New York Times
By MATTHEW L. WALD
Two of the nation’s biggest coal-burning utilities said Thursday that they were withdrawing from a $2.4 billion project to demonstrate carbon capture and storage, and would instead pursue their own work in the field.
The announcement by the utilities, Southern Company and American Electric Power, is a blow to the multinational consortium called the FutureGen Alliance. The group is seeking to build a $2.4 billion plant in Mattoon, Ill., that would convert coal to a fuel gas, capture the carbon dioxide and then burn the gas in a turbine to make electricity. Financing for the project was uncertain even before the announcement by the two utilities.
The Bush administration had tried to kill FutureGen, saying it was too expensive. But the Obama administration said last week it would restore financing.
Michael J. Mudd, chief executive of the alliance, said the group had begun with seven members, and had expanded to 13. After other departures, the group now has nine members, but it is seeking a total of 20. The alliance is a 501(c)(3) voluntary organization; each member has contributed about $2 million.
Executives are trying to determine whether costs have fallen because of the drop in the price of materials and construction work that has followed the recession. The federal government has agreed to contribute $1 billion, Mr. Mudd said, in addition to $100 million previously appropriated. The partners will contribute $400 million to $600 million, although that still leaves a shortfall.
To cut costs, the alliance had decided that initially, the plant would capture only 60 percent of the carbon dioxide instead of 90 percent as originally planned.
Much of the laborious work of picking a site and getting permits is done. But many companies are pursuing alternatives because of the delays created by government’s vacillation in financing.
Steve Higginbottom, a spokesman for Southern Company, confirmed that the company had pulled out of the alliance.
“The reason we did was to focus on the projects that we are currently involved in with government and industry partners that focus on the carbon capture and sequestration and clean coal technologies,” he said.
Melissa McHenry, a spokeswoman for American Electric Power, cited the current economic conditions, a cut in the company’s capital budget as well as the shortfall in the FutureGen plan.
She said the utility would focus on pursuing its own project at a plant in West Virginia.
An environmental group supporting the project, the Natural Resources Defense Council, said it was disappointed with the news.
“We really do need an engagement with the private sector in this,” Henry Henderson, the group’s Midwest director, said. “I don’t believe it’s a death knell.”