The U.S. government has pulled the plug on a project in Illinois to capture carbon, a significant setback for development of a technology that may be critical to the future of coal.
The Energy Department said Tuesday it’s pulling support for FutureGen Industrial Alliance Inc., a public-private partnership to build a coal plant that would store its carbon emissions deep underground instead of sending the gases skyward.
The project, proposed more than a decade ago, was supposed to demonstrate the feasibility of a new, climate-friendly way to use coal, which remains the largest single source of electricity generation in the U.S. Instead, the combination of approaching deadlines, leery investors and reluctant power buyers scuttled the project.
“Carbon capture is important because we cannot address climate change adequately without it,” said John Thompson, a director of the Clean Air Task Force, a Boston-based environmental group. “The importance of CCS hasn’t diminished.”
President Barack Obama’s administration used FutureGen to show it remained committed to the fossil fuel as it advanced climate rules that sought to limit coal use. Illinois lawmakers saw the project as an economic engine for the state, which is the fifth-biggest coal producer in the U.S.
The Energy Department spent $202 million on the Meredosia, Illinois, plant about 90 miles (145 kilometers) north of St. Louis.
Investors, however, remain wary of carbon capture projects, which are unproven even as the federal government has spent billions of dollars to make the technology economically viable.
The projects aren’t a “destination for serious financial commitment,” said Christine Tezak, an energy analyst at ClearView Energy Partners LLC in Washington. “The major change agent this industry needs is a technological breakthrough.”
That hasn’t happened yet, and that’s bad for tackling climate change. While wind and solar power gain market share, they still represent just a fraction of power production. Coal produced about 38 percent of the electricity used in the U.S. in November, the last month figures are available, according to the U.S. Energy Information Administration, which analyzes federal energy data. And while coal use in the U.S. is forecast to hold steady, its use in China and India is set to soar.
“If we are to have any hope of avoiding the worst aspects of climate change, we need CCS on a whole host of things” from coal plants to factories, Thompson said, referring to carbon capture and storage or sequestration.
FutureGen won $1.1 billion in federal money in the economic stimulus in 2009, and was championed by Illinois lawmakers including Democratic Senator Richard Durbin, his party’s No. 2 leader in the chamber.
Durbin, who tried to add a provision in last year’s spending bill to extend the deadline, said the project struggled to attract sufficient commercial interest. He called the government’s withdrawal a “huge disappointment.”
The Energy Department determined that FutureGen’s sponsors couldn’t meet the September deadline to get the project’s plans finalized, said Christopher Smith, assistant secretary of energy for fossil fuels.
“This is unfortunate for us. This is a project we worked very hard on,” Smith said at a meeting in Washington of the Global CCS Institute, an industry-supported group based in Melbourne. “We were simply undone by some timelines established by statute.”
Smith said another project funded by the department -- Hydrogen Energy California -- faces a similar deadline crunch. That project “has had challenges,” he said.
Ken Humphreys, chief executive officer of the FutureGen Alliance, said in a phone interview that private investors were holding back until an Illinois court decided on a challenge to a rate increase that would cover the project’s cost. FutureGen would have received financial backing once the court case was resolved, he said.
Other projects are in progress, though none operating. NRG Energy Inc. is leading a $1 billion effort to install equipment to remove carbon dioxide at a Houston-area coal plant, and plans to sell it to oil fields to help generate further production.
Southern Co.’s Kemper plant in Mississippi, which will use a chemical process to cut the carbon emitted from a coal plant to a level on par with the natural gas plant, is still under construction. Southern says it will cost $6.2 billion, up from $2 billion, making it the most expensive coal plant in U.S. history.
In West Virginia, American Electric Power Co. spent $114 million to test carbon-capture equipment on its Mountaineer plant. The company pumped gas underground for about 18 months, then pulled out of a deal with the federal government to build a commercial-scale project in 2011, because of the “uncertain status of U.S. climate policy and the continued weak economy.”
And in west Texas, Summit Power Group LLC is well past its deadline to begin construction on a plant that would make electricity, urea and carbon dioxide to sell.
In Canada, SaskPower International Inc. installed carbon capture equipment on the Boundary Dam plant, establishing the first commercial-level operation of its kind when it opened last year.
“A lot of the problem is just the size of the projects,” Jeffrey Price, who wrote a report on incentives for the International Energy Agency, said at the Washington forum. “It’s not like putting some solar panels on someone’s house.”
Environmental groups including the Sierra Club and Friends of the Earth opposed the project, saying coal can’t be burned safely or cleanly.
The demise of FutureGen drew a rebuke from the American Coalition for Clean Coal Electricity. The Washington-based group said the decision reflected the administration’s lack of commitment to the technology.
Senator Joe Manchin, a West Virginia Democrat and a coal supporter, said lawmakers including Durbin may try to extend the September deadline to let the department spend the money. A provision to suspend the deadline was in a Senate spending bill but was dropped from the version Congress passed.
Under Obama, the U.S. has invested $6 billion in the technology. And the 2016 budget request would add to that: about $2 billion worth of tax credits for coal plants that capture and bury their emissions.
The Energy Department also is seeking applications for loan guarantees that could back up as much as $8 billion in projects in carbon capture and storage projects. Manchin expressed frustration that the program had yet to be used.
“They won’t spend what they have,” he told reporters.
The department’s participation in FutureGen wasn’t a loss because it helped further development of carbon capture technologies, spokesman Gibbons said. The U.S. had spent about $116.5 million since 2010 on the planned 200-megawatt power plant and $86 million developing an underground storage site.
“Our hope is that industry and government will continue to find ways to develop CCS technology for a cleaner, more secure energy future,” CEO Humphreys said in a statement.