Legalectric

For years and years, I represented mncoalgasplant.com opposing this wretched boondoggle of a pipe-dream of “clean” and “green.”

IGCC – Pipedreams of Green and Clean

The project lingers on, on life-support, and pulling the plug is long overdue.

The good news is that the Duluth News Tribune is finally paying attention, and looking into the financial irregularities.  Duluth News articles are here, and next will be some responses.

It started with an article in Duluth News Tribune, first in a series, the second below:

Published August 21, 2011, 09:40 AM

 

Millions in public money spent, but Iron Range power plant still just a dream

DNT investigation, part 1 of 2: When Excelsior Energy launched its ambitious, clean energy project in 2001, the company touted it as a way to bring much-needed jobs and investment to the Iron Range. But after nearly a decade and receiving more than $40 million in public money, Excelsior has little to show.

By: Peter Passi, Duluth News Tribune

When Excelsior Energy launched its ambitious, clean energy project in 2001, the company touted it as a way to bring much-needed jobs and investment to the Iron Range at a time when local residents were still stinging from the closure of LTV Steel Mining Co. The innovative, state-of-the-art coal gasification plant also would enable the nation to more effectively tap domestic coal reserves with minimal harm to the environment.

But after nearly a decade and receiving more than $40 million in public money, Excelsior has little to show. While significant work has gone into developing site plans and engineering work and garnering permits, the company has yet to move a shovelful of dirt to build its would-be 2,000-megawatt, $2.1 billion power plant.

And despite receiving virtually all of its backing from the public trough, the company’s spending records, including its officers’ paychecks, remain under wraps.

“At the end of the day, this is a project that has not hired one full-time worker on the Iron Range. Only lawyers, lobbyists and professional meeting attenders have gotten jobs,” said Rep. Tom Anzelc, D-Balsam Township, the only Iron Range legislator who has opposed the project. “And it has all been financed by the public.”

Behind the delay

Heading Excelsior are two seasoned energy professionals: Tom Micheletti, a Hibbing native and former Northern States Power executive, and his wife, Julie Jorgensen, former CEO of CogenAmerica and VP of NRG Energy Inc.

Supporting them is another Iron Range legislator, Sen. Tom Bakk, D-Cook, who argues that cleaner ways of turning abundant domestic supplies of coal into electricity are greatly needed.

Bakk blames the development’s delay on Xcel Energy’s refusal to do business with Excelsior, with the established energy company intimating that power from the new plant could be too expensive and could drive up customer rates.

“There was clear legislative intent that Xcel would purchase their power, but Xcel has been unwilling to enter an agreement,” Bakk said. “Without an out-take agreement, the project has not been bankable.”

Excelsior has made repeated efforts to persuade the Minnesota Public Utilities Commission to compel Xcel to buy its power, but has so far been unsuccessful.

Micheletti, who serves jointly with his wife as Excelsior Energy’s president and CEO, also said the project has suffered from unfortunate timing and the effects of a recession.

“Hardly anything is being built right now,” said Micheletti. “Load growth has come to a standstill, so there’s not a great deal of need for new facilities right now.”

Regulatory uncertainties facing the power industry have further complicated the plant’s outlook, Micheletti said, though he added that tougher regulation could help the project if it leads to the shutdown of older, dirtier coal-burning power plants or a shift away from nuclear energy.

Yet Micheletti said he’s stopped making predictions as to when Excelsior will build its first plant.

“It bothers me that, given the current economic situation, we’re not where we thought we’d be,” he said. “By now, 3,000 people would be working on the site if things had gone the way we thought.”

Public funding

From the start, Excelsior has relied primarily on public support, according to a 2008 audit by the Minnesota Office of the Legislative Auditor. The agency noted that excluding a small sum of private seed money, “the company initially relied mainly on Iron Range Resources loans for many basic costs it needed to operate, such as office space, desks and computers.”

