Thursday, March 12, 2009 10:00 PM CDT
COLUMN: Here's a shocker: DOE, FutureGen should be talking
By BILL LAIR, Managing Editor blair@jg-tc.com
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:
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. "