Admitting FutureGen’s Failure

February 10, 2015
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The Department of Energy (DOE) is admitting that it failed. Last week, it announced that it will stop development of FutureGen 2.0, a federally-financed, coal-fired power plant in Illinois. FutureGen, and its successor FutureGen 2.0, wasted millions of tax dollars, and was beset with multiple delays and cost overruns.

FutureGen was one of many federal energy projects experimenting in so-called “clean coal” technology. FutureGen sought to demonstrate the technical capabilities of carbon capture and sequestration (CCS) technology. CCS attempts to capture carbon dioxide emissions from coal-fired power plants and store it underground, eliminating an increase in atmospheric carbon dioxide.

FutureGen was launched in 2003 by the George W. Bush administration as a public-private partnership to demonstrate CCS with a site chosen in Illinois. Costs would be shared among the federal government and 12 private energy companies. The project’s estimated cost grew from $1 billion to $1.8 billion by 2008, when it was cancelled due to the cost overruns.  

In 2010 the Obama administration revived the project using stimulus funding. The new project, FutureGen 2.0, was allotted $1 billion from the federal government, with private investors supposed to be providing additional funding.

The project was plagued with problems. Estimated costs grew quickly, rising from $1.3 billion to $1.65 billion. The Congressional Research Service cited “ongoing issues with project development, [and] lack of incentives for investment from the private sector.” Private investors were unwilling to invest in the project. As of August 2014, the FutureGen Alliance had yet to raise the $650 billion in private debt and equity needed. There were additional concerns about the legality of a $1 a month surcharge to subsidize the project that would have been added to the electricity bills of all Illinois residents. Late last year, the Illinois Supreme Court agreed to hear the case.

Now, DOE announced that it will suspend funding for the project. Energy Secretary Ernest Moniz told reporters, “frankly, the project has got a bunch of challenges remaining,” which is a startling admission from the administration. DOE said that the project failed to make enough progress to keep it alive and would not meet a September 30, 2015 deadline for spending the remaining stimulus funds that it had been allotted.

The project spent $202.5 million of the $1 billion before being cancelled. Together, the two iterations of FutureGen ended up costing taxpayers $378 million.

A related issue is that proposed regulations from the Obama administration would functionally require CCS for all new coal-fired power plants in the United States. But with the failure of FutureGen, the federal government has not demonstrated that it works properly. DOE’s other CCS demonstration project in Mississippi is experiencing delays as well. Some experts question if CCS is technologically possible at a cost-effective price.

FutureGen and FutureGen 2.0 are part of a long list of DOE failures. Repeating mistakes made during the Bush administration, DOE reopened FutureGen, which put millions more tax dollars at risk. DOE should stop trying to centrally plan technological advances, and instead let entrepreneurs experiment and the market guide the nation’s energy progress.

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