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Low-Carbon Showcase Project Cancelled by DOE

Low-Carbon Showcase Project Cancelled by DOE

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Archives of Energy Strategies Report.

Low-Carbon Showcase Project Cancelled by DOE

By Brent Franzel, Principal, Cardinal Point Partners LLC

The Obama administration’s decision in February to pull the plug on government funding for the FutureGen 2.0 program leaves a bleak future for carbon capture technology in the foreseeable future – and it could have an impact on the administration’s new power plant emissions rules scheduled to be released later this year.

After spending more than $200 million on the project, the U.S. Department of Energy announced February 5 that it was cutting off any further commitments of the $1.1 billion that had been set aside for the project. Under rules put in place by Congress when the project was funded in the 2009 stimulus bill, the $1.65 billion project was to be financed through a public-private partnership. The private money, however, had not been put into place due to concerns over the viability of the technology and the low market price of natural gas.

With a September 2015 deadline approaching to spend the federal dollars, administration officials made the decision that the private funding simply would not be in place in time to meet the deadline. The project was to be built in Illinois, and members of the state’s congressional delegation had tried last year to extend the deadline, but were unable to get it included in the final 2015 appropriation bill.

FutureGen was DOE’s leading carbon capture demonstration project. Its goal was to retrofit an existing Illinois coal power plant to capture more than 90 percent of its carbon emissions. The project was originally started in 2003 by the Bush administration as a way to highlight the promise of clean coal. The project was abandoned in 2008 due to technical challenges and rising costs, but revised and restarted by the Obama administration in 2009 as part of the stimulus bill. 

DOE is funding several other carbon capture projects, but most of them face challenges. Six projects were being funded through the Clean Coal Power Initiative, but three projects recently withdrew from the program. DOE is also funding 31 projects through its Industrial Carbon Capture and Storage Program, which finances research and development on large non-utility carbon capture projects.

The only currently operating plant using carbon capture and sequestration technology is the Boundary Dam Plant in Canada. A plant under construction in Mississippi is moving forward, but is facing cost overruns and schedule delays. Several other projects have been cancelled. 

The Obama administration has been a strong supporter of carbon capture technology and has made it a centerpiece of its plans to lower carbon emissions from coal-fired power plants. The Environmental Protection Agency is expected to issue rules by the third quarter of 2015 that will set emissions levels for coal plants that would be unachievable without incorporating carbon capture technology.

Many environmental groups have been critical of FutureGen and other carbon capture programs. They argue coal has no place in the nation’s future power plans and they are critical of projects that use stored carbon for oil and gas development. Tea Party supporters and government spending watchdog groups have been critical of the large amounts of money being spent on the program.

The cancelation of FutureGen is likely to be used by critics of the administration’s emissions policy as evidence that carbon capture technology is not commercially available as required by the Clean Air Act. The EPA has relied on both FutureGen and the still incomplete Mississippi plant as examples of commercial viability. Challenges to the upcoming new power plant rule are likely – both in court and in Congress – where opponents will argue that the emissions limits set by the EPA must be scaled back.

In a joint hearing of the House subcommittees on Energy and Power, and Environment and the Economy, EPA Administrator Gina McCarthy said the agency has not made a final decision on whether to require carbon capture in the final rule. McCarthy said she remains confident that carbon capture technology remains viable for commercial use. Several Republican members at the hearing expressed skepticism at that assertion.

March 2015 Issue