Construction has begun on the stalled FutureGen 2.0 carbon capture and sequestration (CCS) project in western Illinois, according to project officials, but major hurdles remain for the $1.65 billion first-of-its-kind power plant.
Installation of the first foundation piling meets an Aug. 31 start-construction deadline required by the Illinois Environmental Protection Agency, Kim Biggs, a spokeswoman for the agency, told Bloomberg BNA in an e-mail Aug. 28.
The work represents a victory for the project, which involves retrofitting one boiler in a nearly 50-year-old coal plant owned by Ameren Corp. to capture roughly 90 percent of its carbon dioxide emissions.
Success would demonstrate that the technology effectively required for new power plants by the Obama administration is achievable. Critics have said it's not yet commercially viable.
“A number of CCS projects have been announced and fallen to the wayside,” Ken Humphreys, chief executive officer of the FutureGen Alliance, said in an interview. “And here we still stand.”
The nonprofit organization is made up of coal mining and electric power companies that include Alpha Natural Resources Inc., Anglo American SA, Joy Global Inc. and Peabody Energy Corp.
But challenges—including securing private financing, a legal challenge from the Sierra Club, and a September 2015 deadline to use $1 billion in Recovery Act funding—remain ahead for the project, which has been beset by delays and setbacks since it was conceived in 2003 by the administration of former President George W. Bush.
Also needed are a final carbon dioxide storage permit from the Environmental Protection Agency and completion of the easement acquisition for 30 miles of pipeline that will transport carbon to a geologic saline formation 4,000 feet underground.
Tight Deadlines, Little Information
“They are up against some very, very tight deadlines,” Howard Herzog, a leading expert in CCS research at the Massachusetts Institute of Technology, told Bloomberg BNA. “There has been very little public information about the project.”
The project's fate has taken on new importance since the EPA proposed greenhouse gas emissions limits for new power plants—a cornerstone of President Obama's Climate Action plan—that critics say effectively require CCS technology.
A second, larger CCS project being constructed by Southern Co. subsidiary Mississippi Power in Kemper County, Miss., is further along, but it has also run into major cost overruns and delays. The $5.5 billion, 582 megawatt plan, is scheduled to become fully operational in the first half of 2015, according to Southern.
The FutureGen project, which is scheduled to become operational in 2017, would use oxyfuel combustion, a process in which coal is burned in oxygen instead of air, which creates a flue gas composed almost entirely of carbon dioxide and water, according to the Energy Department.
Environmental Challenge Filed
But the project is being challenged by the Sierra Club, which lodged a complaint with the Illinois Pollution Control Board arguing that the 168-megawatt project will result in the emission of thousands of tons of carbon dioxide, nitrous oxides, nitrogen oxides and other pollutants each year.
The complaint, which says the project's state-issued minor source permit allows nitrogen oxide emissions equivalent to every Illinois resident driving a 2013 Jeep Patriot 12,000 miles annually, seeks to require the project to obtain a prevention of significant deterioration permit required under the Clean Air Act.
“For all the talk about it being a near zero [emission] state-of-the-art plant, we just want the permit to reflect that as well,” Eva Schueller, an attorney for the San Francisco-based environmental group, said in an interview.
Humphreys, of the FutureGen Alliance, said he hopes to reach “an amiable settlement” with the Sierra Club.
I don't rule out the possibility we will come up with an alternative solution,” he said. “We feel our position is extremely strong and if we have to let the pollution control board run its full course, we are prepared to do that.”
Private Financing Needed
Financing also remains an issue for the project. Humphreys said it still needs to secure $650 million in private debt and equity before major construction can begin.
We are in the middle of that process as well,” he said. “I can't go into a lot of details because of confidentially, but we are very encouraged.”
A power purchase agreement requiring Illinois utilities Commonwealth Edison Co. and Ameren Illinois to purchase electricity from the project for 20 years was approved in December 2012, and in July, it survived a challenge in the Illinois Court of Appeals.
The project received $1 billion in funding through the American Recovery and Reinvestment Act, but that money expires if it isn't spent by the end of September 2015.
“We have a strategy to manage that deadline,” Humphreys said.
CRS Questioned Meeting Deadline
However, in a 2013 report, the Congressional Research Service questioned whether the 2015 spending deadline could be met, adding “questions remain as to whether or not FutureGen 2.0 will succeed.”
In addition, the report said other challenges facing the project include a “rapid” shift to natural gas as an alternative to coal for electricity generation, rising costs, “ongoing issues” with project development and a lack of incentives for investment in the private sector.
Needed to Keep Using Coal
The Bush administration discontinued the project in 2008 for reasons that included increasing costs, but the Obama administration resurrected it in 2010, renaming it FutureGen 2.0.
“Clean coal is an essential component of the President's ‘all-of-the-above’ energy strategy,” the Energy Department wrote earlier this year in a document giving final approval for the $1 billion project funding.
The development of carbon capture and storage technologies through the FutureGen 2.0 project would support the ongoing and future use of the nation's abundant coal reserves in a manner that address both aging power plants and environmental challenges,” the department said.
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