In 2001, Excelsior borrowed $1.5 million from the Iron Range Resources and Rehabilitation Board. Additional loans have brought that company’s IRRRB debt to $9.5 million

In August 2010, Excelsior was to begin repayment of its IRRRB loans, but the agency extended the timeline to 2017, in light of project delays.

The company also received $10 million in state aid through the Minnesota Public Utility Commission’s Renewable Development Fund, despite objections from environmental groups about spending such funds on a plant designed to run on fossil fuel.

The U.S. Department of Energy contributed another $22 million, intended to cover half of the preliminary design costs.

The only public record of private equity in Excelsior occurred at its inception, when Micheletti and Jorgensen made a combined investment of $60,000.

Shuttered windows

Tracing where all Excelsior’s public money went and how it has been used is not easily accomplished, particularly after state lawmakers voted to restrict public access to Excelsior’s financial statements. Before 2008, reports the company is required to submit to the IRRRB as part of its loan agreement had been publicly available.

But that year, the Minnesota Legislature changed the state law, with a conference committee inserting language into an omnibus tax bill to classify financial disclosures made to the IRRRB.

Bakk, a member of that committee and also of the IRRRB’s board of directors, told the News Tribune he had no recollection of inserting the language and suggested the IRRRB itself may have requested the change.

Sheryl Kochevar, an IRRRB spokeswoman, confirmed that, justifying it to say the agency’s aid recipients should have “privacy protections that are similar to those a business would expect and receive when it is dealing with a bank.”

Kochevar said the IRRRB must approve all its loans and investments in a public meeting. After that, however, she said the agency will not disclose “nonpublic data about the business that it uses to monitor and protect its loan to or investment in the business.”

Bakk defended the IRRRB’s rationale, saying that if the agency required total transparency of the companies it assists, some might shun its aid, causing the Range to miss out on potential economic development opportunities.

But there is nothing stopping Excelsior itself from disclosing what it does with the public money it receives. Micheletti, however, refused to release that information.

“We do not and have never disclosed confidential private financial information, so that subject is off limits,” he told the News Tribune.

Charlotte Neigh, co-chair of Citizens Against the Mesaba Project, a group opposed to the plant, said the Legislature’s secrecy provision came on the heels of a complaint her group made about some of Excelsior’s uses of IRRRB funds that touched off an examination by the Office of the Legislative Auditor.

The auditors found Excelsior had indeed used some IRRRB loan funds for inappropriate purposes, including lobbying. The company subsequently was required to repay $40,161.

Anzelc contends that any entity that has received so much public assistance ought to be more forthright about how it has spent taxpayer money.

“I believe they should tell us exactly what they’ve done with all the public dollars they have secured,” he said.

Limited view

Even when Excelsior’s financial reports to the IRRRB were still public, they sometimes provided scant detail.

A 2004 letter to the IRRRB Board of Directors from Freeberg & Freeberg Certified Public Accountants acknowledged gaps in Excelsior’s reporting.

“Management has elected to omit substantially all of the disclosures and the statements of cash flows and retained earnings required by generally accepted accounting principles,” the report said.

Still, the reports provided a limited view into how the company was spending its funds. As of the end of 2006 — the last year for which financial reports are public — Excelsior had spent $9.6 million on engineering and site development, $8.2 million on permits and regulatory work, $6.9 million on commercial, financial and administrative services and $7.9 million on in-house staff and consulting expenses since the project’s inception.

Some of these expenses were in the form of unpaid bills to be settled at a later date. A significant portion of that debt was owed to the husband-and-wife team at Excelsior’s core.

State funds from the IRRRB and the Renewable Development Fund could not be used to compensate Micheletti and Jorgensen. Even though they could not collect paychecks for the first several years of Excelsior’s existence, Micheletti’s and Jorgensen’s salaries were carried on the company’s books with the understanding that payments would be made when appropriate funds became available.

According to records, in 2001, the two drew a combined $125,000 in deferred pay. In August 2002, the deferred annual salary of each was increased to $250,000, or $500,000 for the pair. In 2003, they each received another $50,000 raise, bringing their combined annual pay to $600,000, where it remained through 2006, at the last time of public disclosure.

