Abby L. Harvey
GHG Monitor
2/20/2015
The Department of Energy’s initiation of a structured closeout of federal support for the FutureGen 2.0 project is not necessarily the last nail in the coffin for the project, which plans to retrofit a decades-old 200 MW oil-fired unit at a mothballed power plant in western Illinois with carbon capture technology for geologic sequestration nearby, John Thompson, Director of the Fossil Transition Project with the Clean Air Task Force, told GHG Monitor last week. “This thing has died more times than a cat with nine lives and come back each time,” Thompson said. “I’m not saying this isn’t the very end, but there is a narrow set of circumstances under which it does revive. I do think it’s important to understand the DOE suspended funding, they didn’t de-obligate it and so there is a narrow path under which it could revive. It may be gone, but I think it’s really too early to say it is.”
FutureGen 2.0 was the biggest ‘clean coal’ winner under the 2009 American Recovery and Reinvestment Act (ARRA), netting a $1 billion cooperative agreement with DOE. The stimulus funding is required to be spent by September 2015, though, at which point it will return to the U.S. Treasury and will not be available for other CCS research projects, according to DOE. That spending deadline has been identified by DOE as the official reason for pulling funding. However, Thompson said, the delay really boils down to the legal issues the project is facing resulting in uncertainty over if the plant could possibly meet the deadline. “You can imagine if you’re DOE that you wouldn’t want to be releasing money in light of some of those uncertainties. You could say, well the financial funding for this project is uncertain, they can’t get financing, but it’s really another way of saying … nobody’s going to commit money to this until all the legal issues are resolved. So, really when DOE says there’s financial uncertainty, they really mean, when you kind of pick that apart, that it’s basically legal uncertainty and there is a path by which those issues get resolved and it’s an orderly path and it moves along and it can be resolved,” Thompson said. Representatives from the FutureGen Alliance declined to comment.
Legal Issues Must Be Resolved
In order for the project to move forward the legal challenges against it must first be decided. Currently, the project is involved in three ongoing suits. A lawsuit challenging the project’s power purchase agreement (PPA) is due to be heard by the Illinois Supreme Court this summer. According to Illinois Commerce Commission documents regarding the FutureGen PPA, “the sourcing agreement requires the state’s electric utilities to purchase electricity from FutureGen 2.0 for 20 years, with the utilities then permitted to collect costs for the project on a pro rata basis from alternative retail electric suppliers.” The project is also facing legal challenges to its Class Six injection permit for CO2 and its air permit.
The delays the project has faced due to these challenges have long been a concern of the FutureGen Alliance. In testimony filed by FutureGen Alliance CEO Ken Humphreys with the Illinois Pollution Control Board in July 2014, concerning a suit brought against the alliance by the Sierra Club, he wrote that, “the Project schedule does not allow time for further and extended delays associated with the Claim. To maintain the Project’s schedule and maintain financial viability of the Project, it is critical that the pending Claim be resolved expeditiously. Delay in resolving the Claim risks disruption of the Project schedule such that ARRA funds cannot be spent before the ARRA Spending Deadline. If it appears that sufficient time does not remain to productively spend all or nearly all ARRA funding before the ARRA Spending Deadline-with a portion of the construction funding therefore expiring-mid-construction- USDOE could prevent commencement of construction and direct early termination of the Project.”
Following Resolution of Legal Challenges, Federal Action Needed
All three of these challenges should be resolved in coming months, Thompson said, and if they are all, or at least most of them are resolved in favor of FutureGen, DOE, because they have not de-obligated the funds, could potentially look to finding a way to restore them. “If there is resolution to those things in a favorable manner, it’s not out of the question that DOE or Congress will come up with either a legislative or administrative fix to this particular situation and the project could move forward,” Thompson said. “There are several ways Congress can go about it. They could extend September to a later date. They could do other kinds of protections of that money. … On the administrative side, the funds could be released into an escrow account such that they’re only used once the thing has reached financial close, and if it never reaches financial close it goes back to the treasury.”
