This report briefly summarizes the history of FutureGen, discusses why it has gained interest and support from some Members of Congress and the Administration while remaining in initial stages of development, and offers some policy considerations on barriers that challenge its further development as a model for a CCS program. A timeline history of FutureGen is found at the end of this report. FutureGen is a clean-coal technology program managed through a public-private partnership between the U.S. Department of Energy (DOE) and the FutureGen 2.0 Industrial Alliance. The FutureGen program as originally conceived in 2003 by the George W. Bush Administration had the intent of constructing a net zero-emission fossil-fueled power plant with carbon capture and sequestration (CCS) technology. CCS is a process envisioned to capture carbon dioxide (CO 2 )—a greenhouse gas associated with climate change—emitted from burning fossil fuels and store it in deep underground geologic formations, thus preventing its release into the atmosphere. If widely deployed in the United States, CCS could decrease the amount of U.S.-emitted CO 2 . In 2008, DOE withdrew from the FutureGen partnership, citing rising costs of construction as its reason. Subsequently, DOE restructured the FutureGen program to instead develop two or three demonstration projects at different power plants around the country. In 2010, the Obama administration announced another change to the program with the introduction of FutureGen 2.0, which would retrofit an existing fossil fuel power plant in Illinois with CCS technology. The FutureGen project was originally conceived as a cost-share between the federal government, which would cover 76% of the cost, and the private sector, which would provide the remaining 24%. Between FY2004 and FY2008, Congress appropriated $174 million to the original FutureGen project. DOE obligated $44 million and expended $42 million between FY2005 and FY2010 toward the original project. Under the Obama Administration, Congress appropriated almost $1 billion in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) for FutureGen 2.0. Furthermore, DOE has obligated nearly $60 million but has expended $2 million from regular appropriations to FutureGen 2.0 since FY2010. Together with the approximately $74 million expended on the project from ARRA funding (discussed below), total expenditures for FutureGen since its conception were between $110 and $120 million as of early 2014. The FutureGen Industrial Alliance estimated the total cost of the FutureGen 2.0 program to be nearly $1.3 billion, with $730 million used toward retrofitting and repowering Ameren Corporation's power plant in Meredosia, Illinois, and $550 million used for the construction of a CO 2 pipeline, storage site, and training and research center. In 2011, they estimated that the project would create approximately 1,000 construction jobs and another 1,000 jobs for suppliers across the state. A 2013 report from the University of Illinois predicted that the project could create an average of 620 permanent jobs for 20 years and approximately $12 billion of business volume by 2037 for the state of Illinois. Current scientific research associates an increase in atmospheric GHGs (in particular CO 2 , methane, and nitrous oxides), which trap heat in the earth's atmosphere, with the potential for changing the Earth's climate. The increase in the atmospheric concentration of CO 2 in the 20 th and 21 st centuries is due almost entirely to human activities. If successful, FutureGen 2.0 would demonstrate a technology that, if widely deployed, could capture a significant fraction of U.S. CO 2 emissions for geologic sequestration. DOE's Office of Fossil Energy directs three major CCS programs: the Clean Coal Power Initiative (CCPI), Industrial Carbon Capture and Storage (ICCS), and FutureGen 2.0. Through its CCPI program, DOE partners with industry leaders in a cost-share arrangement to develop new CCS technologies for power plant utilities in order to reduce greenhouse gas emissions by boosting plant efficiencies and capturing CO 2 . Of the six projects selected under the most recent funding for CCPI (Round 3), three have withdrawn, citing concerns over costs and regulations. DOE's share for the three active projects is $1.0 billion of a total $6.1 billion, approximately 17%. DOE is also partnering with industry for 31 projects in the ICCS program, which supports R&D in a non-utility large-scale industrial CCS program and a program to support beneficial CO 2 use. The combined total DOE share for all the ICCS projects is $1.422 billion of a total $2.0 billion, approximately 70%. FutureGen 2.0 is DOE's most comprehensive CCS demonstration project, combining all three aspects of CCS technology: capturing and separating CO 2 from other gases, compressing and transporting CO 2 to the sequestration site, and injecting CO 2 in geologic formations. In October 2010, FutureGen 2.0 developers began working on Phase 1 of the project with the Pre-Front End Engineering Design (Pre-FEED) report, which included plant design, estimated project cost, and basis for applying for National Environmental Policy Act (NEPA) review and other state and local permits. The report showed that the estimated price for FutureGen 2.0 had increased from $1.3 billion to $1.65 billion. Subsequently, cost reduction measures were identified and implemented, including establishing the plant gross output at 168 MW (the steam turbine is nominally rated at 200 MW), and using a