FutureGen Switches Tracks

The standard knock on carbon capture and sequestration (CCS) is that it hasn't been tested and proven on an industrial scale. That's really only true in the narrow sense in which you start with coal, produce electricity, and then collect and bury the CO2 that comes out the stack--which I imagine is what CCS evokes for most people who have even heard of the technology. Some years back, the US government set out to close that gap by building a large-scale test facility to demonstrate the coal-to-CCS cycle, with help from a consortium of industry partners. The program was called FutureGen. It died in 2008 after reported cost overruns but was revived in a different format last year. Now the reoriented effort has spawned a new project at a different location--though still in Illinois--to replace the ill-fated Mattoon project. Its basic concept differs significantly from the original FutureGen, and in ways that might improve the odds that coal could continue to contribute a substantial share of the US energy mix for many decades.

The CO2 produced by power plants is much harder to capture and dispose of than the traditional pollutants we associate with them, not least because it is the primary chemical result of the combustion of hydrocarbons, along with water vapor, rather than a byproduct resulting from a fuel impurity or imperfect combustion. That requires dealing with emissions that exceed the mass of fuel being consumed, rather than an order of magnitude or two smaller. And when fossil fuels are burned in air, the CO2 produced must be separated from all that nitrogen, which is the largest constituent of flue gas, before it can be sequestered. All this is expensive, in both energy and financial terms. The original FutureGen was designed to finesse this problem by converting coal into a hydrogen-rich gas that could be burned efficiently in a combined-cycle gas turbine (IGCC), producing emissions consisting mainly of water vapor, plus a sequestration-ready CO2 stream from the hydrogen-production process. Unfortunately, the hardware necessary to do that isn't cheap, either.

FutureGen 2.0, as announced, would take a different tack. It aims to convert an existing power plant owned by Ameren Corporation into an "oxy-coal" plant, in which pure oxygen replaces air in the boiler for combustion, resulting in flue gas consisting mainly of CO2. This approach has pluses and minuses, compared to IGCC. It requires a bigger air separation plant to support full combustion, but it eliminates all the hardware associated with hydrogen. That should entail somewhat lower capital costs, but not necessarily lower operating costs, particularly when you consider that the efficiency of IGCC exceeds that of most existing US coal power plants, though not necessarily supercritical or ultra-supercritical pulverized coal plants. (I couldn't tell how much the basic power block of Unit 4 of Ameren's Meredosia, IL plant, which formerly burned fuel oil, will be modified.) As in FutureGen 1.0, the resulting compressed CO2 would then be pipelined to a disposal site elsewhere in the state.

Although it would take some doing to convince me that oxy-coal with CCS is a better technology than IGCC with CCS, the revised approach to FutureGen looks like a good call on the part of the government. That's because the context in which FutureGen is being pursued has altered significantly since it was first devised. Instead of a scenario of continuing to build many new coal-fired power plants every year to meet steadily-growing electricity demand, the future--at least in the US--looks quite different. An article in yesterday's Washington Post pointed out that a number of new coal plants are still under development, but the rate of new construction has slowed dramatically, due to regulatory pressures, weaker electricity demand, competition from cheaper natural gas, and the growth of renewables. If we want to have an impact on the emissions from the US coal-fired power plant fleet--which accounts for 31% of total US emissions and 91% of the emissions from the electricity sector--then our best strategy probably doesn't involve building hundreds of gleaming new IGCC plants, but rather retrofitting hundreds of existing units built with older technology, for which conversion to IGCC would likely be cost-prohibitive. If FutureGen 2.0 succeeds--technically, if not economically--it would validate that retro-fitting potential.

The world hasn't stood still while the Department of Energy wrestled with all the political and technical challenges that FutureGen faced. The original siting competition between Texas and Illinois looked like a textbook case of logrolling, and FutureGen 1.0 exhibited the hallmarks of a classic government boondoggle. Meanwhile, commercial projects such as Duke Energy's Edwardsport IGCC (without CCS, but in effect CCS-ready) and the Good Spring IGCC project of Future Fuels LLC have emerged and appear to be making progress. The latter is based on technology from the Thermal Power Research Institute of China, which is a good bet to beat all of these projects to the punch with its GreenGen power plant in Tianjin. If FutureGen 2.0 is going to matter, it must be built smartly, quickly and cost-effectively. Yet technical success still won't guarantee that this technology will be taken up and deployed widely. In a market economy, rather than a centrally-planned one, it's hard to see any of this going beyond a demonstration plant or two without a substantial price on CO2 emissions to offset the inherently higher costs of generating power this way.

Zombie Project?

A year ago, the FutureGen partnership to build a prototype low-emissions coal power plant incorporating gasification and carbon capture and sequestration (CCS) technology looked dead in the water. Now, according to Technology Review, it may be on the verge of revival. A cynic would point out that a project sited in the home state of the new President might be a little harder to kill than most. It also can't hurt that Illinois's senior Senator stands high in the leadership of the majority party. However, there may be objective reasons to carry on with the project, particularly if the cost assessments that led to its "restructuring" were flawed, as suggested in a report issued recently by the General Accounting Office. Moreover, although major R&D projects ought to be carried out as efficiently as possible, I'm not sure that project costs should be the primary criterion for evaluating a one-off proof of concept, especially for such a crucial technology.

