Clean Coal:

DOE Should Prepare a Comprehensive Analysis of the Relative Costs, Benefits, and Risks of a Range of Options for FutureGen

GAO-09-465T: Published: Mar 11, 2009. Publicly Released: Mar 11, 2009.

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Mark E. Gaffigan
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This testimony discusses our recent report on the Department of Energy's (DOE) decision to restructure the FutureGen program. The original FutureGen plant was to capture and store underground about 90 percent of its CO2 emissions. DOE's cost share was to be 74 percent, and industry partners agreed to fund the rest. Concerned about escalating costs, DOE announced in January 2008 that it had decided to restructure FutureGen. In October 2008, DOE received a small number of applications for the restructured FutureGen; however, some of these applications were for proposals outside the restructured FutureGen's scope. As we reported, DOE is currently assessing proposals received and stated it expected to announce a selection of projects by December 2008; however, as of the beginning of March 2009, it had made no decision. DOE requested supplemental information from restructured FutureGen applicants, which will be reviewed before any selection decision. As Congress may know, the recently enacted American Recovery and Reinvestment Act of 2009, known as the stimulus law, provides DOE an additional $3.4 billion for "Fossil Energy Research and Development." Such a substantial amount of funding could significantly impact DOE's decisions about how to move forward with programs such as FutureGen.

The overall goals of the original and restructured FutureGen programs are largely similar in that both programs seek to produce electricity from coal with near-zero emissions by using CCS, and to make that process economically viable for the electric power industry. However, the programs have different approaches for achieving their goals, which could have different impacts on the commercial advancement of CCS and, therefore, result in two largely distinct programs. First, the original program focused on researching and developing the integration of IGCC and CCS at a new, commercial-scale, coal-fired power plant, while the restructured FutureGen aims at demonstrating the use of CCS technology at one or more new or existing commercial coal-fired power plants. As a result, the restructured program could provide opportunities to learn about CCS at different plants, including those that use IGCC and conventional ones that use pulverized coal generating technology. However, under the restructured program, learning about the integration of IGCC and CCS would be possible only if DOE received applications proposing IGCC and selected one for funding. Second, it is unclear which of the two programs would advance the broader roll out of CCS across industry more quickly. The original FutureGen would have served as an operating laboratory host facility for (1) emerging technologies aimed at the goal of near-zero emissions (such as hydrogen fuel cells and advanced gasification) and (2) gaining broad industry acceptance for these technologies. In contrast, the restructured FutureGen would not include a facility for testing these technologies, and its ability to advance them would, therefore, be limited. DOE manages a portfolio of clean coal programs that research and develop CCS technology or demonstrate its application. The restructured FutureGen differs in important ways from most of DOE's other CCS programs, with the exception of one program--Round III of the Clean Coal Power Initiative (CCPI). Both the restructured FutureGen and CCPI (1) fund the commercial demonstration of CCS at new or existing coal-fired power plants and (2) require industry participants to bear at least 50 percent of costs. We reported that the restructured FutureGen targets a higher amount of CO2 to be captured and stored (at least 1 million metric tons stored annually, per plant) than CCPI does (300,000 metric tons of CO2 stored or put to use annually, such as to enhance oil recovery, per plant). However, CCPI's goals may be more achievable for industry partners than those of the restructured FutureGen and, therefore, lead to more industry participation. Contrary to best practices, DOE did not base its decision to restructure FutureGen on a comprehensive analysis of factors such as the associated costs, benefits, and risks. DOE based its decision largely on its conclusion that costs for the original FutureGen had doubled and would escalate substantially. However, this conclusion was problematic because it was derived from a comparison of two cost estimates for the original FutureGen that were not comparable; DOE's $950 million estimate was in constant 2004 dollars, while the $1.8 billion estimate of DOE's industry partners was inflated through 2017. As a result, DOE has no assurance that the restructured FutureGen is the best option to advance CCS. In contrast, DOE's Office of Fossil Energy had identified and analyzed 13 other options for incremental, cost-saving changes to the original program, such as reducing the CO2 capture requirement.

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