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Thursday, March 12, 2009 10:00 PM CDT
COLUMN: Here's a shocker: DOE, FutureGen should be talking



My mood went from shocked to, well, shocked again Wednesday at the news out of Washington about FutureGen.

First, I was shocked to see the U.S. Government Accounting Office report that the Department of Energy had overstated the cost of the FutureGen project by $500 million in late 2007.

DOE officials in the Bush Administration had put a $1.8 billion pricetag on the FutureGen project, saying it had doubled in cost from the estimate of $950 million when first announced in 2003.

GAO said the price tag of FutureGen, slated to be built at Mattoon, was $1.3 billion, not $1.8 billion.

The CEO of FutureGen Alliance pounced on the news to say the Alliance is still ready to start the project.

Sen. Dick Durbin and U.S. Rep. Jerry Costello and U.S. Rep. Tim Johnson were outraged.

Things were looking up for FutureGen.

Unless you just arrived in these parts, you know that FutureGen was proposed in 2003 by President Bush. It is a “near-zero emissions” coal-fired power plant that seeks to capture carbon dioxide emissions by burying them several thousand feet underground.

The research and development project involves utility companies and governments from several continents.

DOE withdrew its support in January 2008 shortly after Mattoon was selected as host site in a nationwide process.

The GAO report to a House committee on science and technology seemed to affirm local officials’ opinion that the DOE under Bush was either evil or incredibly stupid, as one observer told me Wednesday afternoon.

But then....

But then, a few hours later, President Obama’s Energy secretary, Steven Chu, said the pricetag for FutureGen still might be wrong.

The FutureGen pricetag might not be $1.3 billion, he said.

The FutureGen pricetag might not be $1.8 billion, he said.

The FutureGen pricetag now might be $2.3 billion!!

What!?

Shocked again.

Chu’s only explanation, according to AP, is that “commodity costs and some other factors” now put the FutureGen cost estimate at $2.3 billion.

Chu seems to be doing the same thing that the GAO charged the previous Energy secretary of doing — tossing out figures without substantiation.

But if FutureGen’s price went from $950 million to $1.3 billion in five years (2003 to 2008), how did it catapult from $1.3 billion to $2.3 billion in one year when we are in the midst of an economic slump?

I have pored through more than a hundred pages of reports from the House committee hearing Wednesday. Basically, the GAO report says the restructured FutureGen plan by DOE was a half-baked idea.

The original FutureGen proposal at Mattoon would be operational quicker and would have a greater impact on carbon sequestration advances in the U.S. and the world.

When then-Energy Secretary Sam Bodman asked his own Office of Fossil Energy to look at controlling costs of the FutureGen project, GAO said: “They noted various measures already in place for controlling costs.... Importantly, none of the recommendations indicated that DOE should cancel the original program and restructure FutureGen.”

Some other highlights from the GAO report:

- “Contrary to best practices, DOE did not base its decision to restructure FutureGen on a comprehensive analysis of factors.... DOE made its decision, largely, on the conclusion that costs for the original FutureGen had doubled and would escalate substantially. However, DOE compared two cost estimates that were not comparable because DOE’s $950 million estimate was in constant 2004 dollars and the $1.8 billion estimate of DOE’s industry partners was inflated through 2017.”

-“The original FutureGen was a DOE research and development project, but the restructured FutureGen (proposal) is a DOE commercial demonstration project. (The difference is private sources must fund not less than 20 percent of an R&D project and not less than 50 percent of a commercial demonstration project).” 

- “The original FutureGen would have served as a living laboratory host facility for emerging technologies, aimed at the goal of near-zero emissions and for gaining broad industry acceptance for these technologies. The restructured FutureGen would not include a facility for testing these technologies, and its ability to advance them would be limited.”

- “To help insure the widespread commercial advancement of carbon capture sequestration while protecting taxpayer interests, we are recommending that, before implementing significant changes to FutureGen or before obligating additional funds for such purposes, the Secretary of Energy should direct DOE staff to prepare a comprehensive analysis comparing the relative costs, benefits and risks of a range of options, including the original and restructured FutureGen programs and incremental options for modifying the original program.”

I know Steven Chu has not been a big booster of coal. But goodness gracious, it’s time DOE and the FutureGen Alliance get back together and get this project moving before someone else says the price tag is $3 billion.


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Tom Andres wrote on Mar 13, 2009 9:03 AM:

" Excellent column, Bill (and Penny, excellent reporting). Thank you for digging into the House committee hearing (GAO) reports to uncover what I consider to be the most significant nuances of the FutureGen project yet.

Before reading your column and news summary, I was unaware that the Office of Fossil Energy did not recommend that DOE cancel the original program and restructure FutureGen. Were you able to find out who first proposed this change in structure?