combination of 60% Illinois coal and 40% Powder River Basin (PRB) coal to reduce sulfur and chlorine emissions. Also, in late 2011 Ameren announced it was closing its power plant in Meredosia, Illinois, and discontinuing its cooperative agreement with DOE. Following that announcement, the project was redesigned to reflect that the Alliance would take control of the capture process as well as the transportation and storage site. The Alliance is currently negotiating the purchase of parts of the Meredosia Energy Center from Ameren to continue with project development. Figure 1 shows the location of the town of Meredosia, Illinois, the proposed pipeline route, and the proposed carbon sequestration site where the captured CO 2 would be injected underground and stored. Throughout the summer and fall of 2012, the project continued to confront rising cost estimates, as well as challenges in negotiating a long-term power purchasing agreement with the state of Illinois. However, the project has achieved several milestones since 2012 that could favor its future progress. In late December 2012, the Illinois Commerce Commission voted 3-2 to approve a power procurement plan for the state that requires utilities to purchase all the electricity generated by the FutureGen 2.0 facility for 20 years. That decision cleared a major hurdle for FutureGen 2.0, and the decision allows Commonwealth Edison and Ameren Illinois to collect costs for the project from the state's alternative retail electric suppliers. Opposition to the power procurement proposal stemmed primarily from those opposed to its potential to raise costs for retail customers. In February 2013, DOE approved the start of Phase 2 of the project, which includes final permitting and design activities that precede a decision to begin construction. The project faced delays while it was being redesigned following the release of the Pre-FEED report; however, the FEED activities resulted in a 70%-90% design completion for the project, which is better than the industry standard of about 25%, according to the FutureGen 2.0 Industrial Alliance. On October 25, 2013, DOE issued the final environmental impact statement (EIS) for FutureGen 2.0. The proposed action in the EIS is for DOE to provide funding of approximately $1 billion to the FutureGen 2.0 Industrial Alliance to support the completion of Phase 2—preliminary and final design for the project—followed by construction and commissioning (Phase 3) and operations (Phase 4). On November 30, 2013, EPA published a notice of availability in the Federal Register , and on January 16, 2014, DOE issued a favorable record of decision (ROD), as part of the NEPA process. Issuance of the ROD clears the last hurdle in the NEPA process, and reportedly allows the FutureGen 2.0 Industrial Alliance to move forward pending approval of a permit to install the CO 2 injection wells and meeting financial requirements." After more than 10 years and two restructuring efforts since FutureGen's inception, the project is still in its early development stages. Although the FutureGen 2.0 Industrial Alliance completed drilling a characterization well at the storage site in Morgan County, IL, and installed a service rig over the well for further geologic analysis, issues with the power plant itself have not yet been resolved. Among the remaining challenges are securing private sector funding to meet increasing costs, purchasing the Meredosia power plant from Ameren, obtaining permission from the DOE to retrofit the plant, performing the retrofit, and then meeting the goal of 90% capture of CO 2 . In addition, the Alliance is awaiting approval for a Class VI well permit for the injection and sequestration wells. Increasing projected costs have posed significant problems for FutureGen's development since 2003. Confronted with increasing projected costs in 2008, DOE under the George W. Bush Administration first restructured FutureGen, then postponed the program when cost projections rose from $950 million to $1.8 billion. When Secretary of Energy Steven Chu announced the new FutureGen 2.0 in 2010, the cost was estimated at $1.3 billion, with the DOE covering 80% of costs and industry partners contributing the remaining 20% of the total. Initially, FutureGen 2.0 was to be implemented through two separate cooperative agreements, with approximately $590 million of ARRA funds allocated to Ameren Corporation to retrofit a power plant and approximately $459 million of ARRA funds to the FutureGen 2.0 Industrial Alliance to implement a pipeline and regional CO 2 storage reservoir project. According to the FutureGen 2.0 Industrial Alliance, total capital costs for the FutureGen 2.0 project are estimated to be $1.65 billion. The Alliance is expected to cover the additional cost beyond the original cost estimate for FutureGen 2.0. Rising costs of construction may continue to be a challenge to the project's development. Some projections for FutureGen predict construction on the power plant, pipeline, and storage facility will conclude by 2017. A looming question is whether the FutureGen 2.0 Alliance will have sufficient time to expend the nearly $995 million of ARRA funding appropriated by Congress for the project before it expires on September 30, 2015. As of October 2013, the FutureGen 2.0 Alliance has expended about $73.97 million, or about 7.4%, of the total $994,729,000 appropriated under ARRA. Once construction begins, the rate of spending will undoubtedly increase. Now that the DOE ROD has been issued, it is likely