GAO: Costs, Benefits, Risks Should Inform DOE's Restructuring of FutureGen
March 27, 2009 // Published as a news service by IHS
First, the original program aimed at developing knowledge about integrated gasification combined cycle (IGCC) and CCS at one plant; in contrast, the new program could provide opportunities to learn about CCS at different plants, such as conventional ones that use pulverized coal generating technology.
Second, the original program was operated by a nonprofit consortium of energy companies at one plant, while the new program called for CCS projects at multiple commercial plants.
The new, restructured FutureGen differs from most DOE CCS programs, according to the report. The new FutureGen would develop and integrate multiple CCS components at coal-fired plants (including CO2 capture, transportation and underground storage). Other programs concentrate on only one CCS component and/or a related component such as capture or capture and compression.
However, Round III of DOE's Clean Coal Power Initiative (CCPI) is a cost-shared partnership with industry that funds commercial CCS demonstrations at new and existing coal-fired plants.
The new FutureGen is most like CCPI in that both fund CCS commercial demonstrations at several plants to accelerate CCS deployment and require that participants bear 50% of the costs, but the DOE expects the new FutureGen to have more funding for commercial demonstrations than CCPI, according to the report.
The new FutureGen also targets a higher amount of CO2 to be captured and stored (at least 1 million metric tons of CO2 annually per plant) than CCPI (300,000 metric tons).
Contrary to best practices, the DOE did not base its decision to restructure FutureGen on a comprehensive analysis of factors, such as the associated costs, benefits and risks. According to the report, the DOE made its decision largely on the conclusion that costs for the original FutureGen had doubled and would escalate "substantially."
However, in its decision, the DOE compared two cost estimates for the original FutureGen that were not comparable because the 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, according to the report.
As its restructuring decision did not consider an analysis of costs, benefits and risks, the DOE has no assurance that the restructured FutureGen is the best option to advance CCS, according to the report.
In contrast to the restructuring decision, the DOE's Office of Fossil Energy identified and analyzed 13 options for incremental, cost-saving changes to the original program such as reducing the CO2 capture requirement.
While the Office of Fossil Energy did not consider all of these options to be viable, it either recommended or noted several of them for consideration with potential savings ranging from $30 million to $55 million each, according to the report.
Coal-fired power plants generate about one-half of the nation's electricity and about one-third of its CO2 emissions, which contribute to climate change.
In 2003, the DOE initiated FutureGen - a commercial-scale, coal-fired power plant to incorporate IGCC, an advanced generating technology, with CCS. The plant was to capture and store underground about 90% of its CO2 emissions.
The DOE's cost share was 74% and industry partners agreed to fund the rest. Concerned about escalating costs, the DOE restructured FutureGen.
The GAO was asked to examine the original and restructured programs' goals, similarities and differences between the new FutureGen and other DOE CCS programs and if the restructuring decision was based on sufficient information.
The GAO recommends that the DOE re-examine its restructuring decision based on the comparative costs, benefits and risks of the original and restructured programs, as well as other incremental options for modifying the original program.
Source: U.S. Government Accountability Office (GAO).