The first indication that Excelsior actually cut paychecks for Micheletti and Jorgensen can be found in 2006, when Department of Energy funds became available for the project. As of 2005, Excelsior owed the pair $2.49 million jointly. In 2006, that debt was reduced by $600,000.

Micheletti’s and Jorgensen’s deferred annual salaries totaled $600,000 each of the previous three years. And unless the co-presidents took a cut, Excelsior actually would have had to pay them $1.2 million in 2006 to reduce their total deferred pay by $600,000 in a single year.

How much more pay Micheletti and Jorgensen have received since 2006 has not been publicly disclosed.

Micheletti refused the News Tribune’s request to disclose how much Excelsior has paid its officers, saying, “As I have indicated to you many times before, our company, like all others, does not disclose confidential information, including confidential financial information.”

 

Part II of the Duluth News Tribune series on Excelsior Energy:

Published August 22, 2011, 12:30 AM

Iron Range energy project seeks lifeline in more funding, new fuel source

Despite receiving more than $40 million in federal and state government money, Excelsior Energy risks running out of gas if it cannot attract additional investment from the public or private sector soon.

By: Peter Passi, Duluth News Tribune

* EARLIER: Millions in public money spent, but Iron Range power plant still just a dream

Despite receiving more than $40 million in federal and state government money, Excelsior Energy risks running out of gas if it cannot attract additional investment from the public or private sector soon.

Gone are state funds, including:

# About $9.5 million in loans it received from the Iron Range Resources and Rehabilitation Board, and

# $10 million from the Minnesota Renewable Development Fund.

Soon, Excelsior will burn through the more than $22 million in federal funding the Department of Energy earmarked to help develop its clean coal project on the Iron Range, according to financial records obtained through the Freedom of Information Act and analyzed by the News Tribune.

Those records show that as of Sept. 30, 2010, Excelsior had only about $1.9 million in unobligated DOE funds still available. The company had already spent more than 90 percent of the federal funding approved for project development.

And at what was then the company’s expenditure rate — consuming an average of $418,000 in grant funding per quarter in 2010 — Excelsior would exhaust the last of its federal aid before the end of this calendar year.

Tom Micheletti, Excelsior’s co-president and CEO, refused to discuss how much money the company has left or where it will turn next. Yet his confidence remained intact.

“We’ve got staying power to see our way through this,” he said.

Rep. Tom Anzelc, D-Balsam Township, said he expects Excelsior will turn again to the IRRRB for more support. But IRRRB Commissioner Tony Sertich said there have been no discussions about providing aid to Excelsior beyond the loans that it already has received.

“I don’t anticipate any further request from them,” he said. “We’re watching to see what happens next, just like everyone else.”

Refueling

Unable to move ahead with plans to build a $2.1 billion power plant that would run on gasified coal, Excelsior received authorization from the Minnesota Legislature this past session to proceed initially with a plant fueled by natural gas.

Sen. Tom Bakk, D-Cook, supported Excelsior’s request.

“I think that if we allow Excelsior to start as a natural gas plant, it substantially increases the chance that it (the coal plant) will be built,” he said.

Bakk noted that a natural gas-fueled plant would rely on pre-existing rather than relatively untested technology.

“There’s much less risk from an investor standpoint,” he said.

Anzelc was the only Iron Range legislator to oppose the idea of allowing Excelsior to shift gears and build a natural gas plant instead of one running on gasified coal. He sees the change of plans as a last-ditch effort to throw Excelsior a lifeline.

“The majority of the Range delegation and the governor believe that this is the only way to get any of the $9.5 million in IRRRB funds back. You need to have an actual project that has permits and is constructed. You need a real company that makes a profit,” he said.

Nevertheless, as hard as it may be to accept the loss, Anzelc contends that walking away from Excelsior is the responsible thing to do.