that construction will begin sometime in spring or early summer of 2014. But even if construction began as early as March 2014, the project would need to spend approximately $921 million over 19 months, or about $48 million per month until the end of September 2015 to exhaust all the ARRA funding. According to the investigatory work of one industry observer, using documents obtained from DOE under a Freedom of Information Act request, DOE would grant the Alliance the flexibility to accelerate the cost-share and expend the ARRA-provided funding to cover capital costs before using private funds from the Alliance to cover its portion of the cost-share. According to the report, DOE would require an increased level of oversight over the project to safeguard the public investment in the project. Further, DOE would have the ability to suspend or terminate funding if the project failed to demonstrate sufficient progress. The partnership between the federal government and the private sector in funding and developing FutureGen has been marked by a series of setbacks and challenges. Some critics of the public-private partnership attribute the project's decade-long stasis to a lack of incentives for industry leaders to invest seriously in clean coal technologies. A report released by the Massachusetts Institute of Technology in 2007 stated that government investment and leadership in carbon capture technologies are necessary: "Given the technical uncertainty and the current absence of a carbon charge, there is no economic incentive for private firms to undertake such projects." Since the MIT report was published, Congress has appropriated nearly $7 billion in CCS research and development (R&D), including FutureGen; however, Congress has not enacted any form of a "carbon charge," through either a cap-and-trade system or a carbon tax. Ameren Corporation, which partnered with DOE to retrofit its power plant in Meredosia, IL, for FutureGen 2.0, discontinued operations at the Meredosia Energy Center where the plant is located, stating that it would not be able to afford the costs to comply with air pollution rules issued in July 2011 by the EPA to reduce sulfur dioxide and nitrogen oxide. In addition to the FutureGen project, DOE partnered with industry for six other commercial-scale CCS projects through its Clean Coal Power Initiative (CCPI) program. The 2010 DOE Strategic Plan report predicted that at least five of DOE's major CCS projects would become operational by 2016. Since the report was released, three of the six industry partners of CCPI projects have pulled out of agreements with DOE. The departure of several industry leaders from contracts with DOE demonstrates the volatility of the public-private partnership model. On September 20, 2013, the U.S. Environmental Protection Agency (EPA) re-proposed a standard that would limit emissions of carbon dioxide (CO 2 ) from new fossil-fueled power plants. As re-proposed, the rule would limit emissions to no more than 1,100 pounds per megawatt-hour of production from new coal-fired power plants and between 1,000 and 1,100 pounds per megawatt-hour (depending on size of the plant) for new natural gas-fired plants. EPA proposed the standard under Section 111 of the Clean Air Act. According to EPA, new natural gas-fired stationary power plants should be able to meet the proposed standard without additional cost and the need for add-on control technology. However, new coal-fired plants would be able to meet the standard only by installing carbon capture and sequestration (CCS) technology to capture about 40% of the CO 2 they typically produce. The proposed standard allows for a seven-year compliance period for coal-fired plants but would demand a more stringent standard for those plants that limits CO 2 emissions to an average of 1,000-1,050 pounds per megawatt-hour. On January 8, 2014, EPA published the re-proposed rule in the Federal Register . Publishing in the Federal Register triggers the start of a 60-day public comment period: comments will be accepted until March 10, 2014. The initial 2012 proposal generated more than 2.5 million comments, which prompted, in part, the September 20, 2013, re-proposal. Promulgation of the final rule could be expected sometime after the public comment period ends and EPA evaluates the comments. The re-proposed rule would address only new power plants. However, Section 111 of the Clean Air Act requires that EPA develop standards for greenhouse gas emissions for existing plants whenever it promulgates standards for new power plants. In his June 25, 2013, memorandum, President Obama directed the EPA to issue proposed standards for existing plants by June 1, 2014, and to issue final rules a year later. Given the pending EPA rule, congressional interest in the future of coal as a domestic energy source appears directly linked to the future of CCS. The history of CCS research, development, and deployment (RD&D) at DOE and the pathway of its signature program—FutureGen—invite questions about whether DOE-funded RD&D will enable widespread deployment of CCS in the United States within the next decade. When EPA first proposed a new rule regulating GHG emissions from power plants that would likely require CCS, Congress considered legislation to block the new regulations. For example, the Subcommittee on Energy and Power of the House Science, Space, and Technology Committee held a hearing on June 19, 2012, where opponents of the new rule, including FutureGen Alliance Chairman Steven E. Winberg, criticized