US government steps back up for carbon capture
New York, 18 June:The US government has resurrected the FutureGen Project – a major carbon capture and sequestration (CCS) pilot – although its future remains far from certain.

Reversing a decision by the Bush administration to cancel the project due to cost overruns, the Department of Energy (DOE) has agreed to provide more than $1 billion to fund construction of the first commercial scale, research and development project to integrate CCS with integrated gasification combined cycle (IGCC) technology in a single power plant.

The project, co-funded by the FutureGen Alliance, is intended to prove the feasibility of producing electricity and hydrogen from coal while capturing and permanently storing carbon dioxide underground.

“It’s designed as a learning platform,” said Sarah Forbes, senior associate and CCS expert at the World Resources Institute, an environmental think-tank based in Washington.

While the size of the facility has yet to be determined, it is expected to be similar to the original design, which called for a 275MW plant. But the DOE and the coalition will make a decision either to move forward or to discontinue the project early in 2010 after conducting an extensive review of cost and design options.

“The fact that the project is now moving forward is definitely a step in the right direction,” Forbes said.

The project has a long and complicated history. In 2003, the DOE announced it would partner with the electric power industry to design, build and operate the world’s first coal-fired, zero-emissions power plant. In 2005, the FutureGen Alliance, a non-profit consortium of 11 of the largest coal producers and electric power companies in the world, agreed to fund 26% of the $1 billion programme. The DOE was to fund the rest of the project, with about 8% of the total cost coming from foreign government partners.

But the project began to fall apart in 2007 as the DOE became increasingly concerned about potentially escalating costs. In January 2008, the DOE discontinued the original plan and announced a restructured proposal that focused on demonstrating CCS at multiple new or existing commercial coal-fired power plants that may use high-efficiency IGCC or other technology.

The agency agreed last week to provide $1.073 billion for the project, $1 billion of which comes from economic stimulus funds for CCS research. The FutureGen Alliance’s total anticipated financial contribution is $400 million to $600 million, based on a goal of 20 member companies each contributing $20 million to $30 million over a four- to six-year period. The Alliance and DOE will work together through the rest of the year to refine the facility’s design to reduce cost and technical risk, said FutureGen CEO Michael Mudd.

Despite the DOE and Alliance commitment, there is still a funding gap with the total cost of the project now projected at about $2 billion, said Ned Leonard, vice president of technology policy for the American Coalition for Clean Coal Electricity. One of the cost-saving options being considered is lowering the capture rate from 90% to 60% of carbon dioxide during the initial years of operation, said Leonard, whose organisation also includes several Alliance members. “Sixty percent is nothing to sneeze at,” he said.

By mid-July, the DOE plans to certify the environmental analysis required by the National Environmental Policy Act of 1969, completed in December 2007. From the end of July through early 2010, developers will pursue a rapid restart of preliminary design activities, completion of a preliminary design and updated cost estimate, expansion of the alliance sponsorship group and development of a complete funding plan.

Plans to reduce US greenhouse gas emissions count on about 20% of those reductions coming through CCS, so testing at scale is an important step, but the US needs at least five projects to come into operation in the next few years, Forbes said. A bill just approved by the Senate Energy and Natural Resources Committee establishes a national indemnity programme through the DOE for up to 10 commercial-scale CCS projects. 

Meanwhile, about 20 projects are being developed globally and the DOE must facilitate information sharing between countries developing these projects to advance the technology, she said. “If we don’t have a solution for coal, particularly in China, we won’t have a solution for climate change,” Forbes said.