The Department of Energy is scrapping plans for a zero-emissions coal plant in Illinois and going for plan B.

In what it is calling "FutureGen 2.0," the department announced yesterday it was providing $1 billion in stimulus money to retrofit a shuttered coal plant in Meredosia, Ill., rather than build a new one with experimental carbon-cutting technology. There, engineers plan to swap out a boiler in the 200-megawatt plant, replace it with one that can capture C02 and pipe the resulting gas across the state to a storage spot in Mattoon, Ill.

The retrofit plan -- which experts described as a coal plant transplant-- is a much less ambitious and costly proposal than the original FutureGen project. The original concept envisioned unprecedented construction of a more than $2 billion dollar coal plant in Mattoon gasifying coal before burning and capturing nearly all of its emissions.

But for the project's backers, yesterday's announcement was a victory nonetheless. If the revised project works, it could result in the world's first commercial-scale power plant using oxy-combustion technology to capture and store almost all of its carbon dioxide.

The oxy-combustion method burns coal in pure oxygen, creating a high concentration of C02 in the emissions stream that is easier to capture than coal burned in air.

"This was a great day for Illinois," said Sen. Dick Durbin (D-Illinois) on a conference call with reporters. "The heart of this is a research effort. We're going to learn as we go."

A 'transplant' model for elderly coal-fired power plants
The project would bring 900 jobs to downstate Illinois and 1,000 additional jobs to Illinois manufacturers, Durbin said. He said he hoped the revised FutureGen would lead to additional retrofits on the 594 coal-fired power plants in the U.S. fleet. Coal fires almost half of U.S. electricity and produces about a third of its emissions.

"We tried to pick a technology that has a future," Durbin said. The construction timeline has not been determined, although preliminary building on the project could begin next year, Durbin's office said. The targeted completion date is 2015.

Several coal experts said yesterday, however, that FutureGen 2.0 would not revolutionize carbon capture and storage, or CCS, on its own. The technology has never been proven on a commercial scale, and analysts say that a lot more money is needed to make widespread retrofits on the U.S. coal fleet.

Yesterday's announcement could be an isolated case of dollars, they said, considering Durbin's influence in Congress and the long-term expectation of a decision on a project.

"You're not going to see that huge amount of money unless there's a climate bill," said Kevin Book, managing director of research at ClearView Energy Partners. With federal climate legislation stalled on Capitol Hill for now, he and other analysts said that there may not be an economic driver to spur widespread deployment of the technology.

Currently, companies are not in a do-or-die situation where they need to invest in CCS or face the prospect of going out of business, Book said.

The Government Accountability Office concluded in a June report that CCS would not be widely deployed without a "national carbon policy" such as a tax or a restrictive limit on emissions.

A compromise after six years
There also are uncertainties about how the oxy-fuel process will work on such a large plant, said Sean McCoy, an engineer at Carnegie Mellon University. The chemical mechanism is "one of the better capture technologies," but formulating the exact mixture of pure oxygen and preventing leakage of air into a boiler could be tricky, he said.

A spokeswoman for American Electric Power, which is running its own CCS test on an existing coal-fired power plant, called yesterday's decision "disappointing" because the integrated gasification combined cycle, or IGCC, technology planned for the original FutureGen plant would not receive as much testing now.

"We've long believe that IGCC is an important technology for advancing clean-coal-fueled generation," said Melissa McHenry of the company, which proposed an IGCC plant in West Virginia that was denied by regulators because the technology was "undemonstrated."

Yesterday's announcement comes after six years of negotiations on the FutureGen project and discussions with the Department of Energy on how to reduce the original plant's price tag. The George W. Bush administration proposed FutureGen in 2003, but canceled it later out of cost concerns.

The $1 billion from the federal government heads to Ameren Energy Resources, Babcock & Wilcox, Air Liquide Process & Construction and the FutureGen Alliance, a coalition of energy companies.

The funds combined with $250 million in expected private investment should cover the total cost of the revised initiative, according to Durbin's office.

That includes installment of the capturing boiler at the plant operated by Ameren in Meredosia, construction of a 175-pipeline and establishment of a regional storage site in Mattoon at the same spot where the first FutureGen was planned. The Mattoon site will store more than 1 million tons of captured C02 yearly.

Additionally, a training center will be built near Mattoon to prepare workers for deploying oxy-combustion technology, Durbin said.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500