"CLEAN COAL" PROJECT SCRAPPED HOURS AFTER BUSH SPEECH

(ENS) WASHINGTON -- Energy Secretary Samuel Bodman sent America's clean coal program back to square one Wednesday when he tossed out the FutureGen low emissions coal gasification plant that the Bush administration has supported for the past five years.

FutureGen is a public-private partnership between the U.S. Energy Department and the FutureGen Industrial Alliance, Inc, a non-profit consortium of 12 American and international energy companies.

The site at Mattoon, Illinois, selected after a hard-fought battle with two sites in Texas and another in Illinois, was scrapped, and Bodman said the FutureGen Alliance will have to compete all over again with other commercial power companies and consortia.

The announcement raised howls of protest from the Illinois congressional delegation. Half the delegation declared in a letter to President George W. Bush Wednesday that they "have lost confidence in Secretary Bodman."

"We feel that the Secretary misled us and the people of Illinois, creating false hope in a FutureGen project which he had no intention of funding or supporting," they told the president.

"We are writing today to urge you to keep FutureGen on track, so that this project can begin construction and become a reality," wrote the Illinois elected officials, including Senators Dick Durbin and Barack Obama, both Democrats, and Democratic Representatives Jerry Costello, Danny Davis, Rahm Emanuel, Phil Hare, and Jan Schakowsky, and Republicans Tim Johnson, Ray LaHood, and Peter Roskam.

Bodman said he now favors "a restructured approach to its FutureGen project that aims to demonstrate cutting-edge carbon capture and storage, CCS, technology at multiple commercial-scale Integrated Gasification Combined Cycle, IGCC, clean coal power plants."

"Under this strategy," Bodman said, "the U.S. Department of Energy, DOE, will join industry in its efforts to build IGCC plants by providing funding for the addition of CCS technology to multiple plants that will be operational by 2015."

"This approach builds on technological research and development advancements in IGCC and CCS technology achieved over the past five years and is expected to at least double the amount of carbon dioxide sequestered compared to the concept announced in 2003," Bodman said.

"The FutureGen concept announced in 2003 planned the creation of a near-zero emissions, 275 MW power plant that produced hydrogen and electricity from coal on a smaller-than-commercial-scale, serving as a laboratory for technology development," said Bodman.

The FutureGen Alliance today said Bodman's assertions were untrue. "The Mattoon site and FutureGen, as currently configured, can sequester approximately two million tons per year. The environmental impact statement considered as much as 2.5 million tons," said the Alliance.

"FutureGen is commercial scale," the Alliance said. "The facility will be built around a commercial-scale gasifier and commercial-scale frame 7 turbine."

In annoucing the restructuring, Bodman raised the issue of government funding for FutureGen. "Under this plan, DOE's investment would provide funding for no more than the CCS component of the power plant -- not the entire plant construction, compared with the FutureGen concept announced in 2003 where the federal government would incur 74 percent of rising costs."

Again, the FutureGen Alliance disagrees with Bodman.

"Project costs have increased, but DOE's share has not doubled -- not even close. When President Bush first announced FutureGen, the DOE share was $800M. DOE's current estimated share is $1.1B with the increase due to inflation," the Alliance said today.

"The Alliance has offered to provide DOE with partial-to-full repayment to ease the final cost to the taxpayer. The costs are manageable," the Alliance said.

"Alliance member contributions, thus far, have been cash donations. The Alliance has told DOE that it still expects a majority of its contributions will come from cash donations. Proposed financing is small relative to traditional projects. The Alliance includes some of the world's largest companies; DOE's notion that they might default is nonsense. The Alliance has fulfilled all its responsibilities thus far," the consortium said.

On Wednesday, FutureGen Alliance chief executive Michael Mudd said, "The Alliance remains committed to keeping FutureGen on track."

In their letter to President Bush, the Illinois congressional delegation too challenged the energy secretary's statement that funding concerns are behind the withdrawal of support for FutureGen.

"When the Secretary was assured that we were prepared to provide adequate funding and to resolve any other outstanding issues between the Administration and the FutureGen Alliance if he would take steps to move FutureGen forward, he unequivocally refused. Given that, it is hard to believe that cost concerns constitute his real objection to this project," the letter states.

"Many have argued that this abrupt about face by Secretary Bodman was the direct result of the FutureGen Alliance choosing Mattoon, Illinois as the site, over Texas applicants," the congressional delegation wrote. "While we'd like not to believe this theory, there is no other plausible explanation."

The president has not yet commented on the FutureGen controversy.

The Energy Department today issued a Request for Information that seeks industry's input by March 3, 2008, on the costs and feasibility associated with building clean coal facilities that achieve the intended goals of FutureGen.

Bodman said the president's Fiscal Year 2009 budget requests $407 million for coal research, including development of more efficient gasification and turbine technologies, innovations for existing coal power plants, and large-scale CCS injection tests, and $241 million to demonstrate technologies for cost-effective carbon capture and storage for coal-fired power plants, including $156 million for the restructured FutureGen approach and $85 million for DOE's Clean Coal Power Initiative.

"This $648 million request represents a $129 million increase from the president's FY2008 request and is the largest amount requested for DOE's coal program in more than 25 years," said the energy secretary.

The FutureGen Alliance, a non-profit organization, represents some of the world's largest coal companies and electric utilities including: American Electric Power, Anglo American, BHP Billiton, the China Huaneng Group, CONSOL Energy Inc., E.ON U.S., Foundation Coal, Luminant, PPL Corporation, Rio Tinto Energy America, Peabody Energy, Southern Company, and Xstrata Coal.