the regulations: "In effect, EPA's rule will eliminate any new coal for years to come because EPA is requiring new coal-fueled power plants to meet a natural gas equivalent CO 2 standard, before CCS technology is commercially available." Following the September 20, 2013, re-proposal of the rule, the debate has been mixed as to whether the rule would spur development and deployment of CCS for new coal-fired power plants or have the opposite effect. Multiple analyses indicate that there will be retirements of U.S. coal-fired capacity; however, virtually all analyses agree that coal will continue to play a substantial role in electricity generation for decades. How many retirements would take place and the role of EPA regulations in causing them are matters of dispute. Since the September 2013 re-proposal, the argument over the rule has focused, in part, on whether CCS is the best system of emissions reduction (BSER) for coal plants and whether it has been "adequately demonstrated" as such, as required under the Clean Air Act. In its re-proposed rule, EPA cites the "existence and apparent ongoing viability" of several ongoing CCS demonstration projects as examples that justify a separate determination of BSER for coal-fired plants and integrated gasification combined-cycle plants. (The second BSER determination is for gas-fired power plants.) The EPA noted that these projects had reached advanced stages of construction and development, "which suggests that proposing a separate standard for coal-fired units is appropriate." FutureGen 2.0 was not included as one of the projects used to justify the proposed rule, despite its 10-year long history and more than $1 billion in committed federal support. Its omission from the EPA re-proposed rule further reinforces FutureGen's status as a CCS project in the early stages of development. The huge increase in the U.S. domestic supply of natural gas, due largely to the exploitation of unconventional shale gas reservoirs through the use of hydraulic fracturing, has also led to a shift to natural gas for electricity production. The shift appears to be largely due to the cheaper and increasingly abundant fuel—natural gas—compared to coal for electricity production. The EPA re-proposed rule, discussed above, noted that "power companies often choose the lowest cost form of generation when determining what type of new generation to build. Based on [Energy Information Administration] modeling and utility [Integrated Resource Plans], there appears to be a general acceptance that the lowest cost form of new power generation is [natural gas combined-cycle]." Cheap gas, due to the rapid increase in the domestic natural gas supply as an alternative to coal, in combination with regulations that curtail CO 2 emissions, may lead electricity producers to invest in natural gas-fired plants, which emit approximately half the amount of CO 2 per unit of electricity produced compared to coal-fired plants. Regulations and abundant cheap gas may raise questions about the rationale for CCS demonstration projects like FutureGen. Alternatively, and despite increasingly abundant domestic natural gas supplies, EPA regulations could provide the necessary incentives for the industry to accelerate CCS development and deployment for coal-fired power plants. As part of its re-proposed ruling, EPA cites technology as one of four factors that it considers in making a BSER determination. Specifically, EPA stated that it "considers whether the system promotes the implementation and further development of technology," in this case referring to CCS technology. It appears that EPA asserts that its rule would likely promote CCS development and deployment rather than hinder it. Those arguing against the re-proposed rule do so on the basis that CCS technology has not been adequately demonstrated, and that it violates provisions in P.L. 109-58 , the Energy Policy Act of 2005, that prohibit EPA from setting a performance standard based on the use of technology from certain DOE-funded projects, such as the three projects cited in the EPA re-proposal, among other reasons. On January 9, 2014, Representative Whitfield and 62 cosponsors introduced H.R. 3826 , the Electricity Security and Affordability Act, which would essentially impose a number of requirements to be met before EPA could issue greenhouse gas emission regulations under Section 111 of the Clean Air Act, such as the EPA re-proposed rule discussed above. On January 14, 2014, the Energy and Power subcommittee, House Energy and Commerce committee, voted to report the bill. Much of the discussion during the bill's markup centered on whether CCS was an adequately demonstrated technology to meet the requirements of the Clean Air Act. Congressional consideration of CCS has focused on balancing competing national interests, such as fostering low-cost domestic sources of energy like coal versus reducing greenhouse gas (GHG) emissions in the atmosphere. Legislative proposals during the 109 th and 110 th Congresses focused on advancing carbon capture technologies that reduce CO 2 emissions to mitigate GHG-induced global warming. Congress began appropriating funds specifically for FutureGen beginning in 2005. Previously, DOE had allocated funds under its Clean Coal Power Initiative (CCPI) program. With the American Recovery and Reinvestment Act of 2009, Congress appropriated approximately $1 billion for the FutureGen 2.0 project. The revival of FutureGen under the Obama Administration as FutureGen 2.0 has sparked