At its estimated cost of $1.8 billion for a 275 MW power plant, FutureGen must be the most expensive coal-fired power plant project in the world, for its size. That equates to $6500/kW of capacity, roughly triple the cost of a conventional coal plant and six times the cost of the combined-cycle gas-turbine unit that its core power block resembles. In normal utility service it could never compete with the cost of power from other technologies. If the project is successful, it should produce reliable power for many years, but as a byproduct of its principal purpose, which is to demonstrate a fully-integrated process for reducing the greenhouse gases and criteria pollutants from fossil-fuel power plants to the maximum extent possible. While all of the elements of this system, involving the gasification of coal to produce hydrogen, combustion of hydrogen in a gas turbine, and the capture and sequestration of CO2 from flue gas have all been demonstrated separately, with some of these elements in routine industrial and oil-industry service, integrating them at scale and running them together to determine the suitability of such a system for wider deployment has not.

As I described recently, CCS is a key technology for addressing climate change and for holding down the cost of large-scale reductions of emissions, once we've harvested the low-hanging fruit of energy efficiency and methane destruction. That doesn't mean FutureGen should be given a blank check, unless the new management at the Department of Energy can convince themselves that, particularly in light of all the work already done on this project, it represents the quickest and most effective next step in proving the technology. In particular, they should assess whether FutureGen includes outcomes beyond a proven prototype CCS power plant, such as opportunities to transfer technology elements to improve the efficiency or cost of other new and existing facilities. For example, could it improve existing integrated gasification combined cycle (IGCC) designs to increase their efficiency advantage over supercritical pulverized coal and other conventional coal technology, and thus reduce emissions even without full CCS? Could it advance our knowledge concerning the retro-fitting of CCS to existing power plants? If the answers to these questions look promising, then FutureGen deserves reviving, even if that creates the appearance of home-state favoritism.

Note: Energy Outlook will be on vacation for a few days. New postings should resume next Wednesday or Thursday.

Sequestration On Hold?

Today's Washington Post reports that the Department of Energy may be withdrawing its support for the landmark Futuregen carbon capture and sequestration (CCS) project, which recently announced its selection of a site in Illinois. CCS is widely viewed as an essential technology for managing the growth of greenhouse gas emissions from energy production, and particularly from coal, which has the highest emissions of any fossil fuel. The Futuregen project would be one of the first to integrate all of the elements of coal-power-based CCS under one roof. If the DOE truly intends to cancel its involvement in this public/private project, it should provide a detailed, public explanation of its concerns, rather than vague suggestions that technology has passed the project by, and cost over-runs rendered it unattractive.

Demonstration projects are rarely intended to be profitable, and Futuregen is no exception. Even at its original estimated cost of $1 billion, the effective capacity cost of its planned 275 MW output was already a multiple of that for a comparable conventional coal or gas-fired plant. While cost over-runs can cripple the profitability of commercial projects, that simply isn't a consideration, here. In fact, the international industrial partnership supporting the project is organized as a 501(c)(3) non-profit corporation.

Nor do I find Secretary Bodman's suggestion that he would prefer to support other sequestration projects particularly reassuring. The DOE recently announced support for three such projects, but all of them are focused on the CO2 handling side of the problem. While no one would call CCS proven technology, most of its components have been demonstrated at various scales in industrial projects elsewhere. CO2 from North Sea gas fields is collected and reinjected underground, and the Great Plains Synfuels Plant sends its CO2 to the Canadian oil fields for use in enhanced recovery. The main attraction of Futuregen was that it would be the first large-scale effort to integrate CCS into the up-front design process of a coal-gasification combined-cycle power plant (IGCC).

Each of the DOE's stated concerns deserves to be addressed. With regard to the costs of the project, it ought to be relatively easy to assess whether the cost escalation since the project was announced in 2003 is in line with the general inflation in engineering and construction costs that has affected commercial power plants, oil platforms and refinery projects around the world, with some allowance for the first-of-a-kind nature of this facility. Determining whether newer CCS technology has superseded the design basis of Futuregen is trickier, but not impossible, particularly with reference to the project's original technology goals, which appear to focus more on practical integration, operation and performance measurement, rather than finding the "bleeding edge." And if better technology is available, it may still not be too late to incorporate it.

Finally, this being Washington, the specter of politics always looms over such decisions. In Monday's State of the Union address, President Bush said, "Let us fund new technologies that can generate coal power while capturing carbon emissions." He did not specify where. Two of the sites not chosen for the Futuregen project were in Texas. One was in the Congressional district of the former Chairman of the House Energy and Commerce Committee, Joe Barton (R-TX.) The other was in Odessa, TX, sister city to the President's home town, which is represented by K. Michael Conaway (R-TX,) a former close associate of President Bush. Weighing against that, of course, is that Secretary Bodman himself is a native of Illinois. Without suggesting anything improper, these connections make it imperative that the DOE's decision concerning Futuregen be made in as transparent a manner as possible, on its merits, alone. I share the President's assessment of the importance of demonstrating this technology; if for good reasons Futuregen isn't the right vehicle, then we need to find a better one ASAP.