Obama Administration decision deals a fatal blow to FutureGen 2.0 project

The National Mining Association (NMA) said Feb. 4 that $1bn in funding for the long-running FutureGen 2.0 coal repowering project in Illinois has been terminated by the U.S. Department of Energy.

NMA President and CEO Hal Quinn said: “The Department of Energy’s decision to back out of its commitment to its U.S. industry partners to build the world’s first near zero-emissions, carbon capture and sequestration (CCS) coal-fueled power plant calls into question the commitment of the Administration to the development of clean coal technologies. This decision cannot be reconciled with the Administration’s proposal to require [carbon capture and storage] as the only acceptable technology for any new coal-fueled power plant in the U.S.

“Last month in his State of the Union, the president called for American leadership on addressing climate change. DOE’s decision signals a retreat from a transformative technology solution,” Quinn added. “FutureGen has secured the permits, possesses an investment-grade power purchase agreement and has broken ground. It is poised to demonstrate a first-of-a-kind technology for deploying our nation’s vast fossil fuel resources.”   

The National Mining Association’s membership includes more than 325 corporations involved in all aspects of coal and solid minerals production including coal, metal and industrial mineral producers.

FutureGen 2.0 is a near-zero emissions coal-fueled power plant. The FutureGen 2.0 project partners planned to upgrade a shut power plant in Meredosia, Ill. with oxy-combustion technology to capture approximately 1.1 million tons of CO2 each year—more than 90% of the plant’s carbon emissions. The Associated Press reported that project backers have said they have no choice but to shut it down without the federal funding.

The American Coalition for Clean Coal Electricity on Feb. 4 also blasted DOE’s close-out notice for FutureGen 2.0, which was issued despite the Environmental Protection Agency specifically citing Future Gen 2.0 as an advanced-stage model in the agency’s New Source Performance Standards rule. The announcement came just one day after President Obama requested millions of dollars in funding for carbon capture and storage projects in his FY 2016 budget.

“The Obama Administration is engaging in misleading double-talk on clean coal technology. Although the administration leaned heavily on FutureGen technologies to justify its flawed New Source Performance Standards rule, President Obama has now cut the project off altogether—demonstrating his hypocrisy towards the American people and his bias against advanced clean coal technologies,” said Laura Sheehan, senior vice president for communications at ACCCE. “President Obama and his federal agencies are clearly opposed to advancing carbon capture and storage technology, despite repeated assurances. What makes this action even more disgraceful is then-Senator Obama’s full-throated support for FutureGen in 2006.”

FutureGen has a history of stops and starts dating back to the administration of former President George W. Bush. The initial FutureGen, which was to use integrated gasification combined-cycle (IGCC) technology, was announced by Bush in 2003.

Obama represented Illinois, the home of FutureGen 2.0, while he was in the U.S. Senate. In 2006, then-Senator Barack Obama described the FutureGen project as “the future of coal in the United States.”

Durbin says this decision forced by a looming funding deadline

U.S. Senator Dick Durbin, D-Ill., on Feb. 3 released a statement that said DOE has been “forced” to cancel federal funding for the FutureGen 2.0 project due to the FutureGen Industrial Alliance’s failure to find agreement with the private partners before the expiration of the $1bn in federal funding under the American Recovery and Reinvestment Act.

“The Secretary of Energy informed me that because the FutureGen Alliance was unable to secure the private financing necessary to meet the conditions of the project, the Department of Energy has been forced to end their participation,” said Durbin. “This is a huge disappointment for both Central Illinois and supporters of clean coal technology. A decade-long bipartisan effort made certain that federal funding was available for the FutureGen Alliance to engage in a large-scale carbon-capture demonstration project. But, the project has always depended on a private commitment and can’t go forward without it. I worked on FutureGen 2.0 believing it would create jobs in Illinois and demonstrate a viable environmentally acceptable use of coal to generate electricity. I am encouraged by the news that the Department of Energy values the injection site in Morgan County as a world class sequestration opportunity. I am hopeful that Illinois will continue to play an integral role in developing this technology.”

Recently, said Durbin, the FutureGen Industrial Alliance ran into financial hurdles that they have not been able to overcome, such as trouble securing a private-sector loan and challenges from the Sierra Club and Illinois utilities.

Peabody Energy (NYSE: BTU), the nation’s largest coal producer and a major backer of the project, on Feb. 4 called on the Obama Administration to reverse its decision to suspend this funding. 

“It makes no sense to pull the plug on $1 billion committed to America’s signature near-zero emissions power project at such a critical time for these investments in technology,” said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce. “The Administration has pledged $1 billion for advanced coal projects in China, and I urge them to support investments in the United States. We have the knowledge to advance low-carbon technologies to commercial scale and must demonstrate our leadership and our will.”   

Peabody noted that the Administration’s decision ironically comes only days after the National Coal Council (NCC) issued its latest study calling on the U.S. Department of Energy to accelerate deployment of carbon capture and storage technology at scale for both energy and industrial applications. The NCC conducted the study at the request of the Secretary of Energy and serves as an advisor to the Secretary on matters related to coal.

FutureGen 2.0 would be the only fully integrated carbon capture and storage project in the world. There are 22 carbon capture and storage projects in operation or construction globally, and the International Energy Agency initially called for at least 100 projects by 2020, Peabody pointed out. Norway’s Sleipner carbon storage project in the North Sea has been operating since 1996. Canada’s Boundary Dam power station began operating last October, capturing CO2 for enhanced oil recovery. China’s GreenGen power plant and carbon research center was brought online in 2012, and ultimately will capture CIO2 for enhanced oil recovery. At full build, GreenGen could become the world’s largest near-zero emissions coal plant.

Peabody pointed out that it is a founding member of the FutureGen Industrial Alliance and the only non-Chinese equity partner in GreenGen.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.