At present, natural gas prices are comparatively low, making it a competitive fuel for power generation, said Julie Jorgensen, Excelsior’s co-president and CEO. Still, Excelsior needs to consider the long-term price outlook for both gas and coal, and Micheletti said the company is weighing its options.

“Do we go slow on one and faster with the other or vice-versa?” he asked. “Or do we proceed with both at once?”

Micheletti estimates a couple of 600-megawatt natural gas-powered units could be built for about $900 million. That’s less than half the anticipated cost of Excelsior’s proposed gasified coal plant. Also, permits for natural gas-fired generators are typically easier to obtain than for coal-burning plants.

One roadblock is that Department of Energy money earmarked for “clean coal” technology probably could not be used to help develop a natural gas plant, Micheletti said. Regardless, he said, Excelsior is in a unique position to push a power plant along quickly.

“Right now, we have the only viable new site for an energy plant in the Midwest because of all the work we’ve done,” he said.

But Anzelc said Excelsior still lacks one essential: a customer.

“To my knowledge, no on in the power business is supportive of this project,” he said.

Search for customers

While Micheletti said he could not discuss specifics because of confidentiality concerns, he said Excelsior is in active talks with potential customers. He said the company will push ahead with a project only when markets justify the investment.

“A lot of companies went bankrupt building on spec. We’re not going to build without a customer,” he said.

Pat Mullen, Minnesota Power’s vice president of marketing and public affairs, isn’t surprised that Excelsior is looking at alternatives to its plan for a gasified coal plant.

“Their original project was way too expensive, and it didn’t get any traction,” he said. “We didn’t want it and neither did Xcel.”

Xcel and Minnesota Power objected to the project, warning that it would drive up their customers’ rates.

Excelsior sought to compel Xcel to buy power from its plant through a power purchase agreement, but the Public Utilities Commission refused.

Even the revamped natural gas plant plan could be a tough sell, however.

Minnesota Power spokeswoman Amy Rutledge said her company has been diversifying its energy portfolio to meet a state mandate that 25 percent of its power come from renewable sources by 2025. The company recently signed a deal to purchase another 250 megawatts of power from Manitoba Hydro in 2020. But new fossil fuel energy is not in Minnesota Power’s plans.

“We’ve looked at the energy needs of our customers,” Rutledge said, “and it is clear we have no need for additional power from Excelsior.”

Xcel Energy has plans to retire two coal-burning units at its Black Dog plant in Burnsville, Minn., and replace them with natural gas units. To obtain permits for that project, the company was required to seek alternative proposals to supply 435 megawatts of power by 2016 or 2017.

But the July deadline has come and gone, and Patti Nystuen, an Xcel spokeswoman, said Excelsior did not submit a proposal and Xcel anticipates no need for additional generation.

Minnesota Power’s Mullen described what he considers “a flat market” for power generation,

But he’s not counting Excelsior out.

“You have to give them credit for their tenacity,” Mullen said.

The most bizarre bill has been introduced that seems to be trying to breathe life into the most unreal project that ever existed, and the project that refuses to die, have they no shame?

Here’s the poop:

SF 417 and HF 618

Senate authors are Tomassoni, Senjem, Michel and Saxhaug

WRITE TO COMMITTEE MEMBERS — TELL THEM TO PUT A STAKE THROUGH ITS SLIMY HEART!

Referred to Senate Energy, Utilities and Telecommunications

CLICK HERE FOR SENATE ENERGY COMMITTEE MEMBERS EMAILS

House authors are Beard, Dill and Fabian

Referred to House Environment, Energy and …

CLICK HERE FOR SENATE ENERGY COMMITTEE MEMBERS EMAILS

What on earth are they trying to do

This is the “artist’s conception” of the PurGen coal gasification plant proposed for Linden, New Jersey.

Last week there was an earthquake just off the cost of New Jersey and New York:

Small earthquakes in N.J. prompt calls to police, but no reported damages

Small earthquake off New Jersey felt on east coast

The US Geological Survey has a site to report earthquakes:

DID YOU FEEL IT?

