On February 27, 2003, the President announced FutureGen as a cost- shared project between DOE and industry to create the world’s first coal- fired, zero emissions electricity and hydrogen production power plant. DOE stated that it would  demonstrate CCS at multiple commercial-scale power plants, including  retaining the integration of CCS and IGCC. DOE referred to this new  approach as the restructured FutureGen program. Eighteen of the 49 respondents indicated that the 90 percent  goal would be too restrictive for industry participants because of the  additional energy required to capture and compress CO However, the restructured program, a DOE commercial  demonstration project, seeks to accelerate the commercial deployment of  CCS (that is, generating and selling electricity to earn profits) by  implementing CCS at one or more commercial facilities by 2015— approximately five years earlier than the original program’s commercial  operations could begin. First, the  original program would have developed knowledge about CCS at IGCC  plants, while the restructured program could allow for opportunities to  learn about CCS at both IGCC and other types of coal plants. Four  of these five CCS programs do not integrate all key components of CCS  and concentrate on developing one or two related components of CCS,  such as CO storage, or CO Round III  of CCPI seeks to demonstrate, at a commercial scale, advanced coal-based  technologies that capture and store carbon, or put CO emissions to  beneficial reuse, such as to enhance oil recovery. The Restructured FutureGen Differs from Most Other DOE CCS Programs

from coal-fired power  plants, including possibly capturing 500,000 metric tons of CO storage in deep oil-, gas-, coal-, and saline-bearing  formations. The injection of CO  capture and compression technologies to assist existing coal-fired power  plants. While DOE had reason to be concerned about the  escalating costs of the original FutureGen, it made its decision to cancel  that program and replace it with the restructured FutureGen based, in  large part, on a comparison of cost estimates that were not comparable. In May 2008, the Secretary of Energy testified before Congress that  FutureGen was conceived as a $950 million venture and that its estimated  cost had increased to roughly $1.8 billion; however, the Secretary’s  prepared statement did not indicate that the first estimate was in constant  dollars, while the second was in current dollars. However, they stated that they did  not have any written or comprehensive analysis. In  addition, we do not consider the draft strategic planning document to be  comprehensive because it did not assess:    1.  whether costs for the original FutureGen would escalate substantially  2.  the relative costs, benefits, and risks for all of the types of plants for  which the restructured FutureGen was eligible to receive proposals,  such as conventional pulverized-coal and oxyfuel combustion plants,  but only contemplated proposals for IGCC plants; 3.  the risk that industry respondents might not propose an IGCC plant for  4.  the risk that industry respondents might not propose enough viable  projects for the restructured FutureGen; 5.  the costs, benefits, and risks of making incremental changes to the  original FutureGen alongside the relative costs, benefits, and risks of  the restructured FutureGen; and  6.  any potential overlap between the restructured FutureGen and other  DOE programs. A comprehensive analysis could have supported DOE’s decision making in  several ways. For example, prior to  the decision to restructure FutureGen, FE identified and analyzed 13  options for changes to the original program, such as reducing the COrecommended or noted that DOE should be willing to consider several  options with potential savings from $30 million to $55 million each. Appendix I: Scope and Methodology

We examined (1) the goals of the original and restructured FutureGen  programs, (2) the similarities and differences between the restructured  FutureGen and other Department of Energy (DOE) carbon capture and  storage programs, and (3) the extent to which DOE used sufficient  information to support its decision to restructure the FutureGen program. In particular, we interviewed DOE officials  from the Office of Fossil Energy’s (FE) National Energy Technology  Laboratory (NETL) and Office of Clean Coal. We made DOE’s editorial correction. Rather,  our report states that DOE’s decision was based on a desire to limit its  exposure to increased costs.
Why GAO Did This Study

Coal-fired power plants generate about one-half of the nation's electricity and about one-third of its carbon dioxide (CO2) emissions, which contribute to climate change. In 2003, the Department of Energy (DOE) initiated FutureGen--a commercial-scale, coal-fired power plant to incorporate integrated gasification combined cycle (IGCC), an advanced generating technology, with carbon capture and storage (CCS). The plant was to capture and store underground about 90 percent of its CO2 emissions. DOE's cost share was 74 percent, and industry partners agreed to fund the rest. Concerned about escalating costs, DOE restructured FutureGen. GAO was asked to examine (1) the original and restructured programs' goals, (2) similarities and differences between the new FutureGen and other DOE CCS programs, and (3) if the restructuring decision was based on sufficient information. GAO reviewed best practices for making programmatic decisions, FutureGen plans and budgets, and documents on the restructuring of FutureGen. GAO contacted DOE, industry partners, and experts.

What GAO Found

The original FutureGen program and the new restructured FutureGen program attempt to use CCS at coal-fired power plants to achieve near-zero CO2 emissions and to make CCS economically viable. However, they take different approaches that could affect CCS's commercial advancement. First, the original program aimed at developing knowledge about the integration of 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. The new FutureGen would develop and integrate multiple CCS components at coal-fired plants (including CO2 capture, transportation, and storage underground). Other programs concentrate on only one CCS component and/or a related component (e.g., 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 percent of the costs, but DOE expects the new FutureGen to have more funding for commercial demonstrations than CCPI. Moreover, the new FutureGen 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, DOE did not base its decision to restructure FutureGen on a comprehensive analysis of factors, such as the associated costs, benefits, and risks. DOE made its decision, largely, on the conclusion that costs for the original FutureGen had doubled and would escalate substantially. However, in its decision, DOE compared two cost estimates for the original FutureGen that were not comparable because 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. As its restructuring decision did not consider a comprehensive analysis of costs, benefits, and risks, DOE has no assurance that the restructured FutureGen is the best option to advance CCS. In contrast to the restructuring decision, DOE's Office of Fossil Energy had 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.