Hopes for coal gasification ride on one project

By Eileen O'Grady

HOUSTON (Reuters) - Much talked-about U.S. efforts to build a coal-fired power plant with near zero emissions are now concentrated in a single project, as the costs and difficulties of the endeavor have mounted and the stakes have risen.

FutureGen, a $1.5 billion public-private venture, aims to design and test the technology required to turn coal into a gas that can be stripped of harmful emissions, then burned to produce electricity and hydrogen. It will also capture carbon dioxide -- widely blamed for global warming -- and store it underground forever.

Plants that burn coal, already used to produce half the electricity consumed in the United States, were poised to make a major comeback after a decade of construction of less-polluting, natural gas-fired units. Dirtier coal regained its luster as a cheap power-plant fuel after gas prices soared in 2005 following two hurricanes that disrupted U.S. supply.

But increased worry about climate change and the potential for new laws to tax carbon emissions have created a backlash against new coal plants, which account for nearly 40 percent of all U.S. carbon dioxide emissions.

While China and India continue to pursue construction of traditional coal-fired plants, U.S. regulators and utilities this year in Texas, Florida, Oklahoma, Minnesota and Kansas have backed off plans for a dozen new coal-fired plants, citing high costs and regulatory uncertainty about carbon emissions.

Earlier this month, Tampa, Florida-based TECO Energy said its utility dropped plans to build a long-awaited advanced clean-coal plant. While utility executives said they will continue to look for new ways to use coal, the project was too risky at the current time.

The growing risk associated with coal use increases the pressure on FutureGen to succeed.

"For those still in the process of coming to the realization of the importance of the global warming threat, FutureGen may be more important than it seemed a couple of years ago," said Scott Anderson, senior policy adviser for climate and air programs at Environmental Defense in Texas.