What does this Linden coal gasification plant have to do with an earthquake?   Well DUH, PurGen wants to pump the earth full of CO2.  They claim that “Carbon dioxide will then be removed from the gas and safely stored offshore in a permanent repository.”

In support of this nonsense, they’re trotting out our friend from the Mesaba Project, Dan Schrag:

Storage of Carbon Dioxide in Offshore Sediments

For information on impact of gas storage on seismic activity, check out “Gas Migration” which is THE source for the real poop.  In short, pumping the earth full of gas, i.e. CO2, triggers seismic activity, CCS = earthquakes.

What’s interesting to me is that this is the second time this year for New Jersey:

Earthquake Jolts New Jersey
By Therese Crowley
2/22/2010

BERNARDSVILLE, NJ – Sunday morning reverie at 8:59 a.m. was punctuated by a big BOOM in Bernardsville- and Basking Ridge- and at least 25 more zip codes, according to the US Geological Survey. Within an hour, an earthquake measuring 2.6 on the Richter scale was confirmed by the Lamont Doherty cooperative Seismographic Network (LCSN). The quake was centered at Peapack and Gladstone, New Jersey, 13 miles WSW of Morristown.

In Bernardsville, the quake was experienced as a ‘boom. BOOM!!! shake.’ In this reporter’s old stone cottage, the shaking rang bells. The quake shook Bernardsville Police headquarters, where Dispatcher 35 was fielding calls from residents, and cautioning that an aftershock may follow. Some 100 residents called in the first hour. No damage was immediately reported, although an earthquake of mild magnitude can cause hairline cracks in structures.

The region sits on the Ramapo Fault Line, and Lamont Doherty estimates the depth of the quake at 3.1 miles, measuring the impact as mild, at ll-lV level intensity. Still, residents were excited and rattled. The first aftershock followed at 12:31pm, measuring 2.3 on the Richter scale. As with the original quake, the first alert of something happening within the earth was a booming rumble, followed by a shaking sensation. The first aftershock was centered just one mile from the morning tremor.

The quake was the talk of the Somerset Hills YMCA; many people felt it, but few had heard confirmation of the event. One Dad reported, ‘We were watching TV with the kids and heard the boom—I made them turn the TV down, and we listened and felt the shake. It was something!’

The Sunday morning earthquake follows a series of tremors that moved the ground in Far Hills and Bernardsville from Friday, February 5th to Sunday, February 7th. One of those quakes measured 1.2, but Sunday morning’s 2.6 is orders of intensity greater.

An aftershock took place around 12:30 p.m. on Sunday measuring 2.3 on the richter scale.

Residents who would like to report their experience can go to the US Geological Survey Website and fill out the ‘Did You Feel It?’ form, at http://earthquake.usgs.gov/earthquakes/dyfi/

A couple of days ago, a little birdie sent me an uplifting article, and what I like most about it is the use of the term “boondoggle,” which is the definition of Minnesota’s “own” Mesaba Project:

For Carbon Capture, DOE Moves Oxycombustion Ahead of IGCC

If IEEE’s Spectrum is using that term, the rest of the world can’t be far behind!

We’ve been having quite a few go-rounds about Mesaba lately, since Iron Range Resources unilaterally decided to significantly and substantively alter the “contract” for the $9.5 million in funding.   I’d started a post on that and can’t find it for the life of me, so here we go… Now remember, this is not including the state’s Renewable Development Fund money or the DOE’s money thrown at this project, this is “only” the state IRR’s money, $9.5 million, and the interest on that “loan” is 20%:

MCGP Exhibit 5023 – IRR & Excelsior Convertible Debenture Agreement

You’ll find that interest rate on p. 12, 20% simple interest per annum on the outstanding principal.  Since they’ve paid nothing on it except the $40k that they were found to have spent improperly (with many other issues not addressed because the IRR had “destroyed” documentation… yeah, right…), 20% simple interest per annum on a “loan” from 2004 means that there’s another $8,000,000 due now.  And this does NOT take into account the initial $1.5 million from IRR, it’s just the agreement above.

