month, Ameren said it would shut its Meredosia plant by the end of the year to comply with planned federal air-pollution rules. At that time, Ameren said the decision to close the facility had no “impact on the viability” of FutureGen 2.0.
The Energy Department “remains committed to the demonstration of carbon capture and storage technologies at commercial scale and has been working to make FutureGen a reality,” Tiffany Edwards, a spokeswoman for the agency, said in an e-mailed statement.
Once phase one of FutureGen is done this year, “we will assess the progress that the project participants have made before moving on to the next phase of the project,” Edwards said.
Babcock & Wilcox Co. and Air Liquide SA would continue in their current roles as contractors for the technology, equipment and conversion of the plant, said two people familiar with the talks.
Spokesmen for Ameren, Babcock, Air Liquide and Illinois’s Department of Commerce and Economic Opportunity didn’t respond to requests for comment.
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