Before reading your column and news summary, I was unaware of the distinction in DOE nomenclature: research and development project (80% federal funding) vs commercial demonstration project (50% public funding) and how that difference would hugely impact the viability of FutureGen. That piece of the puzzle may explain myriad special interest motives in DC. For the Alliance, R&D versus commercial radically changes the scope of FutureGen. This change in structure represents a 250% increase in costs to the Alliance, no matter what the final cost of the project is.

Before reading your column and news summary, I was unaware that constant 2004 dollars were compared with 2017 estimated dollars - from an accounting standpoint, hardly a plausible or fair comparison. It appears this was not an oversight or a mistake, but rather a purposeful attempt to derail the whole project. The question is: who is responsible?

Your writings shed more light on this issue than anything written about FutureGen since January 2008. My only question is: why haven't we already heard these facts from Obama or Durbin or Burris or Johnson? The failure of our elected representatives to hold their cohorts responsible for what they do is the most damaging breach of trust there is in Washington DC, or Springfield, IL.

Freedom of the press is all about exposing truth when our elected representatives fail to do so. Keep up the good work. "

Danny Boy wrote on Mar 13, 2009 1:38 PM:

" The longer thay talk about it, the less chance of survival, Obama's Clean Coal speeches, were nothing but that!! Speeches........He doesn't live in Illinois anymore, he lives in Washington, and folks seem to get amnesia in that city..... "

Mike P wrote on Mar 14, 2009 12:53 AM:

" Not less than 20%, does not necessarily mean if you can come up with 20, taxpayers will put up the other 80. Nor does the not less than 50%, mean costs will be split down the middle.

Cost estimates are not the same as fixed spending limits. You look at the possible high figure, or risk the entire projects fate. What if they went with the lowball numbers, not adjusted for inflation, and found it wasn't close, 2 years into construction. Not that the government hasn't soaked 900 million into something and cut its losses before, but do you really want that half or anything less than a completed project in your back yard.

Think Grayville and Thompson state prisons, one or both of which this area heavily courted.

If this was close to everythnig it was sold as, funding would not have been an issue. All kinds of funding should have made government involvement minimal. Why would you ever risk a project of this nature, on fickle government funding, if it was remotely capable of progressing without it? If they had to kick in anything, it may have been a hefty sum, to get their name on the donors list, so they weren't out done on innovation on their own soil, by foreign investments, but not 1 or 2 billion. If its a ten year project, that comes out to 230 million a year, if the highest estimates are right. The world is a smaller place, many foreign countries were interested, they couldn't come up with 230 donors to invest 1 million a year for ten years, or more investing portions over the time span, 460 investing 500k, 720 at 250k, and so on. Either they didn't seek it properly, or it wasn't all they sold it as.

People, business and countries around the rest of the world are investing in rediculous carbon credits. They could have sought to get the project approved for that, if the data and concepts derived were to be open for use elsewhere. I saw a thing on pbs, where a group got carbon credit investors to pay millions to a small asian country not to deforest so they could farm.

They could have sold shares in this project, at 100 a piece, and only needed to sell 23 million of them. Since they landed in omega land, I still can't believe they haven't yet. If just this state charged every citizen 20 dollars a year, for 10 years, and made them share holders in return, to get an equal portion of any benefits monitarily derived from the research, it would be more than 2.3 billion in collections they had to operate from. Either its not likely to yield a profit, or this was a no strings 80% taxpayer funding only plan.

This and switch grass, were not GWs ideas, he latched on to them rather publicly, but giving them lip service was all that came from one speach on energy. He spoke of reducing dependance on foreign oil. You can't do that unless you reduce dependance on oil in general. He never went so far as to state that.

An illinois refinery, wouldn't have invested 2 billion to increase its capacity by one third, if there was a hint of a real push to cut dependance on oil. If anything the push has firmly been against it. "

Julio wrote on Mar 14, 2009 10:38 AM:

" Injecting pollution directly into the earth shows the great progress that's been made in our efforts to ruin the planet. "

Equalizer wrote on Mar 15, 2009 12:22 PM:

" Julio wrote on Mar 14, 2009 10:38 AM:
" Injecting pollution directly into the earth shows the great progress that's been made in our efforts to ruin the planet. "

I think I read this before on another thread, and it's sad but true, and worth repeating! :) "

father bob wrote on Mar 16, 2009 12:25 PM:

" why are you wasting bandwidth on this dead-in-the-water topic? "

jrussell wrote on Mar 19, 2009 1:36 AM:

" father bob wrote on Mar 16, 2009 12:25 PM:

" why are you wasting bandwidth on this dead-in-the-water topic? "


...cause old BLUEDOGS posts are becoming fewer and they figured we needed some new mindless readings "

 


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