And as noted above,  a couple of weeks ago, it seems the IRR unilaterally decided to significantly and substantively alter the “contract” … based on exactly what???

Here’s how Commissioner Sandy Layman characterized the predicament:

The principal balance owed by Excelsior Energy, Inc. to Iron Range Resources under the
existing loan documents is $9,454,962.

No mention is made of the more than $10 million in interest.   Nada…

Here are two of Aaron Brown’s posts:

Excelsior Energy to seek huge break from Iron Range Resources

… and …

This Iron Range blogger is done apologizing for Iron Range cronyism

Here’s Charlotte Neigh’s editorial, published in the Grand Rapids Herald-Review and on the Citizens Against the Mesaba Project site:

IRR WRITES OFF $ MILLIONS OWED BY EXCELSIOR ENERGY

By failing to declare Excelsior Energy in default, which would put an end to the Mesaba Energy Project, the Iron Range Resources Board is enabling Excelsior to draw down the remaining $2.3 million of Department of Energy funding, which can continue to provide handsome salaries for Tom Micheletti and his wife and co-president, Julie Jorgensen.

In April 2007 Excelsior Energy defaulted on its $952,376 interest payment on loans from IRR and it hasn’t paid any interest yet. Since then interest has been accruing on $9.5 million at the rate of 20% per year and the annual payments should be about $2 million. In addition, Excelsior was supposed to pay $800,000 per year on the principal, starting in December 2009, which it also failed to do. After repeated extensions of the due date, payment was supposed to be made by December 2010.

However, at a non-public meeting on August 10th, an IRR committee discussed Tom Micheletti’s proposed changes to the terms of the loans and the IRR Board rubber-stamped these amendments at its meeting on August 19th. From the limited information available, it can be determined that: the annual principal payment will start in December 2010 and will be reduced from $800,000 to $100,000; the interest will be calculated at the reduced rate of 5% instead of 20% and annual payments are not required; and if Excelsior pays off the entire principal by 12/31/17, the interest rate will be recalculated at 3% per year. This amounts to a loss of revenue to IRR well in excess of $10 million, in addition to the $9.5 million that probably never will be repaid.

The high initial interest rate reflected the risk level of the Mesaba Energy Project, which has been borne out by Excelsior’s failure to attract investors or customers. This is despite having spent nearly 40 million public dollars, including approximately $20 million from the federal Department of Energy and $10 million from Minnesota’s Renewable Development Fund, in addition to IRR’s $9.5 million. Tom Micheletti did not offer the IRR Board any revised plan for making this project succeed. When the remaining $2.3 million is gone, Excelsior can declare bankruptcy without assets to repay its creditors, and its co-presidents can walk away.

Micheletti touts the accomplishment of a final environmental impact statement but that process has not been finished because it still lacks a Record of Decision by the DOE. Micheletti touts the accomplishment of having the site approved by the Public Utilities Commission but fails to mention that the project cannot proceed without required regulatory permits. The air permitting has been delayed since 2006 and is problematic because this project is competing with mining operations that can’t be located elsewhere for scarce space for more pollutants in the airshed.

Sensible people must wonder why the IRR Board would do this, or why it would have funded this project in the first place, or why it would have waived the requirement for matching funds, or why it would have extended the due date for payments while it continued throwing good money after bad. A likely factor is the generosity of Excelsior insiders at campaign fundraisers for some of these legislators the week before the committee meeting and over recent years.

FEIS NOT ACTUALLY “FINAL”: AIR AND WATER PERMITS LACKING

The final step for the environmental impact statement (issued in November 2009) is a “record of decision” (ROD) prepared within the DOE, vouchsafing that all has been done thoroughly and properly and the project should be allowed to proceed with DOE support. However, the ROD has been delayed and the monthly reports indicate “schedule uncertain”. We don’t know all of the reasons for this but they may include concerns previously raised by the EPA, the Army Corps of Engineers and the federal land managers. One of the known reasons is Excelsior’s failure to acquire the necessary air and water permits from the Minnesota Pollution Control Agency (MPCA). Apparently Excelsior continues to qualify for cost-sharing contributions from the $22 million DOE fund ($2.3 million remaining) while it pursues these permits.

