Just two weeks after the federal government revived plans to build the FutureGen power plant in eastern Illinois, two of the experimental coal plant's financial backers said Thursday they are withdrawing.
The exit of American Electric Power Co. and Southern Co. leaves the nine power and coal companies that are still part of what's known as the FutureGen Alliance searching for new partners to help cover building and startup costs they expect to reach roughly $2.4 billion.
The Department of Energy said June 12 that it would provide just over a billion dollars in stimulus money as it agreed to restart the long-stalled project, aimed at proving that the pollutant carbon dioxide can be removed from coal and safely stored.
Both AEP and Southern, two of the country's largest utilities, cited concerns about cost.
Never miss a local story.
AEP says it will leave the project by July 1, mentioning both uncertainty about its details and how much money the Columbus, Ohio-based utility would have to spend.
"There's like a billion dollar shortfall between what the alliance originally agreed to fund and what we think it's going to cost," AEP spokeswoman Melissa McHenry said. "There's not a definitive message from the Department of Energy of what scope and scale the project" will be, she said.
In reviving the project, the Department of Energy has said FutureGen's carbon removal and storage goals might have to be scaled back.
In a weak economy, AEP is cutting its capital spending and will focus on other carbon capture projects that it is involved in, McHenry said.
Earlier this year, however, AEP's Chairman, President and CEO Michael Morris had promoted FutureGen as a good candidate for federal stimulus money. "That is one clean coal project that is shovel ready," he told The Associated Press. "The world needs the technology."
Southern Co. spokesman Steve Higginbottom called the company's decision "definitely financial" and declined to elaborate. The Atlanta-based utility will spend only on other carbon capture projects it is working on, he said.
FutureGen had already said it needed to find new partners to help share the costs of the project, spokesman Lawrence Pacheco said, and is negotiating with several companies. He declined to name them.
"The alliance," Pacheco added, "will be working with DOE to figure out the cost share of the project moving forward, and that agreement will reflect the scale of the project, as well as the cost."
Energy Secretary Steven Chu said earlier this month that developing the carbon capture technology that would be used by FutureGen would be "critically important for reducing greenhouse gas emissions in the U.S. and around the world." Coal-burning power plants are the top producers of carbon dioxide, the major greenhouse gas linked to global warming.
The Department of Energy said Thursday it knew the two companies intended to withdraw when it announced plans to restart FutureGen, and that it remains committed to the project.
"Secretary Chu believes the FutureGen project holds great promise and looks forward to working with the members of the Alliance who are committed to developing a flagship commercial-scale carbon capture and sequestration facility," spokeswoman Stephanie Mueller said in an e-mail.
U.S. Sen. Dick Durbin, an Illinois Democrat who has long championed the project, said Thursday that he doesn't think the departure of Southern and AEP will hurt FutureGen.
"I believe the Alliance will continue to grow in membership, in strength and in their partnership with the DOE," he said in a statement.
At one time 13 companies were involved in FutureGen. Peabody Energy Corp., Consol Energy Inc. and the others decided in late 2007 to build the experimental plant in Mattoon, Ill. The Department of Energy shelved the project weeks later over cost overruns that later proved to be inaccurate.