increased scrutiny of the future of integrated CCS technology on a commercially viable scale. FutureGen was originally proposed to demonstrate the feasibility of using CCS technology to mitigate CO 2 emissions into the atmosphere. Among the challenges that continue to influence the development of FutureGen 2.0 are rising costs of construction, ongoing issues with project development, lack of incentives for investment from the private sector, and time constraints on project development. Despite congressional and Obama Administration commitments to the FutureGen 2.0 project, particularly the $1.0 billion appropriation from ARRA, questions remain as to whether or not FutureGen 2.0 will succeed. The Congressional Budget Office (CBO) published a report in June 2012 stating that the success of CCS technology depends on reducing technical costs, ensuring the effectiveness of CCS, and adopting policies that provide incentives for industry to pursue the high-cost demonstration technologies. The report explained that if regulations, tax credits, or policies such as carbon taxation or cap-and-trade that increase the price of electricity from conventional power plants are adopted, then CCS technology may become competitive enough for private sector investment. Even then, industry may choose to forgo coal-fueled plants for natural gas or other sources that emit less CO 2 compared to coal, according to CBO. The timeline that follows shows a chronology of the history of FutureGen since 2003.

Summary: More than a decade after the George W. Bush Administration announced its signature clean coal power initiative—FutureGen—the program is still in early development. Since its inception in 2003, FutureGen has undergone changes in scope and design. As initially conceived, FutureGen would have been the world's first coal-fired power plant to integrate carbon capture and sequestration (CCS) with integrated gasification combined cycle (IGCC) technologies. FutureGen would have captured and stored carbon dioxide (CO2) emissions from coal combustion in deep underground saline formations and produced hydrogen for electricity generation and fuel cell research. Increasing costs of development, among other considerations, caused the Bush Administration to discontinue the project in 2008. In 2010, under the Obama Administration, the project was restructured as FutureGen 2.0: a coal-fired power plant that would integrate oxy-combustion technology to capture CO2. FutureGen 2.0 is the U.S. Department of Energy's (DOE) most comprehensive CCS demonstration project, combining all three aspects of CCS technology: capturing and separating CO2 from other gases, compressing and transporting CO2 to the sequestration site, and injecting CO2 in geologic formations for permanent storage. Congressional interest in CCS technology centers on balancing the competing national interests of fostering low-cost, domestic sources of energy like coal against mitigating the effects of CO2 emissions in the atmosphere. FutureGen 2.0 would address these interests by demonstrating CCS technology as commercially viable. Among the challenges to the development of FutureGen 2.0 are rising costs of production, ongoing issues with project development, lack of incentives for investment from the private sector, and time constraints. Further, FutureGen's development would need to include securing private sector funding to meet increasing costs, purchasing the power plant for the project, obtaining permission from DOE to retrofit the plant, performing the retrofit, and then meeting the goal of 90% capture of CO2. The FutureGen project was conceived as a public-private partnership between industry and DOE with agreements for cost-share and cooperation on development, demonstration, and deployment of CCS technology. The public-private partnership has been criticized for leading to setbacks in FutureGen's development, since the private sector lacks incentives to invest in costly CCS technology. Regulations, tax credits, or policies such as carbon taxation or cap-and-trade that increase the price of electricity from conventional power plants may be necessary to make CCS technology competitive enough for private sector investment. Even then, industry may choose to forgo coal-fired plants for other sources of energy that emit less CO2, such as natural gas. However, Congress signaled its support for FutureGen 2.0 via the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) by appropriating almost $1 billion for the project. ARRA funding will expire on September 30, 2015, and it remains a question whether the project will expend all of its federal funding before that deadline. A proposed rule by the Environmental Protection Agency (EPA) to limit CO2 emissions from new fossil-fuel power plants may provide some incentive for industry to invest in CCS technology. The debate has been mixed as to whether the rule would spur development and deployment of CCS for new coal-fired power plants or have the opposite effect. Multiple analyses indicate that there will be retirements of U.S. coal-fired capacity; however, virtually all analyses agree that coal will continue to play a substantial role in electricity generation for decades. The rapid increase in the domestic natural gas supply as an alternative to coal, in combination with regulations that curtail CO2 emissions, may lead electricity producers to invest in natural gas-fired plants, which emit approximately half the amount of CO2 per unit of electricity produced compared to coal-fired plants.