Excelsior is not actively pursuing water permits at the MPCA; if there have been any changes since the June 2006 applications, revised applications will be required. In late spring Excelsior contacted the MPCA regarding the air permits and work is currently underway to determine what updates to the 2006 applications will be required. It appears that no draft permit will be issued in the foreseeable future and if one ever is, it can be appealed to the EPA, a process that could take 18 months.

There’s been change afoot as the facts of the infeasibility of CO2 capture and storage filters up to the higher regions of the cesspool, and as the financing nightmares and high capital costs of IGCC are paraded in public as the Indiana Duke IGCC project moves forward, and as, of course, the DOE’s EIS (here’s the DOE’s project page) for Excelsior Energy’s Mesaba Project drags on and on and on as the agency refuses, thankfully, to issue the Record of Decision on that… and slowly, painfully slowly, the truth about this IGCC pipedream is coming out.

A few telling tidbits, first, that they’ve given up on FutureGen IGCC, YEAAAAAAAAA:

DOE to provide $1B to revamped FutureGen

Katherine Ling, E&E reporter

The Energy Department today announced $1 billion in stimulus funding for a carbon capture and sequestration retrofit project it is labeling “FutureGen 2.0.”

The new project would retrofit a mothballed unit of an Ameren Energy Resources coal-fired power plant in Meredosia, Ill., to capture 90 percent of carbon dioxide and other pollutants using “oxy-combustion” technology, and then transport and sequester the CO2 in a regional storage site in Mattoon, Ill. The Mattoon location — the site of the original FutureGen project — would also house a training facility to teach oxy-combustion technology and retrofitting skills.

DOE is providing the $1 billion to the FutureGen Alliance, Ameren, Babcock & Wilcox and Air Liquide Process & Construction Inc. to develop the facility. The total cost of retrofitting the plant and building a “collection facility” for carbon dioxide, a training facility and CO2 pipelines will be about $1.13 billion in federal investment, with the expectation of up to $250 million in private investment, Sen. Dick Durbin (D-Ill.) told reporters. Durbin has been a strong advocate for the project and repeatedly requested appropriations for it.

The project would be a significant change from the original FutureGen clean coal project announced by President George W. Bush and DOE in 2003. The original project supported by DOE and the FutureGen Alliance — a consortium of major coal and utility companies — aimed to build a new coal power plant on 444 acres in Mattoon that would use integrated gasification combined cycle (IGCC) technology, produce hydrogen and electricity, and capture and sequester CO2. Bush and then-Energy Secretary Samuel Bodman announced in 2008 that they were walking away from the project because of skyrocketing costs (Greenwire, June 12, 2009).

“Today’s announcement will help ensure the U.S. remains competitive in a carbon-constrained economy, creating jobs while reducing greenhouse gas pollution,” Energy Secretary Steven Chu said in a statement.

“This investment in the world’s first, commercial-scale, oxy-combustion power plant will help to open up the over $300 billion market for coal unit repowering and position the country as a leader in an important part of the global clean energy economy,” Chu added.

Oxy-combustion technology utilizes oxygen and CO2 instead of air to produce a concentrated CO2 stream for safe, permanent storage, DOE said. The technology also eliminates almost all of the mercury, SOx, NOx and particulate pollutants from plant emissions and could be potentially the lowest-cost approach to clean up existing coal-fired facilities and capture CO2 for geologic storage, according to the National Energy Technology Laboratory.

“It really didn’t make any sense to prove a technology that has already been proven” and move forward with IGCC, Durbin said. “I think this is going to build way beyond the original FutureGen concept.”

Durbin said the plan is to conduct engineering and land acquisition this fall and start on construction next spring.

The construction of the pipelines, facilities and retrofit will create about 900 jobs in southern Illinois and another 1,000 jobs at suppliers across the state, according to DOE.

