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By Robert Rapier on Jan 31, 2008 with no responses

FutureGen Project Stopped

The FutureGen Project, a clean coal demonstration plant that would have included carbon capture and sequestration (and was #8 on My Top Energy Stories of 2007) has been cancelled. The culprit? Cost overruns of about 80%, and a lot of competing projects. It turns out that carbon sequestration isn’t cheap, and the DOE decided the price tag was too high for this project:

U.S. pulls the plug on funding for FutureGen

The Department of Energy on Wednesday officially quashed a $1.8 billion clean-coal project slated for central Illinois, leaving the experimental venture to capture carbon emissions dependent on Congress for survival.

The FutureGen Industrial Alliance was cooperating with the Energy Department to develop a coal-fired power plant designed to gasify and store carbon emissions deep within the Earth, a process known as sequestration. But the Energy Department withdrew its support because of ballooning cost estimates on what was initially supposed to be a $1 billion project.

The surprise move transformed a short-lived celebration after Mattoon, Ill., was selected last month as the plant’s home into a legislative battle, once the Bush administration chose instead to spread funding across multiple facilities planned nationwide.

Carbon sequestration, however, is certainly not off the agenda:

During a conference call Wednesday, Deputy Secretary of Energy Clay Sell said circumstances have changed since the program’s conception in 2003, noting there are 33 applications to build similar coal power plants. Under the new plan, the Energy Department would fund the capture and storage of carbon emissions, while utilities cover the cost of power generation. The Department of Energy estimated the new plants would join the grid starting in 2015.

FutureGen executives were confused by the decision:

Department of Energy officials in April expressed reservations about rising costs, leading to a series of meetings with FutureGen executives that failed to produce a meaningful conclusion. Mudd said his organization does not understand the rationale behind the Energy Department’s announcement, noting that its decision squanders four years spent reviewing the science and regulatory framework in a historically unprecedented effort.

It’s not so hard to understand. When you have huge cost overruns, you run the risk of having your project cancelled. It’s the same in industry. I know it is very easy to underestimate project costs, because I have seen it done again and again. That’s why I always take those claims of “We will produce (ethanol, biodiesel, gasoline) for less than $1/gal” with a big grain of salt.