This study was released last June, which shows that leakage of CO2 is a major problem, and which makes sequestration not feasible:

Long-term Effectiveness and Consequences of Carbon Dioxide Sequestration – Shaffer

Can’t have information like that getting out, so USA Today, of course, plays it with the following headline — DUH, of course critics pan the study — and this is the best they could come up with and it took two months!

Critics question carbon storage study

Worries about leaks from buried greenhouse gasses unearthed in a recent climate study look overblown, say critics.

Carbon sequestration, burying carbon dioxide in underground reservoirs, has emerged in recent years as one option for continuing to burn coal and other fossil fuels from power plants while addressing global warming. A 2004 Science journal report by Princeton researchers, for example, pointed to carbon sequestration as one strategy, among many, for humanity dodging the climate consequences of pumping global warming gases into the atmosphere.

A June Nature Geoscience report by Gary Shaffer of the Danish Center for Earth System Science, however found such carbon dioxide reservoirs would have to leak less than 1% per millennium to help the climate. “The dangers of carbon sequestration are real and the development of (carbon sequestration) should not be used as a way of justifying continued high fossil fuel emissions,” Shaffer said in a statement, alluding to a debate over whether “clean coal” power plants, which would store their greenhouse gas emissions underground, are a worthwhile goal for addressing climate change.

The study made news in climate circles, but some have since pointed out problems with Shaffer’s study. “I feel that this calculation adds little to the question of whether we should use carbon capture and storage,” wrote Nature assistant news editor Richard Van Noorden, suggesting that researchers need to figure out whether carbon can be safely pumped underground in the first place before worrying about 20,000 years from now, an end point of the study.

This month, an Energy Department analysis from the Pacific Northwest National Laboratory (PNNL) of the study found “two deeply flawed assumptions which combine to grossly overstate the impacts associated with society using carbon dioxide capture and storage.”

First, the Nature Geoscience analysis suggested that carbon sequestration would be used to bury enough greenhouse gas to stave off all future climate warming. At best, carbon sequestration could store only about half of the carbon dioxide emissions responsible for global warming, notes the PNNL critique, and likely much less. And those carbon dioxide emissions are only partly responsible for projected future average surface temperature increases (anywhere from 2 to 11 degrees Fahrenheit depending on actual emissions, according to March National Research Council reports) alongside deforestation, and other greenhouse gasses:

“The assumption that (sequestration) is the only mitigation technology available is therefore highly questionable as a simplifying assumption as it leads to a dramatic overestimation of the amount of CO2 required to be sequestered. This significant overestimation of CO2 stored leads directly to the enormous volume of leakage and the resulting harm from imperfect retention reported by Shaffer.”

Second, the whole point of carbon sequestration underground is that the carbon dioxide would chemically bind to the rock layers there, preventing it from leaking, over decades and centuries.

“My study was not meant to propose if and how much (sequestration) to use but rather to look for the first time at the long term consequences of any leakage back to the atmosphere of any CO2 sequestered,” Shaffer says, by email. “My results show that high emissions with (sequestration) is not the same as low emissions without (sequestration) because of the leakage and its consequences.”

But the amount of sequestration contemplated in the study is “off by at least two orders of magnitude,” says MIT’s Ruben Juanes. “I’m as skeptical of carbon sequestration as anyone — the energy penalty it incurs is substantial — but the assumptions made in this (Nature Geoscience) paper are very hard to justify.”

Princeton’s Michael Celia, another sequestration researcher, notes that research already shows that 95% of any carbon injected into a reservoir would become trapped within 1,000 years. “In general I agree with the PNNL comments,” Celia says, by email.

Carbon sequestration critics often make over-sized assumptions about the technology to write it off, Juanes adds, such as objecting to the amount of pipe needed to immediately equip every existing power plant in the nation with it, making a one-time purchase out of an economic process that would play out over decades. “No single technology can immediately bridge the gaps in climate,” Juanes says.

By Dan Vergano